SITEL Worldwide Corp - FORM 10-Q

Attached files

file	filename
EX-32.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. 1350 - SITEL Worldwide Corp	q22015exhibit322.htm
EX-32.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. 1350 - SITEL Worldwide Corp	q22015exhibit321.htm
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 15D-14(A) UNDER THE SE - SITEL Worldwide Corp	q22015exhibit312.htm
EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 15D-14(A) UNDER THE SE - SITEL Worldwide Corp	q22015exhibit311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended	June 30, 2015



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from		to

Commission file number 333-172952

SITEL WORLDWIDE CORPORATION

(Exact Name of Registrant as Specified in Its Charter)



Delaware		16-1556476
(State or Other Jurisdiction of		(I.R.S. Employer Identification No.)
Incorporation or Organization)

3102 West End Avenue
Two American Center, Suite 900
Nashville, Tennessee		37203
(Address of Principal Executive Offices)		(Zip Code)

Registrant's Telephone Number, Including Area Code:		(615) 301-7100

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES o NO þ

The Registrant is a voluntary filer of reports required of companies with public securities under Section 13 or 15(d) of the Securities Exchange Act of 1934 and has filed all reports which would have been required of the Registrant during the preceding 12 months had it been subject to such provisions.

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

YES þ NO o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:



Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer	þ	(Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act.)

YES o NO þ

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date.



	Outstanding
Class	July 31, 2015
Class A, $0.01 par value	38,320,089
Class B, $0.01 par value	88,281,647
Class C, $0.01 par value	23,990

TABLE OF CONTENTS




Item		Page No.
PART I	Financial Information	3
1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014	3
	Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2015 and 2014	5
	Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the six months ended June 30, 2015	6
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014	8
	Notes to Condensed Consolidated Financial Statements	9
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	39
3.	Quantitative and Qualitative Disclosures About Market Risk	52
4.	Controls and Procedures	52

PART II	Other Information	53
1.	Legal Proceedings	53
1A.	Risk Factors	53
6.	Exhibits	53
	Signature	54

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS (UNAUDITED)

SITEL Worldwide Corporation

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands of U.S. dollars)



	June 30, 2015		December 31, 2014
Assets
Current assets
Cash and cash equivalents	$	7,507	$	8,857
Accounts receivable (net of allowance for doubtful accounts of $1,813 and $2,562, respectively)	253,979		279,227
Prepaids and other current assets	58,056		56,711
Total current assets	319,542		344,795
Property and equipment, net	88,977		87,354
Goodwill	117,707		117,708
Other intangible assets, net	36,737		36,915
Deferred income taxes	27,260		28,951
Other noncurrent assets	33,267		33,946
Total assets	$	623,490	$	649,669
Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable	$	24,437	$	22,300
Accrued payroll and benefits	80,537		75,037
Accrued liabilities and other	74,886		85,713
Income taxes payable	4,316		6,521
Current portion of long-term debt	29,147		—
Current portion of capital lease obligations	3,324		2,952
Total current liabilities	216,647		192,523
Long-term debt	714,272		746,016
Capital lease obligations	2,690		3,272
Deferred income taxes	5,938		5,919
Other noncurrent liabilities	43,289		42,654
Total liabilities	982,836		990,384

SITEL Worldwide Corporation

Condensed Consolidated Balance Sheets (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)



	June 30, 2015			December 31, 2014
Commitments and contingencies (see Note 9)
Redeemable preferred stock, 20,000,000 convertible shares authorized, issuable in series:
Series B, $0.01 par value; 39,947 shares issued and outstanding at June 30, 2015 and December 31, 2014	79,441			75,103
Series C, $0.01 par value; 28,881 shares issued and outstanding at June 30, 2015 and December 31, 2014	75,172			69,273
Series D, $0.01 par value; 75,000 shares issued and outstanding at June 30, 2015 and December 31, 2014	88,332			81,869
Stockholders’ deficit
Subsidiary exchangeable preferred stock, no par value; 1,713,321 shares authorized, issued, and outstanding at June 30, 2015 and December 31, 2014	2,665			2,665
Common stock, 361,000,000 shares authorized; 225,000,000 Class A shares, 128,500,000 Class B convertible shares, and 7,500,000 Class C shares
Class A, $0.01 par value; 41,862,712 shares (including 9,090,858 restricted shares) and 41,766,222 shares (including 9,060,858 restricted shares) issued at June 30, 2015 and December 31, 2014, respectively; 38,320,089 shares and 38,223,599 shares outstanding at June 30, 2015 and December 31, 2014, respectively	328			327
Class B, $0.01 par value; convertible into Class A common stock on 1:1 basis; 88,281,647 shares issued and outstanding at June 30, 2015 and December 31, 2014	882			882
Class C, $0.01 par value; 6,751,263 shares issued and 23,990 shares outstanding at June 30, 2015 and December 31, 2014	68			68
Additional paid-in capital	317,988			334,657
Accumulated deficit	(850,931		)	(836,750		)
Accumulated other comprehensive loss, net of tax	(61,668		)	(57,186		)
Treasury shares, at cost	(11,623		)	(11,623		)
Total stockholders’ deficit	(602,291		)	(566,960		)
Total liabilities and stockholders’ deficit	$	623,490		$	649,669

See accompanying Notes to Condensed Consolidated Financial Statements.

SITEL Worldwide Corporation

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

(in thousands of U.S. dollars)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Revenues	$	343,330		$	348,747		$	697,923		$	699,226
Operating expenses
Costs of services*	231,787			237,180			471,226			474,110
Selling, general, and administrative expenses*	87,112			87,424			170,448			179,354
Depreciation and amortization of property and equipment	8,814			8,548			17,831			16,960
Amortization of intangible assets	41			—			108			523
Restructuring and exit charges	1,002			12,532			1,345			15,804
(Gain) loss on foreign currency transactions	(1,500		)	600			5,325			190
Other income, net	(234		)	(145		)	(363		)	(11		)
Operating income	16,308			2,608			32,003			12,296
Interest and other financing costs, net	21,094			21,423			42,714			42,989
Loss before income taxes	(4,786		)	(18,815		)	(10,711		)	(30,693		)
Income tax provision	1,406			2,817			3,470			9,755
Net loss	(6,192		)	(21,632		)	(14,181		)	(40,448		)
Other comprehensive (loss) income:
Foreign currency translation adjustments, net of tax of $0	(2		)	2,761			(3,829		)	3,413
Unrealized (loss) gain on derivative valuation, net of tax expense (benefit) of $247, $1,265, $627, and $(2,153), respectively	(1,974		)	1,483			(725		)	5,909
Change related to pension liability, net of tax of $0	52			37			72			72
Total other comprehensive (loss) income	(1,924		)	4,281			(4,482		)	9,394
Comprehensive loss	$	(8,116	)	$	(17,351	)	$	(18,663	)	$	(31,054	)

* Exclusive of Depreciation and amortization of property and equipment

See accompanying Notes to Condensed Consolidated Financial Statements.

SITEL Worldwide Corporation

Condensed Consolidated Statements of Changes in Stockholders' Deficit - Schedule 1

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

-- Schedule 1 --



	Shares Issued				Par Value
	Class A Common Stock		Class B Common Stock	Class C Common Stock	Class A Common Stock		Class B Common Stock		Class C Common Stock		Additional Paid-in Capital			Accumulated Deficit			Subtotal
Balances at December 31, 2014	41,766,222		88,281,647	6,751,263	$	327	$	882	$	68	$	334,657		$	(836,750	)	$	(500,816	)
Restricted shares granted	100,000		—	—	—		—		—		—			—			—
Restricted shares forfeited	(70,000	)	—	—	—		—		—		—			—			—
Non-cash stock granted	66,490		—	—	1		—		—		31			—			32
Preferred B, C, and D stock accretion and BCF	—		—	—	—		—		—		(16,700		)	—			(16,700		)
Net loss	—		—	—	—		—		—		—			(14,181		)	(14,181		)
Balances at June 30, 2015	41,862,712		88,281,647	6,751,263	$	328	$	882	$	68	$	317,988		$	(850,931	)	$	(531,665	)

See accompanying Notes to Condensed Consolidated Financial Statements.

SITEL Worldwide Corporation

Condensed Consolidated Statements of Changes in Stockholders' Deficit - Schedule 2

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

-- Schedule 2 --



				Accumulated Other Comprehensive Loss
	Totals from Schedule 1			Foreign Currency Translation			Defined Benefit Pension/ Other			Unrealized Loss on Derivatives Valuation			Subsidiary Exchangeable Stock		Treasury Stock Shares	Treasury Stock Capital			Total
Balances at December 31, 2014	$	(500,816	)	$	(48,458	)	$	(2,612	)	$	(6,116	)	$	2,665	10,269,896	$	(11,623	)	$	(566,960	)
Non-cash stock granted	32			—			—			—			—		—	—			32
Preferred B, C, and D stock accretion and BCF	(16,700		)	—			—			—			—		—	—			(16,700		)
Change related to pension liability, net of tax of $0	—			—			72			—			—		—	—			72
Unrealized loss on derivative, net of tax expense of $627	—			—			—			(725		)	—		—	—			(725		)
Net loss	(14,181		)	—			—			—			—		—	—			(14,181		)
Foreign currency translation adjustment, net of tax of $0	—			(3,829		)	—			—			—		—	—			(3,829		)
Balances at June 30, 2015	$	(531,665	)	$	(52,287	)	$	(2,540	)	$	(6,841	)	$	2,665	10,269,896	$	(11,623	)	$	(602,291	)

See accompanying Notes to Condensed Consolidated Financial Statements.

SITEL Worldwide Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands of U.S. dollars)



	Six Months Ended June 30,
	2015			2014
Cash flows from operating activities
Net loss	$	(14,181	)	$	(40,448	)
Adjustments to reconcile Net loss to net cash flows relating to operating activities:
Depreciation and amortization (including intangible assets)	17,939			17,483
Deferred income taxes	(271		)	4,697
Non-cash derivative activity	759			3,836
Amortization of debt issue costs and original issue discount	2,795			2,625
Amortization of deferred training revenue, net of costs	(5,897		)	(779		)
Other non-cash items, net	259			194
Change in book overdrafts	(1,889		)	(3,138		)
Changes in operating assets and liabilities, net	22,942			(5,075		)
Net cash provided by (used in) operating activities	22,456			(20,605		)
Cash flows from investing activities
Purchases of property and equipment	(18,705		)	(16,747		)
Proceeds from disposition of property and equipment	322			1,208
Net cash used in investing activities	(18,383		)	(15,539		)
Cash flows from financing activities
Proceeds from issuance of Series D Preferred Stock, net	—			74,820
Payments on long-term debt and capital lease obligations	(280,493		)	(239,875		)
Proceeds from long-term debt	276,826			220,701
Payment of interest rate swap, net	(1,803		)	(1,826		)
Payments of debt issue costs	—			(719		)
Net cash (used in) provided by financing activities	(5,470		)	53,101
Effect of exchange rate on cash and cash equivalents	47			(272		)
Net change in cash and cash equivalents	(1,350		)	16,685
Cash and cash equivalents:
Beginning of period	8,857			7,366
End of period	$	7,507		$	24,051

See accompanying Notes to Condensed Consolidated Financial Statements.

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)


1.	Overview and Basis of Presentation

Overview

SITEL Worldwide Corporation, including consolidated subsidiaries ("we," "our," “Sitel," or “the Company”), is a majority-owned subsidiary of Onex Corporation ("Onex") and is one of the world's largest and most diversified providers of customer care outsourcing services. We offer our clients a wide array of services, including customer service, technical support, customer acquisition, retention and revenue generation services, and back office support. The majority of our customer care services are inbound and delivered telephonically, but we are increasingly asked to provide services through other communication channels, including email, online chat, interactive voice response ("IVR"), and social media channels. We serve a broad range of industry end–markets, including financial services, technology, wireless, retail and consumer products, telecommunications, media and entertainment, energy and utilities, travel and transportation, Internet service providers, insurance, public sector, and healthcare.

We are organized geographically and have two reporting segments: (1) "Americas," which refers to North America, Latin America, and Asia Pacific; and (2) "EMEA," which refers to Europe, the Middle East, and Africa. Each reporting segment performs substantially the same services for clients.

Merger Transaction Agreement

On July 10, 2015, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Groupe Acticall S.A. (“Purchaser”), Saturn Merger Sub Corporation, a wholly owned subsidiary of Purchaser (“Merger Sub”), and Onex American Holdings Subco LLC. Upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), whereupon the separate existence of Merger Sub will cease and the Company will be the surviving corporation and an indirect wholly owned subsidiary of Purchaser. Under the Merger Agreement, the Company will be acquired for an aggregate purchase price based on a total enterprise value of approximately $830,000, subject to adjustment as set forth in the Merger Agreement. Approximately $775,000 of this will be used to pay off outstanding indebtedness and expenses of the Company and its subsidiaries in connection with the closing of the Merger. The transaction is expected to close during the third quarter of 2015 and is subject to certain customary closing conditions. The Merger Agreement contains certain termination rights for each of the Company and Purchaser, including the right of each party to terminate the Merger Agreement if the Merger has not been consummated by November 30, 2015.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements of the Company are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and, in the opinion of management, include all adjustments necessary for a fair statement of the financial position, results of operations, and cash flows for each period shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The December 31, 2014 Condensed Consolidated Balance Sheet data was derived from the Company’s year-end audited Consolidated Financial Statements as presented in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (“SEC”) on February 18, 2015. The Company’s interim Condensed Consolidated Financial Statements are not necessarily indicative of the financial position or operating results for an entire year. The accompanying interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in Item 8 of Part II of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)", which applies to customer contracts for the transfer of goods or services or nonfinancial assets, unless those contracts are within the scope of other standards. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in ASU 2014-09 were originally effective for annual and interim reporting periods beginning after December 15, 2016. However, on July 9, the FASB decided to delay the effective date of the new revenue standard by one year. Reporting entities may choose to adopt the standard as of the original effective date. The FASB decided,

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

based on its outreach to various stakeholders and the forthcoming amendments to the new revenue standard, that a deferral is necessary to provide adequate time to effectively implement the new revenue standard. Early application is not permitted. The amendments should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this Update recognized at the date of initial application. If an entity elects the transition method, it should provide additional disclosures in the reporting periods that include the date of initial application of the amount by which each financial statement line item is affected in the current reporting period compared to the guidance that was in effect before the change. In addition, an explanation of the reasons for significant changes are required in the disclosure. The Company is currently evaluating the effect of ASU 2014-09 on our financial statements.

In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Cost (Subtopic 835-30)", which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. The core principle of the guidance is that prior to the issuance of the standard, debt issuance costs were required to be presented in the balance sheet as a deferred charge (i.e., an asset). This presentation differed from the presentation for a debt discount, which is a direct adjustment to the carrying value of the debt (i.e., a contra liability). Having different balance sheet presentation requirements created unnecessary complexity and the new guidance seeks to simplify the presentation. The amendments in ASU 2015-03 are effective for annual and interim reporting periods beginning after December 15, 2015. Early application is permitted for financial statements that have not been previously issued. The amendments should be applied retrospectively to each prior reporting period presented. At June 30, 2015 the company had $6,215 of unamortized debt issuance cost recognized in long term assets.

There are no other recently issued accounting pronouncements that are expected to have a material impact on our financial condition, results of operations or cash flows.

Out of Period Adjustments

During the six months ended June 30, 2014, we identified prior period accounting errors related to the understatement of an accrued liability, the overstatement of certain deposits, and the overstatement of foreign currency transaction losses. The errors were not material to prior years' financial statements and are not expected to be material to the 2014 results. Therefore, we recorded the error corrections in the same quarters they were identified, which increased Loss before income taxes and Net loss by $961 and $625, respectively, for the first quarter of 2014 and decreased Loss before income taxes and Net loss by $1,400 for the second quarter of 2014. The aggregate impact of the corrections for the six months ended June 30, 2014 was a $439 decrease in Loss before income taxes and a $775 decrease in Net loss.


2.	Property and Equipment

The composition of Property and equipment is as follows:



	June 30, 2015			December 31, 2014
Land	$	3,559		$	3,554
Buildings and improvements	27,015			26,353
Leasehold improvements	71,789			71,087
Computer software	49,741			50,376
Equipment	183,559			183,897
Furniture and fixtures	31,071			30,951
Total original cost	366,734			366,218
Less: Accumulated depreciation	(290,906		)	(282,635		)
Net, excluding construction in progress	75,828			83,583
Construction in progress	13,149			3,771
Property and equipment, net	$	88,977		$	87,354

Depreciation expense was $8,814 and $17,831 for the three and six months ended June 30, 2015, compared to $8,548 and $16,960 for the same periods in 2014.

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)


3.	Goodwill and Other Intangible Assets

The carrying amount of Goodwill decreased $1 during the six months ended June 30, 2015, due to foreign currency translation.

The following table presents our Other intangible assets as of June 30, 2015:



	Gross Intangibles		Accumulated Amortization and Impairment Charges			Currency Translation Adjustment			Net Intangibles
Customer relationships	$	90,643	$	(89,859	)	$	(71	)	$	713
Trademark and trade name (indefinite lived)	40,200		(4,176		)	—			36,024
	$	130,843	$	(94,035	)	$	(71	)	$	36,737

The following table presents our Other intangible assets as of December 31, 2014:



	Gross Intangibles		Accumulated Amortization and Impairment Charges			Currency Translation Adjustment			Net Intangibles
Customer relationships	$	90,643	$	(89,751	)	$	(1	)	$	891
Trademark and trade name (indefinite lived)	40,200		(4,176		)	—			36,024
	$	130,843	$	(93,927	)	$	(1	)	$	36,915

We amortize intangible assets with definite lives over their estimated useful lives, using the straight-line method. Intangible asset amortization expense was $41 and $108 for the three and six months ended June 30, 2015. Amortization expense for the same periods of 2014 was $0 and $523. Amortization is estimated to be approximately $274 for the year ended December 31, 2015.


4.	Restructuring and Exit Activities

We evaluate and assess our worldwide operations in an effort to rationalize facility and labor costs, further streamline our operations in order to align resources to support growth, and appropriately shift the geographic mix of Company resources. Restructuring expense during the three months ended June 30, 2015 for activities initiated in 2015 was $597, of which $337 related to severance costs and $260 related to facility exit costs. Restructuring expense during the six months ended June 30, 2015 for activities initiated in 2015 was $795, of which $502 related to severance costs and $293 related to facility exit costs. For these activities, the remaining severance-related accrual of $179 is expected to be paid during the remainder of 2015, and the remaining accrual for facility exit costs of $129 is expected to be paid during the remainder of 2015 through the year 2016 as the related leases expire.

Restructuring expense during the three months ended June 30, 2015 for activities initiated prior to 2015 was $405, of which $268 related to severance costs and $137 related to facility exit costs. Restructuring expense during the six months ended June 30, 2015 for activities initiated prior to 2015 was $550, of which $323 related to severance costs and $227 related to facility exit costs. For these activities, the remaining severance-related accrual of $602 is expected to be paid by the end of 2015, and the remaining accrual for facility exit costs of $1,262 is expected to be paid during the remainder of 2015 through the year 2016 as the related leases expire. Total expected expenses during the remainder of 2015 relating to restructuring activities already initiated as of June 30, 2015 are $690.

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

The liability for restructuring activities initiated in 2015 consisted of the following:



				Facility
				Exit and
	Severance			Other			Total
December 31, 2014	$	—		$	—		$	—
Costs accrued (offset was to expense)	497			281			778
Cash payments	(320		)	(140		)	(460		)
Foreign exchange and other	2			(12		)	(10		)
June 30, 2015	$	179		$	129		$	308
Current portion of restructuring included in Accrued liabilities and other	$	179		$	129		$	308
Long-term portion of restructuring included in Other noncurrent liabilities	$	—		$	—		$	—

Activity not reflected within the restructuring liability:
Costs expensed	$	5		$	12		$	17
Foreign exchange and other	$	—		$	(12	)	$	(12	)
Cash payments	$	(5	)	$	—		$	(5	)

Restructuring expense during the three and six months ended June 30, 2015 for activities initiated in 2015 was $492 and $581 for EMEA and $105 and $214 for the Americas, respectively.

The liability for restructuring activities initiated in 2014 and prior years consisted of the following:



				Facility
				Exit and
	Severance			Other			Total
December 31, 2014	$	1,266		$	2,214		$	3,480
Costs accrued (offset was to expense)	178			227			405
Cash payments	(702		)	(1,156		)	(1,858		)
Foreign exchange and other	(140		)	(23		)	(163		)
June 30, 2015	$	602		$	1,262		$	1,864
Current portion of restructuring included in Accrued liabilities and other	$	602		$	1,229		$	1,831
Long-term portion of restructuring included in Other noncurrent liabilities	$	—		$	33		$	33

Activity not reflected within the restructuring liability:
Costs expensed	$	145		$	—		$	145
Foreign exchange and other	$	(49	)	$	—		$	(49	)

Restructuring expense during the three and six months ended June 30, 2015 for activities initiated in 2014 and prior years was $155 and $371 for EMEA and $250 and $179 for the Americas, respectively. As of June 30, 2015, cumulative restructuring costs related to such activities are $18,210, of which $14,584 relates to EMEA and $3,626 relates to the Americas.

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)


5.	Long-Term Debt

The composition of Long-term debt is as follows:



	June 30, 2015			December 31, 2014
Senior Notes	$	296,535		$	296,018
Senior Secured Notes	196,231			195,458
Senior Secured Credit Facility:
Revolvers:
U.S. revolver	22,000			31,700
Canadian revolver	6,968			—
Term Loans:
U.S. dollar term loan	177,973			177,973
Euro term loan	24,539			26,657
British pound sterling term loan	18,450			18,210
Other	723			—
Total debt	743,419			746,016
Less: Debt maturing within one year	(29,147		)	—
Total long-term debt	$	714,272		$	746,016

Senior Notes

On March 18, 2010, SITEL, LLC and Sitel Finance Corp. (the "Issuers") issued in a private placement, 11.5% senior notes due 2018 (the “Senior Notes”) having an aggregate principal amount of $300,000 with an original issue discount of $7,638. The Senior Notes are general unsecured obligations of the Company and are senior in right of payment to all existing and future indebtedness, if any, that is by its terms expressly subordinated to the Senior Notes. The Senior Notes are guaranteed by the Company’s domestic subsidiaries and will mature on April 1, 2018. Interest accrues on the Senior Notes at a rate of 11.5% annually, and is payable semi-annually in arrears on April 1 and October 1.

Senior Secured Notes

On April 20, 2012, the Issuers issued in a private placement, 11.0% senior secured notes ("Senior Secured Notes") due 2017 having an aggregate principal amount of $200,000 with an original issue discount of $8,000. The Senior Secured Notes are guaranteed by the Company and its domestic subsidiaries, are secured on an equal and ratable basis with all obligations of the Issuers and the guarantors under the Company's senior secured credit facility (the “Senior Secured Credit Facility”), and will mature on April 1, 2017. Interest accrues on the Senior Secured Notes at a rate of 11.0% annually and is payable semi-annually in arrears on February 1 and August 1.

Both the Senior Notes and the Senior Secured Notes contain customary covenants and restrictions on the activities of SITEL, LLC, Sitel Finance Corp. and SITEL, LLC's restricted subsidiaries, including, but not limited to, the incurrence of additional indebtedness; dividends or distributions in respect of capital stock or certain other restricted payments or investments; entering into agreements that restrict distributions from restricted subsidiaries; the sale or disposal of assets, including capital stock of restricted subsidiaries; transactions with affiliates; the incurrence of liens; and mergers, consolidations or the sale of substantially all of SITEL, LLC's assets.

Senior Secured Credit Facility

The Company's Senior Secured Credit Facility initially provided for available borrowings in an aggregate amount of $760,000. Components of the Senior Secured Credit Facility are (1) the $675,000 aggregate principal amount term loans, including a $550,000 U.S. dollar loan, a €51,447 Euro loan, and a £30,000 British pound sterling loan (collectively, the "Term Loans"), and (2) the $85,000 aggregate principal amount revolvers, consisting of a $75,000 U.S. revolver and a $10,000 Canadian revolver (made available in Canadian dollars) (collectively, the "Revolvers"). In January 2013, the non-extended portion of our U.S. revolver expired, reducing the borrowing capacity under the Revolvers to $61,250 from $85,000.

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

All Term Loans mature on January 30, 2017 and amortize in equal quarterly installments in an aggregate annual amount equal to 0.25% of the original principal amount with the balance payable at maturity. Payments on the principal amount have exceeded the cumulative amortization schedule, thus no amount is due until maturity. Interest on the U.S. term loan is based, at our option, on LIBOR plus the applicable margin of 7.25%, or the higher of the federal funds rate plus 0.50% or the prime rate plus the applicable margin of 6.25%. Interest on the Euro term loan is based on EURIBOR plus the applicable margin of 7.25%. Interest on the British pound sterling term loan is based on LIBOR plus the applicable margin of 7.25%. We have an interest rate swap agreement for the notional amount of $175,000 against our Term Loans that is based on a rate of 2.315% versus three month LIBOR.

The Revolvers mature on January 30, 2016. A commitment fee is payable quarterly at 1.00% per annum of the undrawn portion of the Revolvers. Interest on the U.S. revolver is based, at our option, on LIBOR plus the applicable margin of 7.25%, or the higher of the federal funds rate plus 0.50% or the prime rate plus the applicable margin of 6.25%. Interest on the Canadian revolver is based, at our option, on the Canadian banker's acceptance rate (the "BA Rate") plus the applicable margin of 7.25%, or the higher of the one month BA Rate plus 0.75% or the Canadian prime rate plus the applicable margin of 6.25%. At June 30, 2015 and December 31, 2014, we had $30,857 and $27,568 available under the Revolvers and had outstanding letters of credit of $1,703 and $1,982.

Borrowings under the Senior Secured Credit Facility are collateralized by interests granted on a substantial portion of our worldwide assets and are guaranteed by certain subsidiary guarantors.

The Senior Secured Credit Facility also contains customary affirmative and negative covenants such as restricting certain corporate actions, including asset dispositions, acquisitions, the payment of dividends, changes of control, the incurrence of indebtedness, providing financing and investments and transactions with affiliates. Under the Senior Secured Credit Facility, we are required to comply with certain financial covenants on a quarterly and annual basis. During the first quarter of 2014, we executed the sixth amendment to our Senior Secured Credit Facility (the "Sixth Amendment"), which decreased the Minimum Interest Coverage Ratio and increased the maximum permitted Senior Secured Leverage Ratio, effective the first quarter of 2014. We paid debt issuance and other financing costs of $1,492 during the first six months of 2014 related to the Sixth Amendment, of which $719 were deferred and recorded in Other noncurrent assets to be amortized over the remaining term of the facility.

Other Debt

During the quarter ended June 30, 2015, the Company entered into a vendor financing agreement in the amount of $808 related to leasehold improvements in the Philippines. The agreement bears interest at 10% and will be paid in monthly installments over a three-year period. Pursuant to the terms of the contract, the Company paid $85 of the principal during the three months ended June 30, 2015. As of June 30, 2015, $180 and $543 of this amount was recorded in Current portion of long-term debt and Long-term debt, respectively, on the accompanying Condensed Consolidated Balance Sheets.

Future maturities of the Company's outstanding Long-term debt as of June 30, 2015 are summarized as follows:



2015	$	106
2016	29,196
2017	421,214
2018	300,137
2019	—
2020 and thereafter	—
Total debt payments	750,653
Less amount representing unamortized debt discount	(7,234		)
Total debt balance at June 30, 2015	$	743,419


6.	Redeemable Preferred Stock

We are authorized to issue in series up to 20,000,000 shares of preferred stock with a par value of $0.01. To date, we have authorized the issuance of three series of preferred shares—Series B, Series C, and Series D. Our Board of Directors determines

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

the voting rights, dividend policy, and conversion rights of each series of these preferred shares. The majority of each series of these preferred shares are held by Onex and other related parties. Each series has a mandatory redemption date of July 2, 2018 for cash and the right to be converted, at any time through the redemption date at the option of the holder, into the Company's Class A Voting Common Stock (initially at $4.85 per share for Series B, $1.50 per share for Series C, and $0.77 per share for Series D), in settlement of these obligations (including all accumulated and unpaid dividends through the redemption date). The net value of the preferred shares is recorded as Redeemable preferred stock (outside of permanent equity).

The Series B, C, and D Preferred Stock contain an optional cash redemption call option that is only exercisable by the Company. Since Onex controls the majority of our Board of Directors, accounting guidance requires that we account for this as an in-substance put option, since it assumes that Onex could force the execution of the call option. The in-substance put option meets the qualifications of a derivative, requiring it to be separated from the host instrument and recorded as a liability at fair value, with subsequent changes in the fair value recorded to the income statement. We have determined that the value is immaterial as of June 30, 2015 and December 31, 2014, thus no adjustment to the carrying value of the stock has been recorded in relation to the in-substance put option.

Series D Preferred Stock

On May 8, 2014, we authorized the issuance of 125,000 shares of Series D Preferred Stock. On May 8, 2014, we executed a subscription agreement with Onex Clientlogic Holdings LLC to issue up to 75,000 shares of the Series D Preferred Stock at a rate of $1,000 per share. Pursuant to this offer, we received proceeds of $75,000 from Onex Clientlogic Holdings LLC and other existing shareholders during the second quarter of 2014. During the six months ended June 30, 2014, we incurred fees associated with the issuance of the Series D Preferred Stock totaling $180 related to a fairness opinion issued by a third party. These fees were deferred and recorded outside of permanent equity as a reduction of the related proceeds, to be accreted to Additional paid-in capital from the date of issuance to the stated redemption date. At June 30, 2015 and December 31, 2014, the number of shares of Series D Preferred Stock issued and outstanding was 75,000.

The liquidation value of the Series D Preferred Stock, including accrued dividends payable, at June 30, 2015 of $88,332 and at December 31, 2014 of $81,869, is net of deferred financing costs of $132 and $154, respectively. Holders of the Series D Preferred Stock are entitled to receive cumulative dividends at the rate of 16% of the liquidation preference per share per annum, which accrue from inception and are payable at the mandatory redemption date or upon declaration by our Board of Directors.

Series C Preferred Stock

On December 10, 2008, we authorized the issuance of 125,000 shares of Series C Preferred Stock. At June 30, 2015 and December 31, 2014, the number of shares of Series C Preferred Stock issued and outstanding was 28,881.

When the conversion option of the Series C Preferred Stock into Class A Voting Common Stock at $1.50 per share is less than the fair value of the common stock on issuance date, there is a Beneficial Conversion Feature (“BCF”) associated with the preferred stock. The value of the BCF is recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsic value to Additional paid-in capital. For the Series C Preferred Stock owned by certain other related parties, this discount is accreted from the date of issuance to the stated redemption date. For the Series C Preferred Stock owned by Onex, the BCF is immediately amortized to the date of issuance due to existence of the in-substance put option on the stock discussed above.

The liquidation value of the Series C Preferred Stock, including accrued dividends payable, at June 30, 2015 of $75,172 is net of deferred financing costs of $116 and the BCF of $1,195. The liquidation value of the Series C Preferred Stock, including accrued dividends payable, at December 31, 2014 of $69,273 is net of deferred financing costs of $135 and the BCF of $1,395. Holders of the Series C Preferred Stock are entitled to receive cumulative dividends at the rate of 16% of the liquidation preference per share per annum, which accrue from inception and are payable at the mandatory redemption date or upon declaration by our Board of Directors.

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

Series B Preferred Stock

On April 3, 2008, we authorized the issuance of 125,000 shares of Series B Preferred Stock. At June 30, 2015 and December 31, 2014, the number of shares of Series B Preferred Stock issued and outstanding was 39,947.

The liquidation value of the Series B Preferred Stock, including accrued dividends payable, at June 30, 2015 of $79,441 and at December 31, 2014 of $75,103, is net of deferred financing costs of $177 and $206, respectively. Holders of the Series B Preferred Stock are entitled to receive cumulative dividends at the rate of 12% of the liquidation preference per share per annum, which accrue from inception and are payable at the mandatory redemption date or upon declaration by our Board of Directors.


7.	Income Taxes

The effective tax rate of (32.4)% for the six months ended June 30, 2015 differs from the effective tax rate of (31.8)% for the same period of 2014 primarily due to tax benefits resulting from changes in the intra-period allocation to continuing operations of $627 recorded during the six months ended June 30, 2015 compared to tax expense of $2,153 recorded in the same period of 2014, and noncash tax expense of $1,682 related to uncertain tax positions and tax audits recorded in the six months ended June 30, 2014.

We consider all income sources, including other comprehensive income, in determining the amount of tax benefit allocated to continuing operations (the "Income Tax Allocation"). Through the second quarter of 2015, as a result of the Income Tax Allocation, we recorded a non-cash deferred income tax expense of $627 against Other comprehensive income as a result of year-to-date gains from mark-to-market fluctuations on the 2015 portfolio of foreign currency hedges that are designated as accounting hedges and an offsetting non-cash income tax benefit of $627 in continuing operations.

Our gross unrecognized tax benefits (excluding interest and penalties) decreased from $28,207 at December 31, 2014 to $27,839 at June 30, 2015, primarily resulting from currency translation adjustments. There was a cash payment of $113 associated with an audit settlement in a foreign jurisdiction during the first quarter of 2015. The total amount of unrecognized tax benefits (including interest and penalties) that would affect income tax expense, if ever recognized in the financial statements is $28,264. We believe that it is reasonably possible that within the next 12-month period, the amount of unrecognized tax benefits for certain foreign tax positions might be reduced by $172 as a result of statute expirations or final resolution.


8.	Employee Benefits and Compensation

We have defined benefit pension plans covering certain employees outside of the United States. These plans are administered by a third party and include limited activity. The components of the net pension liability of $6,697 at June 30, 2015 and $6,728 at December 31, 2014 are included in Other noncurrent liabilities. Net periodic pension cost consisted of the following:



	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Service cost	$	183		$	170		$	392		$	341
Interest cost	107			113			214			234
Expected return on plan assets	(70		)	(82		)	(139		)	(165		)
Past service costs	43			39			87			76
Amortization of actuarial gains and losses and other	9			(2		)	18			(4		)
Net periodic pension cost	$	272		$	238		$	572		$	482

We also sponsor various employee retirement plans. In the United States, the Company sponsors a 401(k) savings plan that covers substantially all U.S. employees. In both Canada and Europe, the Company sponsors similar defined contribution plans. Expenses related to the defined contribution plans were $360 and $764 in the three and six months ended June 30, 2015. Expenses related to these plans in the same periods of 2014 were $448 and $816.

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)


9.	Commitments and Contingencies

The Company and its subsidiaries from time to time are subject to legal claims arising in the ordinary course of business. While the Company is unable to predict the outcome of these matters, it believes, based upon currently available facts, that adequate provision for such claims has been made. However, adverse developments could negatively impact earnings in particular future fiscal periods.

In October 2013, India’s Provident Fund ("PF") issued a summons to Sitel India pursuant to the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (“PF Act”) stating that Sitel India had improperly remitted PF payments for a period of 2006 to present. The PF Act provides that both the employer and employee make a 12.0% contribution on basic wage, excluding certain allowances, capped at a basic wage of INR 6,500. Sitel India responded to the summons. In August 2014, the PF Commissioner issued an order assessing Sitel India approximately $2,420 plus penalties and interest based on its conclusion that Sitel’s salary structure resulted in an under-contribution to the PF Fund as a result of excluding certain special allowances from “basic wages” for the period 2006 forward. The PF audited Sitel’s contributions in 2008, under the same salary structure, and found no violations. If the excluded allowances are reclassified as basic wages then the basic wage would exceed INR 6,500/month cap on PF contributions and there would be a PF contribution shortfall (the difference between Sitel’s basic wage and INR 6,500/month cap for PF contribution). In September 2014, Sitel India filed an appeal and the appeals tribunal stayed enforcement of the PF Order and directed Sitel India to deposit 25.0% of the amount of the PF Order as an appeal deposit within thirty days. Sitel made that deposit as required by the order. The March 23, 2015 hearing was postponed indefinitely due to a vacancy on the appeals tribunal. We are currently unable to predict the probable outcome of this matter and are not able to reasonably estimate the amount of the loss, if any. No liability has been recorded as of June 30, 2015 or December 31, 2014.

During 2011, the French tax authorities assessed SITEL France approximately €7,900 (equivalent to approximately $8,840 as of June 30, 2015) for the periods from 2007 to July 2010 for input value added taxes related to its performance of intermediary insurance services for the sale of insurance products on behalf of its insurance clients. During December 2013, the French tax authorities reduced the assessment to approximately €1,247 (equivalent to approximately $1,390 as of June 30, 2015). On January 6, 2014, the Company paid the assessment to perfect its rights in the event litigation is necessary to resolve the matter. As of June 30, 2015 and December 31, 2014, we have accrued a portion of the assessment within Selling, general, and administrative expenses ("SG&A") equal to our estimated obligation under this matter.

In April 2008, the local Sao Paulo, Brazil tax authorities assessed our Brazilian subsidiary (“SITEL Brazil”) for the alleged non-payment of local sales taxes in the original amount of approximately R$3,500 (equivalent to approximately $1,140 as of June 30, 2015) for a period extending from 2004 to October 2008. The assessment relates to billings made to a domestic Brazilian client for which SITEL Brazil provided on site agent support at the client’s site located in Barueri City, Brazil. Local sales taxes on services provided in Brazil are assessed based on the actual location where services are rendered. SITEL Brazil paid local sales taxes to Barueri City, however the Sao Paulo tax authorities contend erroneously that the services were performed in Sao Paolo where SITEL Brazil maintains an office. SITEL Brazil appealed the original assessment and in March 2010, the tax authorities ruled against SITEL Brazil. In October 2010, SITEL Brazil received a formal demand to pay the assessment, which at the time totaled R$7,700 due to increases in interest and penalties. SITEL Brazil deposited R$7,700 with the tax authorities in December 2010 and filed its defense with the courts in January 2011. We are currently unable to predict the probable outcome of this matter and are not able to reasonably estimate the amount of loss, if any. No liability related to this matter was recorded as of June 30, 2015 and December 31, 2014.


10.	Derivative Financial Instruments

We are exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates and interest rates. Our policies allow for the use of derivative financial instruments to prudently manage foreign currency exchange rate and interest rate exposure, but do not allow derivatives to be used for speculative purposes. Derivatives that we use are primarily foreign currency forward contracts and interest rate swaps. Our derivative activities are subject to the management, direction, and control of our senior financial officers. Risk management practices, including the use of financial derivative instruments, are presented to our Board of Directors at least annually.

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

Foreign Currency Exchange Rate Risk

We conduct a significant portion of our business in currencies other than the U.S. dollar. Our subsidiaries generally use the local currency as their functional currency for paying labor and other operating costs. Conversely, revenues for some of these foreign subsidiaries are derived from client contracts that are invoiced and collected in a different currency, principally in U.S. dollars, as well as other currencies such as Euro, British pound sterling, or Australian dollars. To hedge against the risk of fluctuations in our subsidiaries' functional currency, we have contracted with financial institutions to acquire (utilizing forward contracts) the functional currency of the foreign subsidiary at a fixed counterparty exchange rate at specific dates in the future. As of June 30, 2015, our forward contracts all mature within the next eighteen months.

Interest Rate Risk

Interest rate movements create a degree of risk by affecting the amount of our interest payments. Our practice is to use interest rate swap agreements to manage our exposure to interest rate changes.

In connection with the Senior Secured Credit Facility dated January 30, 2007, we entered into an interest rate swap to convert $400,000 (reduced to $350,000 on March 31, 2009) of our floating rate debt into fixed rate debt. We elected not to designate this swap for hedge accounting treatment. On November 28, 2011 we amended the interest rate swap agreement to extend the term through December 31, 2016 and decreased the notional amount to $175,000 as of March 31, 2012. The fair value of this interest rate swap is classified as part of Accrued liabilities and other of $3,185 and $3,292 and as Other noncurrent liabilities of $1,072 and $1,680 as of June 30, 2015 and December 31, 2014, respectively.

For the three and six months ended June 30, 2015, we recorded losses of $902 and $1,803 for settled interest payments, compared to losses of $921 and $1,826 for the three and six months ended June 30, 2014. Additionally, there were non-cash mark-to-market valuation increases in the liability of $291 and $1,088 for the three and six months ended June 30, 2015, compared to increases of $743 and $924 for the same periods in 2014. These amounts are reflected in Interest and other financing costs, net.

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

Fair Values in the Condensed Consolidated Balance Sheets



	Derivative Assets					Derivative Liabilities
		June 30, 2015		December 31, 2014			June 30, 2015		December 31, 2014
	Balance Sheet Classification	Fair Value		Fair Value		Balance Sheet Classification	Fair Value		Fair Value
Derivatives designated as hedging instruments
Foreign exchange contracts	Prepaids and other current assets	$	613	$	1,108	Accrued liabilities and other	$	2,843	$	3,539
Foreign exchange contracts	Other noncurrent assets	—		—		Other noncurrent liabilities	316		—
Total		$	613	$	1,108		$	3,159	$	3,539
Derivatives not designated as hedging instruments
Interest rate contract - ST	Prepaids and other current assets	$	—	$	—	Accrued liabilities and other	$	3,185	$	3,292
Interest rate contract - LT	Other noncurrent assets	—		—		Other noncurrent liabilities	1,072		1,680
Foreign exchange contracts	Prepaids and other current assets	359		469		Accrued liabilities and other	1,160		1,851
Foreign exchange contracts	Other noncurrent assets	—		—		Other noncurrent liabilities	131		—
Total		$	359	$	469		$	5,548	$	6,823
Total derivatives		$	972	$	1,577		$	8,707	$	10,362

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

The Effect of Derivative Instruments on the Condensed Consolidated Statements of Comprehensive Loss



Derivatives in Cash Flow Hedging Relationships	Amount of (Loss) or Gain Recognized in OCI on Derivative (Effective Portion)					Location of Loss Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of (Loss) or Gain Reclassified from Accumulated OCI into Income
	Three Months Ended June 30,						Three Months Ended June 30,
	2015			2014			2015			2014
Foreign exchange contracts	$	(2,137	)	$	1,256	COS and SG&A	$	(410	)	$	(1,492	)
Total	$	(2,137	)	$	1,256		$	(410	)	$	(1,492	)

Derivatives in Cash Flow Hedging Relationships	Amount of (Loss) or Gain Recognized in OCI on Derivative (Effective Portion)					Location of Loss Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of (Loss) or Gain Reclassified from Accumulated OCI into Income
	Six Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Foreign exchange contracts	$	(421	)	$	265	COS and SG&A	$	(323	)	$	(3,491	)
Total	$	(421	)	$	265		$	(323	)	$	(3,491	)

For the three and six months ended June 30, 2015 we recorded losses of $246 and $194, respectively, compared to losses of $895 and $2,094, respectively, for the same periods in 2014 to Cost of services. For the three and six months ended June 30, 2015, we recorded losses of $164 and $129, respectively, compared to losses of $597 and $1,397 for the same periods in 2014 to SG&A for the effective portion of settled hedge contracts. We expect unrealized losses of $2,172 will be reclassified from Accumulated other comprehensive loss (“AOCL”) to Cost of services and SG&A over the next twelve months. However, this amount and other future reclassifications from AOCL will fluctuate with movements in the underlying market price of the forward contracts. The estimates of fair value are based on applicable and commonly used pricing models and prevailing financial market information as of June 30, 2015.

For the three and six months ended June 30, 2015 we recognized gains on foreign currency transactions related to the ineffective portion of the derivative instruments of $0 and $0, respectively, compared to gains of $0 and $3, respectively, for the same periods in 2014.



Derivatives Not Designated as Hedging Instruments	Location of (Loss) or Gain Recognized in Income on Derivative	Amount of (Loss) or Gain Recognized in Income on Derivative					Amount of (Loss) or Gain Recognized in Income on Derivative
		Three Months Ended June 30,					Six Months Ended June 30,
		2015			2014		2015			2014
Foreign exchange contracts	COS and SG&A	$	(650	)	$	200	$	8		$	223
Foreign exchange contracts	Foreign currency transactions	(241		)	963		(637		)	1,201
Total		$	(891	)	$	1,163	$	(629	)	$	1,424

For the three and six months ended June 30, 2015, we recorded losses of $390 and gains of $5, respectively, compared to gains of $120 and $134, respectively, for the same periods in 2014 to Cost of services for derivatives not designated as hedging contracts. For the three and six months ended June 30, 2015, we recorded losses of $260 and gains of $3, respectively, compared to gains of $80 and $89, respectively, for the same periods in 2014 to SG&A for derivatives not designated as hedging contracts.

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

Current Contracts

At June 30, 2015, the Company had the following outstanding financial contracts that were entered to hedge foreign exchange and interest rate risk:



Derivatives in Cash Flow Relationship	Notional Amount
Interest rate contract	$	175,000
Foreign exchange contracts	143,189


11.	Fair Value Measurements

The fair values of Cash and cash equivalents, short-term investments, trade receivables, and trade payables are valued as Level 1 items. The carrying value of these assets and liabilities approximates their fair value due to the short-term maturities. The terms of the Senior Secured Credit Facility, Senior Secured Notes, and Senior Notes include debt with variable and fixed interest rates, totaling $743,419 and $746,016 at June 30, 2015 and December 31, 2014, respectively. The estimated fair value of such debt was $717,000 and $676,000 at June 30, 2015 and December 31, 2014, respectively. The fair value of debt with fixed interest rates was determined using the quoted market prices of debt instruments with similar terms and maturities which are considered Level 2 inputs. The fair value of debt with variable interest rates was also measured using Level 2 inputs. These inputs included good faith estimates of the market value for the particular debt instrument, which represent the amount an independent market participant would provide, based upon market observations and other factors relevant under the circumstances.

U.S. GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified into a hierarchy by the inputs used to perform the fair value calculation as follows:

Level 1 – Fair value based on unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2 – Modeled fair value with model inputs that are all observable market values.

Level 3 – Modeled fair value with at least one model input that is not an observable market value.

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

The following tables summarize the value of financial instruments by the pricing levels defined above as of June 30, 2015 and December 31, 2014. There were no transfers between pricing levels for the six month period ended June 30, 2015.



	Fair Value Measurements at June 30, 2015
	Total		Level 1		Level 2		Level 3
Assets
Foreign currency forward contracts	$	972	$	—	$	972	$	—
Total	$	972	$	—	$	972	$	—
Liabilities
Foreign currency forward contracts	$	4,450	$	—	$	4,450	$	—
Interest rate derivative instrument	4,257		—		4,257		—
Total	$	8,707	$	—	$	8,707	$	—



	Fair Value Measurements at December 31, 2014
	Total		Level 1		Level 2		Level 3
Assets
Foreign currency forward contracts	$	1,577	$	—	$	1,577	$	—
Total	$	1,577	$	—	$	1,577	$	—
Liabilities
Foreign currency forward contracts	$	5,390	$	—	$	5,390	$	—
Interest rate derivative instrument	4,972		—		4,972		—
Total	$	10,362	$	—	$	10,362	$	—

We value derivatives based on current market prices of comparable instruments or, if none are available, on pricing models or formulas using current market and model assumptions. Our interest rate derivative instrument is a pay-fixed, receive-variable, interest rate swap based on LIBOR swap rate. The LIBOR swap rate is observable at commonly quoted intervals for the full term of the swap and therefore is considered a Level 2 item. Our foreign currency forward contracts are contracts to buy foreign currency at a fixed rate for delivery on a specified future date or period. The foreign exchange rate is observable for the full term of the swap and is therefore also considered a Level 2 item. The fair value measurement of a liability must reflect the nonperformance risk of the entity and the counterparty. Therefore, the impact of the Company's and counterparty's creditworthiness have also been factored into the fair value measurement of these derivative instruments.

We measure our intangible assets at fair value on a nonrecurring basis. These assets are classified in Level 3 of the fair value hierarchy. We test all existing Goodwill and other indefinite-lived intangibles (trademark and trade name) for impairment at least annually and more frequently if circumstances indicate that the carrying amount exceeds fair value. We conduct annual impairment tests as of December 31.

We estimate the fair values of Goodwill and other indefinite-lived intangibles utilizing multiple measurement techniques performed. The estimation is primarily determined based on an estimate of future cash flows (income approach) discounted at a market derived weighted average cost of capital. The income approach has been determined to be the most representative because our equity does not have an active trading market. Other unobservable inputs used in these valuations include management's cash flow projections and estimated terminal growth rates. The valuation of indefinite-lived intangible assets also includes an unobservable input for royalty rate, which is based on rates used by comparable industries. We then use a public company model (which uses peer group valuation metrics) to confirm the measurement.

No impairment charges related to Goodwill and Other intangible assets were recorded during the three and six months ended June 30, 2015 and 2014.

Long-lived assets are measured at fair value on a non-recurring basis and are classified in Level 3 of the fair value hierarchy. The fair value is estimated utilizing unobservable inputs, including appraisals on real estate as well as evaluations of the marketability and potential relocation of other assets in similar condition and similar market areas. We analyze our long-lived assets on a quarterly basis for any triggering events that would cause us to perform an impairment test. No impairment charges related to long-lived assets were recorded during the three and six months ended June 30, 2015 and June 30, 2014.

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)


12.	Accumulated Other Comprehensive Loss

Changes in Accumulated Other Comprehensive Loss by Component ^(a)



	For the Three Months Ended June 30, 2015
	Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Items			Foreign Currency Items			Total
Beginning balance	$	(4,867	)	$	(2,592	)	$	(52,285	)	$	(59,744	)
Other comprehensive loss before reclassifications, net of tax expense of $247, $0, $0, and $247, respectively	(2,384		)	—			(2		)	(2,386		)
Amounts reclassified from accumulated other comprehensive loss, net of tax of $0	410			52			—			462
Net current-period other comprehensive (loss) income	(1,974		)	52			(2		)	(1,924		)
Ending balance	$	(6,841	)	$	(2,540	)	$	(52,287	)	$	(61,668	)



	For the Three Months Ended June 30, 2014
	Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Items			Foreign Currency Items			Total
Beginning balance	$	(7,899	)	$	(1,597	)	$	(39,355	)	$	(48,851	)
Other comprehensive (loss) income before reclassifications, net of tax expense of $1,265, $0, $0, and $1,265, respectively	(9		)	—			2,761			2,752
Amounts reclassified from accumulated other comprehensive loss, net of tax of $0	1,492			37			—			1,529
Net current-period other comprehensive income	1,483			37			2,761			4,281
Ending balance	$	(6,416	)	$	(1,560	)	$	(36,594	)	$	(44,570	)

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)



	For the Six Months Ended June 30, 2015
	Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Items			Foreign Currency Items			Total
Beginning balance	$	(6,116	)	$	(2,612	)	$	(48,458	)	$	(57,186	)
Other comprehensive loss before reclassifications, net of tax expense of $627, $0, $0, and $627, respectively	(1,048		)	(33		)	(3,829		)	(4,910		)
Amounts reclassified from accumulated other comprehensive loss, net of tax of $0	323			105			—			428
Net current-period other comprehensive (loss) income	(725		)	72			(3,829		)	(4,482		)
Ending balance	$	(6,841	)	$	(2,540	)	$	(52,287	)	$	(61,668	)



	For the Six Months Ended June 30, 2014
	Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Items			Foreign Currency Items			Total
Beginning balance	$	(12,325	)	$	(1,632	)	$	(40,007	)	$	(53,964	)
Other comprehensive (loss) income before reclassifications, net of tax expense of $1,646, $0, $0, and $1,646, respectively	(1,381		)	—			3,413			2,032
Amounts reclassified from accumulated other comprehensive loss, net of tax benefit of $3,799, $0, $0, and $3,799, respectively	7,290			72			—			7,362
Net current-period other comprehensive income	5,909			72			3,413			9,394
Ending balance	$	(6,416	)	$	(1,560	)	$	(36,594	)	$	(44,570	)

(a)Amounts in parentheses indicate debits to Accumulated other comprehensive loss.

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

Reclassifications out of Accumulated Other Comprehensive Loss ^(a)



For the Three Months Ended June 30, 2015
Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss			Affected Line Item in the Statement Where Net Income is Presented
Gains and losses on cash flow hedges
Foreign exchange contracts	$	(246	)	COS
	(164		)	SG&A
	(410		)	Total before tax
	—			Tax (expense) or benefit
	$	(410	)	Net of tax

Amortization of defined benefit pension items
Prior service costs	$	(43	)	SG&A
Actuarial gains	(9		)	SG&A
	(52		)	Total before tax
	—			Tax (expense) or benefit
	$	(52	)	Net of tax

Total reclassifications for the period	$	(462	)	Net of tax



For the Three Months Ended June 30, 2014
Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss			Affected Line Item in the Statement Where Net Income is Presented
Gains and losses on cash flow hedges
Foreign exchange contracts	$	(895	)	COS
	(597		)	SG&A
	(1,492		)	Total before tax
	—			Tax (expense) or benefit
	$	(1,492	)	Net of tax

Amortization of defined benefit pension items
Prior service costs	$	(39	)	SG&A
Actuarial gains	2			SG&A
	(37		)	Total before tax
	—			Tax (expense) or benefit
	$	(37	)	Net of tax

Total reclassifications for the period	$	(1,529	)	Net of tax

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)



For the Six Months Ended June 30, 2015
Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss			Affected Line Item in the Statement Where Net Income is Presented
Gains and losses on cash flow hedges
Foreign exchange contracts	$	(194	)	COS
	(129		)	SG&A
	(323		)	Total before tax
	—			Tax (expense) or benefit
	$	(323	)	Net of tax

Amortization of defined benefit pension items
Prior service costs	$	(87	)	SG&A
Actuarial gains	(18		)	SG&A
	(105		)	Total before tax
	—			Tax (expense) or benefit
	$	(105	)	Net of tax

Total reclassifications for the period	$	(428	)	Net of tax



For the Six Months Ended June 30, 2014
Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss			Affected Line Item in the Statement Where Net Income is Presented
Gains and losses on cash flow hedges
Foreign exchange contracts	$	(2,094	)	COS
	(1,397		)	SG&A
	(3,491		)	Total before tax
	(3,799		)	Tax (expense) or benefit
	$	(7,290	)	Net of tax

Amortization of defined benefit pension items
Prior service costs	$	(76	)	SG&A
Actuarial gains	4			SG&A
	(72		)	Total before tax
	—			Tax (expense) or benefit
	$	(72	)	Net of tax

Total reclassifications for the period	$	(7,362	)	Net of tax

(a)Amounts in parentheses indicate debits to profit/loss.


13.	Operating Segment and Geographical Information

Our two reportable segments, Americas and EMEA, are organized by geographic operating units. The segment information presented below reflects the internal management reporting that the chief operating decision maker ("CODM") uses to evaluate

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

segment performance and allocate resources, which is solely based on segment revenues, gross margin (segment revenues less segment cost of sales), segment SG&A expense, and the segment operating results as calculated below.

Certain Revenues, Costs of services, and SG&A amounts are excluded from the CODM evaluation of our segments, as the CODM believes they are not representative of segment performance. In addition, the CODM does not review assets or the associated depreciation and amortization at the reportable segment level. Therefore, we do not allocate these items to our reportable segments or present these items at the segment level in our internal management reporting. These unallocated amounts, as well as other income and expenses that are managed at the corporate level, are presented below in the reconciliation of segment operating results to our consolidated Loss before income taxes.

We have modified previously reported SG&A for the three and six months ended June 30, 2014 to exclude the net operating results of a certain site that was closed during the second quarter of 2014.

Information about the Company’s reportable segments is as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Americas
Revenues	$	214,084		$	212,783		$	430,882		$	423,611
Gross margin	79,346			75,106			159,243			151,258
SG&A	46,961			47,894			91,943			96,003
Segment operating results	$	32,385		$	27,212		$	67,300		$	55,255
GM%	37.1		%	35.3		%	37.0		%	35.7		%
SG&A%	21.9		%	22.5		%	21.3		%	22.7		%
Op Results%	15.1		%	12.8		%	15.6		%	13.0		%



	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
EMEA
Revenues	$	129,229		$	135,937		$	267,023		$	275,567
Gross margin	32,739			36,129			67,709			73,153
SG&A	25,676			29,847			52,589			61,168
Segment operating results	$	7,063		$	6,282		$	15,120		$	11,985
GM%	25.3		%	26.6		%	25.4		%	26.5		%
SG&A%	19.9		%	22.0		%	19.7		%	22.2		%
Op Results%	5.5		%	4.6		%	5.7		%	4.3		%

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)



Reconciliation of Segment operating results to consolidated Loss before income taxes:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Segment operating results:
Americas	$	32,385		$	27,212		$	67,300		$	55,255
EMEA	7,063			6,282			15,120			11,985
Total	39,448			33,494			82,420			67,240

Corporate and other⁽¹⁾	15,017			9,351			26,171			21,478
Depreciation and amortization	8,855			8,548			17,939			17,483
Restructuring and exit charges	1,002			12,532			1,345			15,804
Other operating expense (income)⁽²⁾	(1,734		)	455			4,962			179
Operating income	16,308			2,608			32,003			12,296
Interest and other financing costs, net	21,094			21,423			42,714			42,989
Loss before income taxes	$	(4,786	)	$	(18,815	)	$	(10,711	)	$	(30,693	)

(1) Represents other operating income and expenses not allocated to segments for internal management reporting purposes, including certain corporate employee compensation, corporate overhead, stock-based compensation, and the net operating results of disposed subsidiaries, which are not material to segment operating results.

(2) Includes amounts from the Condensed Consolidated Statements of Comprehensive Loss for (Gain) loss on foreign currency transactions and Other (income) expense, net.

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)


14.	Supplemental Condensed Consolidated Financial Information

The following guarantor financial information is presented to comply with U.S. SEC disclosure requirements, specifically Rule 3-10 of Regulation S-X.

The Senior Secured Notes and Senior Notes are guaranteed jointly and severally, and in the case of the Senior Secured Notes, on a senior secured basis, by the Issuers' parent company, SITEL Worldwide, and by each of SITEL Worldwide's existing and future direct and indirect domestic subsidiaries that are 100% owned by SITEL Worldwide that are guarantors under the Senior Secured Credit Facility (the “Subsidiary Guarantors”). The guarantees are not full and unconditional because Subsidiary Guarantors can be released and relieved of their obligations under certain customary circumstances contained in the indenture governing the Senior Notes and Senior Secured Notes. These circumstances include the following, so long as other applicable provisions of the indentures are adhered to: any sale or other disposition of all or substantially all of the assets of any Subsidiary Guarantors, any sale or other disposition of capital stock of any Subsidiary Guarantors, or designation of any restricted subsidiary that is a Subsidiary Guarantor as an unrestricted subsidiary.

The Condensed Consolidating Statements of Comprehensive (Loss) Income are presented net of intercompany activity. The following supplemental financial information sets forth, on a consolidating basis based on the equity method of accounting, balance sheets, statements of comprehensive income and loss, and statements of cash flows for the Company, the Subsidiary Guarantors, and the Company's non-guarantor subsidiaries.

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

SITEL Worldwide Corporation

Condensed Consolidating Balance Sheet

June 30, 2015

(in thousands of U.S. dollars)



	Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total Consolidated
Assets
Current assets
Cash and cash equivalents	$	—		$	4,289		$	1,406		$	1,812		$	—		$	7,507
Accounts receivable (net of allowance for doubtful accounts)	—			—			119,815			134,164			—			253,979
Prepaids and other current assets	274,832			227			299,004			373,572			(889,579		)	58,056
Total current assets	274,832			4,516			420,225			509,548			(889,579		)	319,542
Property and equipment, net	2			—			43,440			45,535			—			88,977
Goodwill	—			—			16,690			101,017			—			117,707
Other intangible assets, net	—			—			16,104			20,633			—			36,737
Deferred income taxes	—			—			750			26,510			—			27,260
Investments in affiliates	(504,873		)	570,852			196,843			—			(262,822		)	—
Other noncurrent assets	3,706			91,008			42,844			24,324			(128,615		)	33,267
Total assets	$	(226,333	)	$	666,376		$	736,896		$	727,567		$	(1,281,016	)	$	623,490
Liabilities and Stockholders' (Deficit) Equity
Current liabilities
Accounts payable	$	481		$	—		$	8,346		$	15,610		$	—		$	24,437
Accrued payroll and benefits	—			—			14,831			65,706			—			80,537
Accrued liabilities and other	132,532			494,042			127,007			210,884			(889,579		)	74,886
Income taxes payable	—			—			9			4,307			—			4,316
Current portion of long-term debt	—			22,000			—			7,147			—			29,147
Current portion of capital lease obligations	—			—			2,865			459			—			3,324
Total current liabilities	133,013			516,042			153,058			304,113			(889,579		)	216,647
Long-term debt	—			670,739			—			43,533			—			714,272
Capital lease obligations	—			—			2,172			518			—			2,690
Deferred income taxes	—			—			—			5,938			—			5,938
Other noncurrent liabilities	—			1,073			10,814			160,017			(128,615		)	43,289
Total liabilities	133,013			1,187,854			166,044			514,119			(1,018,194		)	982,836
Series B PIK preferred stock	79,441			—			—			—			—			79,441
Series C PIK preferred stock, net of beneficial conversion feature	75,172			—			—			—			—			75,172
Series D PIK preferred stock	88,332			—			—			—			—			88,332
Stockholders' (deficit) equity
Subsidiary exchangeable preferred stock	2,665			—			—			—			—			2,665
Common stock	1,278			—			536			168,965			(169,501		)	1,278
Additional paid-in capital	317,988			105,786			668,880			309,794			(1,084,460		)	317,988
Accumulated deficit	(850,931		)	(567,180		)	(40,354		)	(263,545		)	871,079			(850,931		)
Accumulated other comprehensive (loss) income, net of tax	(61,668		)	(60,084		)	(58,210		)	(1,766		)	120,060			(61,668		)
Treasury shares, at cost	(11,623		)	—			—			—			—			(11,623		)
Total stockholders' (deficit) equity	(602,291		)	(521,478		)	570,852			213,448			(262,822		)	(602,291		)
Total liabilities and stockholders' (deficit) equity	$	(226,333	)	$	666,376		$	736,896		$	727,567		$	(1,281,016	)	$	623,490

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

SITEL Worldwide Corporation

Condensed Consolidating Balance Sheet

December 31, 2014

(in thousands of U.S. dollars)



	Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total Consolidated
Assets
Current assets
Cash and cash equivalents	$	—		$	—		$	287		$	8,570		$	—		$	8,857
Accounts receivable (net of allowance for doubtful accounts)	—			—			136,215			143,012			—			279,227
Prepaids and other current assets	288,834			414			233,109			356,209			(821,855		)	56,711
Total current assets	288,834			414			369,611			507,791			(821,855		)	344,795
Property and equipment, net	39			—			41,247			46,068			—			87,354
Goodwill	—			—			16,690			101,018			—			117,708
Other intangible assets, net	—			—			16,104			20,811			—			36,915
Deferred income taxes	—			—			750			28,201			—			28,951
Investments in affiliates	(497,564		)	537,316			189,430			—			(229,182		)	—
Other noncurrent assets	1,655			92,835			42,626			24,452			(127,622		)	33,946
Total assets	$	(207,036	)	$	630,565		$	676,458		$	728,341		$	(1,178,659	)	$	649,669
Liabilities and Stockholders' (Deficit) Equity
Current liabilities
Accounts payable	$	282		$	—		$	10,533		$	11,485		$	—		$	22,300
Accrued payroll and benefits	—			—			15,472			59,565			—			75,037
Accrued liabilities and other	133,234			441,962			97,256			235,116			(821,855		)	85,713
Income taxes payable	163			—			—			6,358			—			6,521
Current portion of capital lease obligations	—			—			2,666			286			—			2,952
Total current liabilities	133,679			441,962			125,927			312,810			(821,855		)	192,523
Long-term debt	—			701,149			—			44,867			—			746,016
Capital lease obligations	—			—			3,104			168			—			3,272
Deferred income taxes	—			—			—			5,919			—			5,919
Other noncurrent liabilities	—			1,680			10,111			158,485			(127,622		)	42,654
Total liabilities	133,679			1,144,791			139,142			522,249			(949,477		)	990,384
Series B PIK preferred stock	75,103			—			—			—			—			75,103
Series C PIK preferred stock, net of beneficial conversion feature	69,273			—			—			—			—			69,273
Series D PIK preferred stock	81,869			—			—			—			—			81,869
Stockholders' (deficit) equity
Subsidiary exchangeable preferred stock	2,665			—			—			—			—			2,665
Common stock	1,277			—			536			168,965			(169,501		)	1,277
Additional paid-in capital	334,657			105,786			668,880			309,794			(1,084,460		)	334,657
Accumulated deficit	(836,750		)	(563,223		)	(76,572		)	(273,885		)	913,680			(836,750		)
Accumulated other comprehensive (loss) income, net of tax	(57,186		)	(56,789		)	(55,528		)	1,218			111,099			(57,186		)
Treasury shares, at cost	(11,623		)	—			—			—			—			(11,623		)
Total stockholders' (deficit) equity	(566,960		)	(514,226		)	537,316			206,092			(229,182		)	(566,960		)
Total liabilities and stockholders' (deficit) equity	$	(207,036	)	$	630,565		$	676,458		$	728,341		$	(1,178,659	)	$	649,669

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

SITEL Worldwide Corporation

Condensed Consolidating Statement of Comprehensive (Loss) Income

Three Months Ended June 30, 2015

(in thousands of U.S. dollars)



	Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total Consolidated
Revenues	$	—		$	—		$	111,100		$	232,230		$	—		$	343,330
Operating expenses
Costs of services*	—			—			70,147			161,640			—			231,787
Selling, general, and administrative expenses*	7,011			39			23,759			56,303			—			87,112
Depreciation and amortization of property and equipment	(38		)	—			3,803			5,049			—			8,814
Amortization of intangible assets	—			—			—			41			—			41
Restructuring and exit charges	—			—			104			898			—			1,002
Loss (gain) on foreign currency transactions	75			65			(1,020		)	(620		)	—			(1,500		)
Other, net	—			—			(200		)	(34		)	—			(234		)
Operating (loss) income	(7,048		)	(104		)	14,507			8,953			—			16,308
Interest and other financing costs, net	—			19,189			1,477			428			—			21,094
Equity in earnings of subsidiaries	(856		)	(19,536		)	(6,535		)	—			26,927			—
(Loss) income before income taxes	(6,192		)	243			19,565			8,525			(26,927		)	(4,786		)
Income tax provision	—			—			29			1,377			—			1,406
Net (loss) income	(6,192		)	243			19,536			7,148			(26,927		)	(6,192		)
Other comprehensive (loss) income
Foreign currency translation adjustments, net of tax of $0	(2		)	(228		)	(387		)	(2,206		)	2,821			(2		)
Unrealized (loss) gain on derivative valuation, net of tax expense of $247	(1,974		)	(1,974		)	(1,974		)	(1,783		)	5,731			(1,974		)
Change related to pension liability, net of tax benefit of $0	52			52			53			52			(157		)	52
Comprehensive (loss) income	$	(8,116	)	$	(1,907	)	$	17,228		$	3,211		$	(18,532	)	$	(8,116	)

*Exclusive of Depreciation and amortization of property and equipment

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

SITEL Worldwide Corporation

Condensed Consolidating Statement of Comprehensive (Loss) Income

Six Months Ended June 30, 2015

(in thousands of U.S. dollars)



	Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total Consolidated
Revenues	$	—		$	—		$	228,221		$	469,702		$	—		$	697,923
Operating expenses
Costs of services*	—			—			143,304			327,922			—			471,226
Selling, general, and administrative expenses*	11,942			79			47,105			111,322			—			170,448
Depreciation and amortization of property and equipment	(33		)	—			7,787			10,077			—			17,831
Amortization of intangible assets	—			—			—			108			—			108
Restructuring and exit charges	—			—			177			1,168			—			1,345
(Gain) loss on foreign currency transactions	(545		)	1,362			(2,152		)	6,660			—			5,325
Other, net	—			—			(200		)	(163		)	—			(363		)
Operating (loss) income	(11,364		)	(1,441		)	32,200			12,608			—			32,003
Interest and other financing costs, net	7			38,733			3,000			974			—			42,714
Equity in earnings of subsidiaries	2,810			(36,217		)	(7,036		)	—			40,443			—
(Loss) income before income taxes	(14,181		)	(3,957		)	36,236			11,634			(40,443		)	(10,711		)
Income tax provision	—			—			19			3,451			—			3,470
Net (loss) income	(14,181		)	(3,957		)	36,217			8,183			(40,443		)	(14,181		)
Other comprehensive (loss) income
Foreign currency translation adjustments, net of tax of $0	(3,829		)	(2,642		)	(2,030		)	(2,016		)	6,688			(3,829		)
Unrealized (loss) gain on derivative valuation, net of tax expense of $627	(725		)	(725		)	(725		)	(1,040		)	2,490			(725		)
Change related to pension liability, net of tax of $0	72			72			73			72			(217		)	72
Comprehensive (loss) income	$	(18,663	)	$	(7,252	)	$	33,535		$	5,199		$	(31,482	)	$	(18,663	)

*Exclusive of Depreciation and amortization of property and equipment

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

SITEL Worldwide Corporation

Condensed Consolidating Statement of Comprehensive (Loss) Income

Three Months Ended June 30, 2014

(in thousands of U.S. dollars)



	Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total Consolidated
Revenues	$	—		$	—		$	101,914		$	246,833		$	—		$	348,747
Operating expenses
Costs of services*	—			—			68,692			168,488			—			237,180
Selling, general, and administrative expenses*	4,379			40			22,520			60,485			—			87,424
Depreciation and amortization of property and equipment	61			—			2,877			5,610			—			8,548
Restructuring and exit charges	—			—			280			12,252			—			12,532
(Gain) loss on foreign currency transactions	(247		)	(477		)	(748		)	2,072			—			600
Other, net	(5		)	6			(71		)	(75		)	—			(145		)
Operating (loss) income	(4,188		)	431			8,364			(1,999		)	—			2,608
Interest and other financing costs, net	—			19,063			1,408			952			—			21,423
Equity in earnings of subsidiaries	17,513			(554		)	7,413			—			(24,372		)	—
Loss before income taxes	(21,701		)	(18,078		)	(457		)	(2,951		)	24,372			(18,815		)
Income tax (benefit) provision	(69		)	—			(1,011		)	3,897			—			2,817
Net (loss) income	(21,632		)	(18,078		)	554			(6,848		)	24,372			(21,632		)
Other comprehensive income (loss)
Foreign currency translation adjustments, net of tax of $0	2,761			1,949			2,302			2,425			(6,676		)	2,761
Unrealized gain (loss) on derivative valuation, net of tax expense of $1,265	1,483			1,486			1,486			(15		)	(2,957		)	1,483
Change related to pension liability, net of tax of $0	37			37			37			37			(111		)	37
Comprehensive (loss) income	$	(17,351	)	$	(14,606	)	$	4,379		$	(4,401	)	$	14,628		$	(17,351	)

*Exclusive of Depreciation and amortization of property and equipment

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

SITEL Worldwide Corporation

Condensed Consolidating Statement of Comprehensive (Loss) Income

Six Months Ended June 30, 2014

(in thousands of U.S. dollars)



	Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total Consolidated
Revenues	$	—		$	—		$	210,872		$	488,354		$	—		$	699,226
Operating expenses
Costs of services*	—			—			139,027			335,083			—			474,110
Selling, general, and administrative expenses*	12,705			78			46,343			120,228			—			179,354
Depreciation and amortization of property and equipment	148			—			5,846			10,966			—			16,960
Amortization of intangible assets	—			—			—			523			—			523
Restructuring and exit charges	—			—			465			15,339			—			15,804
(Gain) loss on foreign currency transactions	(147		)	(377		)	(2,212		)	2,926			—			190
Other, net	(5		)	6			31			(43		)	—			(11		)
Operating (loss) income	(12,701		)	293			21,372			3,332			—			12,296
Interest and other financing costs, net	—			38,491			2,766			1,732			—			42,989
Equity in earnings of subsidiaries	25,728			(11,410		)	4,678			—			(18,996		)	—
(Loss) income before income taxes	(38,429		)	(26,788		)	13,928			1,600			18,996			(30,693		)
Income tax provision	2,019			—			2,518			5,218			—			9,755
Net (loss) income	(40,448		)	(26,788		)	11,410			(3,618		)	18,996			(40,448		)
Other comprehensive income
Foreign currency translation adjustments, net of tax of $0	3,413			3,427			3,780			3,083			(10,290		)	3,413
Unrealized gain on derivative valuation, net of tax benefit of $2,153	5,909			5,909			5,909			176			(11,994		)	5,909
Change related to pension liability, net of tax of $0	72			72			72			72			(216		)	72
Comprehensive (loss) income	$	(31,054	)	$	(17,380	)	$	21,171		$	(287	)	$	(3,504	)	$	(31,054	)

*Exclusive of Depreciation and amortization of property and equipment

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

SITEL Worldwide Corporation

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2015

(in thousands of U.S. dollars)



	Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total Consolidated
Cash flows from operating activities
Net (loss) income	$	(14,181	)	$	(3,957	)	$	36,217		$	8,183		$	(40,443	)	$	(14,181	)
Undistributed equity in earnings of subsidiaries	2,810			(36,217		)	(7,036		)	—			40,443			—
Adjustments to reconcile Net (loss) income to net cash flows relating to operating activities:
Depreciation and amortization (including intangible assets)	(33		)	—			7,787			10,185			—			17,939
Deferred income taxes	—			—			(627		)	356			—			(271		)
Non-cash derivative activity	—			1,336			190			(767		)	—			759
Amortization of debt issue costs and original issue discount	—			2,702			—			93			—			2,795
Other non-cash items, net	(32		)	—			(915		)	(4,691		)	—			(5,638		)
Change in book overdrafts	—			—			(473		)	(1,416		)	—			(1,889		)
Changes in operating assets and liabilities, net	11,436			51,928			(23,582		)	(16,840		)	—			22,942
Net cash provided by (used in) operating activities	—			15,792			11,561			(4,897		)	—			22,456
Cash flows from investing activities
Purchases of property and equipment	—			—			(9,268		)	(9,437		)	—			(18,705		)
Proceeds from disposition of property and equipment	—			—			307			15			—			322
Net cash used in investing activities	—			—			(8,961		)	(9,422		)	—			(18,383		)
Cash flows from financing activities
Payments on long-term debt and capital lease obligations	—			(256,700		)	(1,481		)	(22,312		)	—			(280,493		)
Proceeds from long-term debt	—			247,000			—			29,826			—			276,826
Payment of interest rate swap, net	—			(1,803		)	—			—			—			(1,803		)
Net cash (used in) provided by financing activities	—			(11,503		)	(1,481		)	7,514			—			(5,470		)
Effect of exchange rate on cash and cash equivalents	—			—			—			47			—			47
Net change in cash and cash equivalents	—			4,289			1,119			(6,758		)	—			(1,350		)
Cash and cash equivalents
Beginning of period	—			—			287			8,570			—			8,857
End of period	$	—		$	4,289		$	1,406		$	1,812		$	—		$	7,507

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)

SITEL Worldwide Corporation

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2014

(in thousands of U.S. dollars)



	Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total Consolidated
Cash flows from operating activities
Net (loss) income	$	(40,448	)	$	(26,788	)	$	11,410		$	(3,618	)	$	18,996		$	(40,448	)
Undistributed equity in earnings of subsidiaries	25,728			(11,410		)	4,678			—			(18,996		)	—
Adjustments to reconcile Net (loss) income to net cash flows relating to operating activities:
Depreciation and amortization (including intangible assets)	148			—			5,846			11,489			—			17,483
Deferred income taxes	1,980			—			2,153			564			—			4,697
Non-cash derivative activity	—			469			2,585			782			—			3,836
Amortization of debt issue costs and original issue discount	—			2,516			—			109			—			2,625
Other non-cash items, net	119			—			(987		)	283			—			(585		)
Change in book overdrafts	—			—			(2,501		)	(637		)	—			(3,138		)
Changes in operating assets and liabilities, net	(62,342		)	55,758			(18,273		)	19,782			—			(5,075		)
Net cash (used in) provided by operating activities	(74,815		)	20,545			4,911			28,754			—			(20,605		)
Cash flows from investing activities
Purchases of property and equipment	(5		)	—			(4,712		)	(12,030		)	—			(16,747		)
Proceeds from disposition of property and equipment	—			—			1,199			9			—			1,208
Net cash used in investing activities	(5		)	—			(3,513		)	(12,021		)	—			(15,539		)
Cash flows from financing activities
Proceeds from issuance of Series D Preferred Stock, net	74,820			—			—			—			—			74,820
Payments on long-term debt and capital lease obligations	—			(231,371		)	(690		)	(7,814		)	—			(239,875		)
Proceeds from long-term debt	—			213,371			—			7,330			—			220,701
Payment of interest rate swap, net	—			(1,826		)	—			—			—			(1,826		)
Payments of debt issue costs	—			(719		)	—			—			—			(719		)
Net cash provided by (used in) financing activities	74,820			(20,545		)	(690		)	(484		)	—			53,101
Effect of exchange rate on cash and cash equivalents	—			—			—			(272		)	—			(272		)
Net change in cash and cash equivalents	—			—			708			15,977			—			16,685
Cash and cash equivalents
Beginning of period	—			—			136			7,230			—			7,366
End of period	$	—		$	—		$	844		$	23,207		$	—		$	24,051

SITEL Worldwide Corporation

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)


15.	Subsequent Event

On July 10, 2015, the Company entered into a Merger Agreement. See Note 1 for information regarding the agreement.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(in thousands of U.S. dollars, except share and per share data)

Overview

We are one of the world's largest and most diversified providers of customer care outsourcing services. We offer our clients a wide array of services, including customer service, technical support, customer acquisition, retention and revenue generation services, and back office support. The majority of our customer care services are inbound and delivered telephonically, but we are increasingly asked to provide services through other communication channels, including email, online chat, IVR, and social media channels. We serve a broad range of industry end–markets, including financial services, technology, wireless, retail and consumer products, telecommunications, media and entertainment, energy and utilities, travel and transportation, Internet service providers, insurance, public sector, and healthcare. Sitel maintains global standards of excellence providing service through 108 customer experience centers and other facilities located in 21 countries and supporting client customers located in 62 countries across North America, South America, Europe, Africa and Asia Pacific in 40 languages. We have approximately 60,400 employees, with approximately 42,700 employees in the Americas and approximately 17,700 in EMEA. Home-based agents complement our global network of facilities and provide rapidly scalable services and access to unique skill sets, making Sitel a pioneer in customer experience innovation.

Due to the depth of our client relationships and expertise, we are well positioned to help clients holistically improve the experience of their customer with their brand, using the most appropriate channels and communication methods. We further strive to deliver value to our clients by reducing their operating costs, as well as increasing their revenue through improved customer satisfaction, increased retention, more effective sales interactions and turning cost centers, such as technical support, into profit centers.

Our geographic footprint and multi-lingual support capability aligns with growing demand from our clients that have global customer bases. Our offering of domestic, nearshore, and offshore contact centers and our Work@Home program allows us to provide customized client solutions, to service customers in a single country or across many different countries and at various price points. Our Global Operating System enables us to deliver consistent, high quality service throughout the world while our regionalized operating model allows us to quickly respond to customer needs.

Forward-Looking Statements

This report contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, which are based on the beliefs and assumptions of our management regarding, among other things, our plans, strategies and prospects, both business and financial. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning our possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions. These statements discuss potential risks and uncertainties; therefore, our actual future results could be materially different than those expressed in our forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date they were made. We do not undertake any obligation to make any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

unanticipated events, except as required by law, including the securities laws of the United States and rules and regulations of the SEC. See the discussion in the “Risk Factors” and “Caution Concerning Forward-Looking Statements” sections of the Company’s Annual Report on Form 10-K filed with the SEC on February 18, 2015. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements contained in the section entitled “Risk Factors” included in such Annual Report as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties.

Critical Accounting Policies and Estimates

Our discussion and analysis of results of operations and financial condition are based upon our Condensed Consolidated Financial Statements and the Notes thereto. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the amounts reported in the Condensed Consolidated Financial Statements and Notes thereto. Certain of our accounting policies are considered critical, due to the level of subjectivity and judgment necessary in applying these policies and because the impact of these estimates and assumptions on our financial condition and operating performance may be material. On an ongoing basis, we evaluate our estimates and judgments in these areas based on historic experience and other relevant factors. The estimates as of the date of the financial statements reflect our best judgment giving consideration to all currently available facts and circumstances. We believe our estimates and judgments are reasonable, however, actual results and the timing of the recognition of such amounts could differ from those estimates.

We have used methodologies that are consistent from year to year in all material respects. For details concerning these critical accounting policies and estimates, please refer to the audited Consolidated Financial Statements and the Notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on February 18, 2015. Any deviation from these policies or estimates could have a material impact on our Condensed Consolidated Financial Statements.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

Results of Operations

Three Months Ended June 30, 2015 Compared to Three Months Ended June 30, 2014

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and segment data therein. Results for interim periods may not be indicative of the results for the full years. The table below presents statement of operations data, including the amount and percentage changes for the periods indicated, as well as Revenues, Costs of services, and Selling, general, and administrative expenses ("SG&A") adjusted to exclude the impact of foreign exchange translation. See Non-GAAP Measures for more information on the computation of Revenues, Costs of services, and SG&A that have been adjusted to exclude the impact of foreign exchange translation.



	Three Months Ended June 30,						Dollar Change			Percentage Change		Percentage Change Excluding Foreign Exchange		Foreign Exchange Impact
	2015			2014			Dollar Change			Percentage Change		Percentage Change Excluding Foreign Exchange		Foreign Exchange Impact
Statement of Operations Data:
Revenues:
Americas	$	214,084		$	212,783		$	1,301		0.6	%	3.6	%	$	(6,387	)
EMEA	129,229			135,937			(6,708		)	(4.9	)%	15.0	%	(27,037		)
Other	17			27			(10		)	na		na		(2		)
Total revenues	343,330			348,747			(5,417		)	(1.6	)%	8.0	%	(33,426		)
Operating expenses:
Costs of services:
Americas	134,738			137,677			(2,939		)	(2.1	)%	2.8	%	(6,827		)
EMEA	96,490			99,808			(3,318		)	(3.3	)%	17.2	%	(20,467		)
Other	559			(305		)	864			283.3	%	60.3	%	680
Total costs of services	231,787			237,180			(5,393		)	(2.3	)%	8.9	%	(26,614		)
Selling, general and administrative expenses:
Americas	46,961			47,894			(933		)	(1.9	)%	4.1	%	(2,895		)
EMEA	25,676			29,847			(4,171		)	(14.0	)%	2.0	%	(4,782		)
Other	14,475			9,683			4,792			49.5	%	48.9	%	58
Total selling, general and administrative expenses	87,112			87,424			(312		)	(0.4	)%	8.4	%	(7,619		)
Depreciation and amortization of property and equipment	8,814			8,548			266			3.1	%	na		na
Amortization of intangible assets	41			—			41			na		na		na
Restructuring and exit charges	1,002			12,532			(11,530		)	(92.0	)%	na		na
(Gain) loss on foreign currency transactions	(1,500		)	600			(2,100		)	(350.0	)%	na		na
Other income, net	(234		)	(145		)	(89		)	(61.4	)%	na		na
Operating income	16,308			2,608			13,700			525.3	%	na		na
Interest and other financing costs, net	21,094			21,423			(329		)	(1.5	)%	na		na
Loss before income taxes	(4,786		)	(18,815		)	14,029			74.6	%	na		na
Income tax provision	1,406			2,817			(1,411		)	(50.1	)%	na		na
Net loss	$	(6,192	)	$	(21,632	)	$	15,440		71.4	%	na		na

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

Revenues

We reported Revenues of $343,330 for the three months ended June 30, 2015, a decrease of $5,417, compared to $348,747 for the three months ended June 30, 2014. Excluding the $33,426 impact of foreign exchange translation, Revenues increased $28,009 in the second quarter of 2015, compared to the second quarter of 2014. Revenues increased in the second quarter of 2015 (excluding the impact of foreign exchange translation) primarily due to new business of $28,000 with $18,000 attributable to EMEA and $10,000 attributable to the Americas. In addition, revenue from existing client campaigns increased $25,100 of which $14,500 related to Americas and $10,600 related to EMEA. These increases were partially offset by $25,100 of attrition, of which $16,700 related to the Americas and $8,400 related to EMEA.

Costs of Services

Costs of services were $231,787 for the three months ended June 30, 2015, a decrease of $5,393, compared to $237,180 for the three months ended June 30, 2014. Excluding the impact of foreign exchange translation of $26,614, Costs of services increased $21,221 during the three months ended June 30, 2015, as compared to the same period of 2014. The increase in Cost of services is primarily related to the aforementioned increase in Revenue.

SG&A

SG&A expenses were $87,112 for the three months ended June 30, 2015, a decrease of $312, compared to $87,424 for the three months ended June 30, 2014. Excluding the impact of foreign currency translation of $7,619, SG&A increased $7,307 during the three months ended June 30, 2015, compared to the same period of 2014. The increase was primarily related to investments to support continued revenue growth.

Depreciation and Amortization of Property and Equipment

Depreciation and amortization of property and equipment was $8,814 for the three months ended June 30, 2015, an increase of $266 or 3.1%, as compared to $8,548 for the three months ended June 30, 2014. The increase was primarily related increases in capital expenditures throughout 2014.

Amortization of Intangible Assets

Amortization of intangible assets was $41 for the three months ended June 30, 2015, compared to $0 for the three months ended June 30, 2014. The increase is due to the purchase of intangibles in EMEA in the fourth quarter of 2014.

Restructuring and Exit Charges

We evaluate and assess our worldwide operations in an effort to rationalize facility and labor costs, further streamline our operations in order to align resources to support growth, and appropriately shift the geographic mix of Company resources. This evaluation has resulted in restructuring activities and their related charges, as summarized below.

Restructuring and exit charges were $1,002 for the three months ended June 30, 2015, a decrease of $11,530, as compared to $12,532 for the three months ended June 30, 2014. Restructuring charges for the second quarter of 2015 included severance costs of $605 and site closure costs of $397, which are primarily ongoing lease and other contractual obligations.

During the three months ended June 30, 2015, 581 positions were eliminated, resulting in total restructuring charges of $597 and estimated annualized savings of $1,283. The remaining accrual for severance-related activities initiated in 2015 of $179 is expected to be paid during the remainder of 2015, and the remaining accrual for facility exit costs of $129 is expected to be paid during the remainder of 2015 through 2016 as the related leases expire.

In the second quarter of 2015, we recognized expense of $405 relating to restructuring activities that were initiated in 2014 and prior years. These activities are expected to be completed by the end of 2016 as the related leases expire. The remaining accrual for severance-related activities of $602 is expected to be paid by the end of 2015, and the remaining accrual for facility exit costs of $1,262 is expected to be paid during the remainder of 2015 through 2016 as the related leases expire.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

(Gain) Loss on Foreign Currency Transactions

We recognized a gain on foreign currency transactions of $1,500 for the three months ended June 30, 2015, compared to a loss of $600 for the three months ended June 30, 2014. The variance is attributable to foreign currency rate fluctuations in the U.S. dollar and the British pound sterling against the Euro.

Interest and Other Financing Costs, Net

Interest and other financing costs were $21,094 for the three months ended June 30, 2015, a decrease of $329, compared to $21,423 for the three months ended June 30, 2014. The decrease was primarily attributable to the mark-to-market changes in the interest rate swap.

Income Tax Provision

The provision for income taxes was $1,406 for the three months ended June 30, 2015, compared to a provision of $2,817 for the three months ended June 30, 2014. The decrease in tax expense resulted primarily from noncash tax expense of $991 related to foreign uncertain tax positions recorded in the three months ended June 30, 2014 compared to the same period of 2015. In addition, a benefit was recorded for changes in the intra-period allocation to continuing operations of $247 during the three months ended June 30, 2015 compared to a benefit of $1,265 recorded in the same period of 2014.

Management will continue to assess our ability to realize the deferred tax benefits in jurisdictions which currently have valuation allowances. There are certain state and foreign jurisdictions where management feels it is necessary to see further evidence of sustained achievement towards financial targets before any valuation allowance can be released with respect to these operations. It is not anticipated that the Company will release any remaining portion of valuation allowances with respect to these operations during 2015. During the second quarter of 2015, we established a valuation allowance on the deferred tax assets of one of our U.K. subsidiaries in the amount of $595 after management concluded that the company would not recognize the tax benefits based on historical results and forecasted financial targets.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

Six Months Ended June 30, 2015 Compared to Six Months Ended June 30, 2014

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and segment data therein. Results for interim periods may not be indicative of the results for the full years. The table below presents statement of operations data, including the amount and percentage changes for the periods indicated, as well as Revenues, Costs of services, and SG&A adjusted to exclude the impact of foreign exchange translation. See Non-GAAP Measures for more information on the computation of Revenues, Costs of services, and SG&A that have been adjusted to exclude the impact of foreign exchange translation.



	Six Months Ended June 30,						Dollar Change			Percentage Change		Percentage Change Excluding Foreign Exchange		Foreign Exchange Impact
	2015			2014			Dollar Change			Percentage Change		Percentage Change Excluding Foreign Exchange		Foreign Exchange Impact
Statement of Operations Data:
Revenues:
Americas	$	430,882		$	423,611		$	7,271		1.7	%	4.4	%	$	(11,361	)
EMEA	267,023			275,567			(8,544		)	(3.1	)%	16.1	%	(52,877		)
Other	18			48			(30		)	na		na		—
Total revenues	697,923			699,226			(1,303		)	(0.2	)%	9.0	%	(64,238		)
Operating expenses:
Costs of services:
Americas	271,639			272,353			(714		)	(0.3	)%	4.3	%	(12,337		)
EMEA	199,314			202,414			(3,100		)	(1.5	)%	18.0	%	(39,563		)
Other	273			(657		)	930			141.6	%	35.2	%	699
Total costs of services	471,226			474,110			(2,884		)	(0.6	)%	10.2	%	(51,201		)
Selling, general and administrative expenses:
Americas	91,943			96,003			(4,060		)	(4.2	)%	1.2	%	(5,220		)
EMEA	52,589			61,168			(8,579		)	(14.0	)%	1.1	%	(9,224		)
Other	25,916			22,183			3,733			16.8	%	17.6	%	(180		)
Total selling, general and administrative expenses	170,448			179,354			(8,906		)	(5.0	)%	3.2	%	(14,624		)
Depreciation and amortization of property and equipment	17,831			16,960			871			5.1	%	na		na
Amortization of intangible assets	108			523			(415		)	(79.3	)%	na		na
Restructuring and exit charges	1,345			15,804			(14,459		)	(91.5	)%	na		na
Loss (gain) on foreign currency transactions	5,325			190			5,135			2,702.6	%	na		na
Other income, net	(363		)	(11		)	(352		)	(3,200.0	)%	na		na
Operating income	32,003			12,296			19,707			160.3	%	na		na
Interest and other financing costs, net	42,714			42,989			(275		)	(0.6	)%	na		na
Loss before income taxes	(10,711		)	(30,693		)	19,982			65.1	%	na		na
Income tax provision	3,470			9,755			(6,285		)	(64.4	)%	na		na
Net loss	$	(14,181	)	$	(40,448	)	$	26,267		64.9	%	na		na

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

Revenues

We reported Revenues of $697,923 for the six months ended June 30, 2015, a decrease of $1,303, compared to $699,226 for the six months ended June 30, 2014. Excluding the $64,238 impact of foreign exchange translation, Revenues increased $62,935 in the first six months of 2015, compared to the first six months of 2014. Revenues increased in the first six months of 2015 (excluding the impact of foreign exchange translation) primarily due to new business of $60,200 with $37,700 attributable to EMEA and $22,500 attributable to the Americas. In addition, revenue from existing client campaigns increased $45,400 of which $24,800 related to Americas and $20,600 related to the EMEA. These increases were partially offset by $42,700 of attrition, of which $28,600 related to the Americas and $14,100 related to EMEA.

Costs of Services

Costs of services were $471,226 for the six months ended June 30, 2015, a decrease of $2,884, compared to $474,110 for the six months ended June 30, 2014. Excluding the impact of foreign exchange translation of $51,201, Costs of services increased $48,317 during the six months ended June 30, 2015, as compared to the same period of 2014. The increase in Cost of services is primarily related to the aforementioned increase in Revenue.

SG&A

SG&A expenses were $170,448 for the six months ended June 30, 2015, a decrease of $8,906, compared to $179,354 for the six months ended June 30, 2014. Excluding the impact of foreign currency translation of $14,624, SG&A increased $5,718 during the six months ended June 30, 2015, compared to the same period of 2014. The increase was primarily related to investments to support continued revenue growth.

Depreciation and Amortization of Property and Equipment

Depreciation and amortization of property and equipment was $17,831 for the six months ended June 30, 2015, an increase of $871 or 5.1%, as compared to $16,960 for the six months ended June 30, 2014. The increase was primarily related to increases in capital expenditures throughout 2014.

Amortization of Intangible Assets

Amortization of intangible assets was $108 for the six months ended June 30, 2015, compared to $523 for the six months ended June 30, 2014. The decrease is due to the customer relationship intangibles becoming fully amortized during the first quarter of 2014, offset by the purchase of additional intangibles in the last quarter of 2014.

Restructuring and Exit Charges

We evaluate and assess our worldwide operations in an effort to rationalize facility and labor costs, further streamline our operations in order to align resources to support growth, and appropriately shift the geographic mix of Company resources. This evaluation has resulted in restructuring activities and their related charges, as summarized below.

Restructuring and exit charges were $1,345 for the six months ended June 30, 2015, a decrease of $14,459, as compared to $15,804 for the six months ended June 30, 2014. Restructuring charges for the first six months of 2015 included severance costs of $825 and site closure costs of $520, which are primarily ongoing lease and other contractual obligations.

During the six months ended June 30, 2015, 807 positions were eliminated, resulting in total restructuring charges of $795 and estimated annualized savings of $1,624. The remaining accrual for severance-related activities initiated in 2015 of $179 is expected to be paid during the remainder of 2015, and the remaining accrual for facility exit costs of $129 is expected to be paid during the remainder of 2015 through 2016 as the related leases expire.

In the first six months of 2015, we recognized expense of $550 relating to restructuring activities that were initiated in 2014 and prior years. These activities are expected to be completed by the end of 2016 as the related leases expire. The remaining accrual for severance-related activities of $602 is expected to be paid by the end of 2015, and the remaining accrual for facility exit costs of $1,262 is expected to be paid during the remainder of 2015 through 2016 as the related leases expire.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

Loss on Foreign Currency Transactions

We recognized a loss on foreign currency transactions of $5,325 for the six months ended June 30, 2015, compared to a loss of $190 for the six months ended June 30, 2014. The variance is attributable to foreign currency rate fluctuations, primarily related to the U.S. dollar and the British pound sterling against the Euro.

Interest and Other Financing Costs, Net

Interest and other financing costs were $42,714 for the six months ended June 30, 2015, a decrease of $275, compared to $42,989 for the six months ended June 30, 2014. The decrease was primarily attributable to the mark-to-market changes in the interest rate swap for the six months ended June 30, 2015.

Income Tax Provision

The provision for income taxes was $3,470 for the six months ended June 30, 2015, compared to a provision of $9,755 for the six months ended June 30, 2014. The decrease in tax expense resulted primarily from a benefit recorded for changes in the intra-period allocation to continuing operations of $627 during the six months ended June 30, 2015 compared to tax expense of $2,153 recorded in the same period of 2014, noncash tax expense of $1,682 related to foreign uncertain tax positions and tax audits recorded in the six months ended June 30, 2014, in addition to changes in the regional mix of pre-tax book income.

Client Concentration

Our ten largest clients represented approximately 36.6% and 36.3%, respectively, of our revenues for the three and six months ended June 30, 2015, as compared to 37.2% and 36.9%, respectively, for the comparable periods in 2014. No client accounted for more than 10% of our total revenues during these periods.

Liquidity and Capital Resources

Our principal sources of liquidity are net cash provided by operating activities, borrowings under our Senior Secured Credit Facility, and proceeds from the issuances of our Senior Secured Notes, Senior Notes, and equity. We expect that these will continue to be our principal sources of cash in the future. Our principal uses of cash have included debt service, capital expenditures, restructuring activities, and the financing of working capital. We expect that these will continue to be our principal uses of cash in the future.

We manage a centralized global treasury function in the United States with a particular focus on concentrating and safeguarding our global Cash and cash equivalent reserves. While we generally prefer to hold U.S. dollars, we maintain adequate cash in the functional currency of our foreign subsidiaries to support local operating costs. We protect our cash reserves by maintaining sound cash management practices, relationships with reputable banking partners, and highly liquid investments. We continuously review our assertion for indefinitely reinvested earnings in line with our global cash strategy. Based on forecasted cash needs, no changes to our assertion are necessary at this time.

We believe that cash generated from operations, existing cash balances, and borrowings under our Senior Secured Credit Facility or other financing arrangements will be sufficient to meet our working capital requirements, anticipated capital expenditures, and scheduled debt payments. Our Revolvers mature in January 2016. As of June 30, 2015, we had outstanding borrowings of $28,968 under our Revolvers which provide for aggregate borrowings of up to $61,250 less $1,703 of letters of credit outstanding and an additional $278 of availability due to movement in the USD/CAD foreign exchange rate during the quarter for a total availability of $30,857. We intend to restructure or refinance the Revolvers prior to their maturity in conjunction with the Merger Agreement discussed in Note 1 in the accompanying Notes to the Condensed Consolidated

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

Financial Statements. The refinancing of the Revolvers is outside of our control and there can be no assurance that such transaction will occur, or if it does occur, on what terms.

The amount of capital required over the next 12 months will also depend on our levels of investment in infrastructure necessary to maintain, upgrade, or replace existing assets or to develop new customer contact centers. Our working capital and capital expenditure requirements could also increase materially in the event cash is required to fund new strategic initiatives, the resolution of certain litigation or administration disputes, or other unexpected business expenses. These factors could require that we raise additional capital through future debt or equity financing or reduce certain capital and other expenditures.

We expect our operations to continue to require capital expenditures consistent with prior periods to support the growth of our business. We expect to continue to finance equipment purchases through proceeds from our operations, our Senior Secured Credit Facility, and our ability to acquire equipment through operating and capital lease obligations with various equipment vendors and lending institutions.

Cash Flows

Six Months Ended June 30, 2015 Compared to Six Months Ended June 30, 2014

The following summarizes our primary sources and uses of cash in the periods presented (in thousands):



							Increase
	Six Months Ended June 30,						(Decrease) to
	Six Months Ended June 30,						Net Cash Flow
	2015			2014			Amount
Cash provided by (used in):
Operating activities	$	22,456		$	(20,605	)	$	43,061
Investing activities	(18,383		)	(15,539		)	(2,844		)
Financing activities	(5,470		)	53,101			(58,571		)

Operating Activities. Cash provided by operations was $22,456 during the six months ended June 30, 2015, compared to cash used in operations of $20,605 during the six months ended June 30, 2014. The $43,061 increase compared to the same period in 2014 was driven by a decrease in Net loss, as well as an increase in cash from the changes in working capital as a result of a decrease in Accounts receivable. The decrease in Accounts receivable was due to the timing of cash receipts in the current quarter as compared to the prior year.

Investing Activities. Cash used in investing activities was $18,383 during the six months ended June 30, 2015 compared to $15,539 during the comparable period in 2014. The $2,844 increase was primarily due to increases in capital expenditures during the six months ended June 30, 2015.

Financing Activities. Cash used in financing activities was $5,470 during the six months ended June 30, 2015, compared to a source of cash of $53,101 during the same period in 2014. The $58,571 decrease was primarily due to the proceeds from the issuance of Preferred D stock during the second quarter of 2014.

Cash Position, Working Capital and Indebtedness

As of June 30, 2015, our total Cash and cash equivalents were $7,507 and we had total indebtedness of $749,433. Working capital was $102,895 at June 30, 2015, compared to $152,272 at December 31, 2014, while adjusted working capital (defined as current assets (excluding Cash and cash equivalents and restricted cash) less current liabilities (excluding current portion of long-term debt and book overdrafts)) was $124,831 at June 30, 2015, compared to $145,176 at December 31, 2014, a decrease of $20,345. Adjusted working capital is a non-GAAP measure. See "Non-GAAP Measures" for a reconciliation of this non-GAAP measure.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

Long-Term Debt

Senior Notes

On March 18, 2010, SITEL, LLC and Sitel Finance Corp. (the "Issuers") issued the 11.5% Senior Notes due April 1, 2018 having an aggregate principal amount of $300,000 with an original issuance discount of $7,638. The Senior Notes are general unsecured obligations of SITEL Worldwide Corporation and are senior in right of payment to all existing and future indebtedness, if any, that is by its terms expressly subordinated to the Senior Notes. The Senior Notes are guaranteed by our domestic subsidiaries and will mature on April 1, 2018. Interest accrues on the Senior Notes at a rate of 11.5% annually, and is payable semi-annually in arrears on April 1 and October 1. Proceeds from the Senior Notes offering were used to pay down approximately $231,600 of the Term Loans and 100.0% of the outstanding balance on the Revolvers, both of which are discussed further below.

We are not required to make mandatory redemptions or sinking fund payments with respect to the Senior Notes. On or after April 1, 2014, the Senior Notes may be redeemed in part or in full at the following percentages of the outstanding principal amount prepaid: 105.750% prior to April 1, 2015; 102.875% on or after April 1, 2015, but prior to April 1, 2016; and 100.000% on or after April 1, 2016.

The indenture governing the Senior Notes contains customary covenants and restrictions on the activities of SITEL, LLC, Sitel Finance and SITEL, LLC's restricted subsidiaries, including, but not limited to, the incurrence of additional indebtedness; dividends or distributions in respect of capital stock or certain other restricted payments or investments; entering into agreements that restrict distributions from restricted subsidiaries; the sale or disposal of assets, including capital stock of restricted subsidiaries; transactions with affiliates; the incurrence of liens; and mergers, consolidations or the sale of substantially all of SITEL, LLC's assets. Certain of these covenants will be suspended if the Senior Notes are assigned an investment grade rating by both Standard & Poor's Rating Services and Moody's Investor Service, Inc. and no default has occurred or is continuing. If either rating on the Senior Notes should subsequently decline to below investment grade, the suspended covenants will be reinstated.

Senior Secured Notes

On April 20, 2012, the Issuers issued the 11.0% Senior Secured Notes due August 1, 2017, having an aggregate principal amount of $200,000 with an original issuance discount of $8,000. The Senior Secured Notes are guaranteed by our domestic subsidiaries and will mature on August 1, 2017. The Senior Secured Notes and the guarantees are the senior obligations of the Issuers and the guarantors and are secured on a first-priority basis by a lien on substantially all of the assets of the Issuers and the guarantors, subject to certain exceptions. Interest accrues on the Senior Secured Notes at a rate of 11.0% annually, and is payable semi-annually in arrears on February 1 and August 1. Proceeds from the Senior Secured Notes offering were used to pay down approximately $128,900 of the Term Loans and 100.0% of the outstanding balance on the Revolvers, both of which are discussed further below.

We are not required to make mandatory redemptions or sinking fund payments with respect to the Senior Secured Notes. On or after August 1, 2014, the Senior Secured Notes may be redeemed in part or in full at the following percentages of the outstanding principal amount prepaid: 105.500% prior to August 1, 2015; 102.750% on or after August 1, 2015, but prior to August 1, 2016; and 100.000% on or after August 1, 2016.

The indenture governing the Senior Secured Notes contains customary covenants and restrictions on the activities of SITEL, LLC, Sitel Finance and SITEL, LLC's restricted subsidiaries, including, but not limited to, the incurrence of additional indebtedness; dividends or distributions in respect of capital stock or certain other restricted payments or investments; entering into agreements that restrict distributions from restricted subsidiaries; the sale or disposal of assets, including capital stock of restricted subsidiaries; transactions with affiliates; the incurrence of liens; and mergers, consolidations or the sale of substantially all of SITEL, LLC's assets.

2007 Senior Secured Credit Facility

Overview

On January 30, 2007, we entered into a Senior Secured Credit Facility among a syndicate of banks with Goldman Sachs Credit Partners L.P. as joint lead arranger, joint bookrunner, administrative agent and collateral agent and GE Capital Markets, Inc. as joint lead arranger and joint bookrunner. The Senior Secured Credit Facility originally provided for total available borrowings in an aggregate principal amount of approximately $760,000, which included $85,000 of revolvers maturing on

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

January 30, 2013, consisting of a $50,000 U.S. revolver, a $7,000 Canadian revolver (made available in Canadian dollars) and a $28,000 U.K. revolver (made available in Euro and British pound sterling) (collectively, the "Revolvers"), and $675,000 of term loans maturing on January 30, 2014, consisting of a $550,000 U.S. term loan, a €51,447 Euro term loan, and a £30,000 British pound sterling term loan (collectively, the "Term Loans"). SITEL, LLC is the borrower under the U.S. term loan and the U.S. revolver, ClientLogic Holding Limited is the borrower under the Euro term loan, the British pound sterling term loan and the U.K. revolver, and SITEL Canada Corporation (formerly known as ClientLogic Canada Corporation) is the borrower under the Canadian revolver.

As of June 30, 2015, we had an aggregate of $249,930 of outstanding indebtedness under our Senior Secured Credit Facility, which consisted of $220,962 of Term Loans and $28,968 of Revolvers. Our Term Loans consisted of $177,973 outstanding on the U.S. term loan, $24,539 outstanding on the Euro term loan, and $18,450 outstanding on the British pound sterling term loan. In addition, we had outstanding letters of credit of $1,703 as of that date. As of June 30, 2015, we had $30,857 available for additional borrowings under our Revolvers.

First Amendment

On December 9, 2008, we entered into the first amendment to our Senior Secured Credit Facility (the "First Amendment") which, among other matters, modified applicable interest rates, certain negative covenants and financial covenant thresholds. In addition, the First Amendment permitted us to offer to purchase the outstanding Term Loans at a discount to par using a portion of the net proceeds we received from the sales of our series C preferred stock we completed in 2008. We received approximately $29,600 through the issuance of series C preferred stock which was a condition to entering into the First Amendment. As required under the First Amendment, we offered to purchase Term Loans under the Senior Secured Credit Facility, and in December 2008, we purchased $27,047 of outstanding principal under the Term Loans for $15,000, which Term Loans were subsequently canceled and retired.

Second Amendment

In April 2009, we entered into the second amendment to our Senior Secured Credit Facility which effected a technical amendment clarifying certain terms governing minimum borrowing amounts under certain interest rates including London Interbank Offer Rate ("LIBOR").

Third Amendment

In February 2010, we entered into a third amendment to the Senior Secured Credit Facility (the "Third Amendment") to, among other things, permit the issuance of the Senior Notes, improve the terms of mandatory prepayment requirements, and modify our Senior Secured Leverage Ratio covenant and Minimum Interest Coverage Ratio covenant.

Fourth Amendment

During the second quarter of 2011, we entered into the fourth amendment to the Senior Secured Credit Facility (the "Fourth Amendment") to, among other things, allow flexibility to refinance or prepay the non-extended portions of the Term Loans prior to the extended portions, and to refinance, extend or replace the Revolvers and Term Loans; increase the Senior Secured Leverage Ratio covenant levels; and decrease the Minimum Interest Coverage Ratio covenant levels.

Fifth Amendment

In April 2012, we entered into the fifth amendment to the Senior Secured Credit Facility (the "Fifth Amendment") which allowed for the issuance and sale of the Senior Secured Notes, modified our Senior Secured Leverage Ratio covenant and Minimum Interest Coverage Ratio covenant and changed the currency mix of our lenders' revolver commitments to consist only of U.S. dollar and Canadian dollar amounts and terminated the British pound sterling revolver commitment. During the second quarter of 2012, a portion of the proceeds received from the issuance of the Senior Secured Notes were used to prepay the outstanding balances on the non-extended term loans, which were due in January 2014.

Sixth Amendment

In February 2014, we entered into the sixth amendment to the Senior Secured Credit Facility (the "Sixth Amendment") which increased our Senior Secured Leverage Ratio and decreased our Minimum Interest Coverage Ratio covenant levels.

Interest

The Term Loans mature in January 2017. All Term Loans amortize in equal quarterly installments in an aggregate annual amount equal to 0.25% of the original principal amount with the balance payable at maturity. Payments on the principal amount

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

have exceeded the cumulative amortization schedule, thus no amount is due until maturity. Interest on the U.S. term loan is based, at our option, on LIBOR plus the applicable margin of 7.25% or the higher of (i) the federal funds rate plus 0.50% or (ii) the banks’ prime rate, plus the applicable margin of 6.25%. Interest on the Euro term loan is based on EURIBOR plus the applicable margin of 7.25%. Interest on the British pound sterling term loan is based on LIBOR plus the applicable margin of 7.25%. We have an interest rate swap agreement for the notional amount of $175,000 against our Term Loans that is based on a rate of 2.315% versus three month LIBOR.

The Revolvers mature in January 2016. In January 2013, the non-extended portion of our U.S. Revolver expired, reducing the borrowing capacity under the Revolvers from $85,000 to $61,250. A commitment fee is payable quarterly at 1.00% per annum of the undrawn portion of the Revolvers. Interest on the U.S. revolver is based, at our option, on LIBOR plus the applicable margin of 7.25%, or the higher of the federal funds rate plus 0.50% or the prime rate plus the applicable margin of 6.25%. Interest on the Canadian revolver is based, at our option, on the Canadian banker's acceptance rate plus the applicable margin of 7.25% or the higher of the one month BA Rate 0.75% or the Canadian prime rate plus the applicable margin of 6.25%.

For the six months ended June 30, 2015, including the impact of our interest rate swap, the weighted average interest rate on the Term Loans was 9.13%. The weighted average rate on the Revolvers was 8.92% for the same period. Specified interest rates for the Euro term loan and British pound sterling term loan are as described in the Senior Secured Credit Facility.

Covenants

We are required under the terms of the Senior Secured Credit Facility to maintain certain financial covenants on a quarterly and annual basis, specifically:

Senior Secured Leverage Ratio. The senior secured leverage ratio is the ratio of our total funded debt that is secured by a lien on any of our assets or equity interests or any of our subsidiaries to our Adjusted EBITDA (as defined in the amended Senior Secured Credit Facility) for each period of four consecutive quarters ending during the term of the Senior Secured Credit Facility.

Minimum Interest Coverage Ratio. The minimum interest coverage ratio is the ratio of Adjusted EBITDA to cash interest expense (net of interest income) for each period of four consecutive quarters ending during the term of the Senior Secured Credit Facility.

Maximum Capital Expenditures. The maximum capital expenditures covenant in our Senior Secured Credit Facility limits our annual capital spending, cash restructuring in excess of $10,000 and our acquisition expenses in excess of $10,000 to a pre-established limit each year and allows for carryover of unused spend.

We were in compliance with all debt covenants under the Senior Secured Credit Facility as of June 30, 2015. We believe that we will continue to be in compliance with restrictive covenants in our Senior Secured Credit Facility throughout the next twelve months.

Off-Balance Sheet Arrangements

Our off balance sheet arrangements primarily consist of our operating leases and standby letters of credit. We lease property and equipment under non-cancelable operating lease arrangements with initial or remaining lease terms in excess of one year. At June 30, 2015, the future lease commitments relating to our operating leases were $121,897. We utilize standby letters of credit to support performance obligations, tax obligations, and certain operating leases. These obligations will expire at various dates through January 2016, and are renewed as required. The outstanding commitment on these obligations at June 30, 2015 was $1,703.

Non-GAAP Measures

We use Adjusted working capital and Revenues, Costs of services, and SG&A that have been adjusted to exclude the impact of foreign exchange translation as non-GAAP measures.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

The computation of Adjusted working capital is as follows:



	June 30, 2015			December 31, 2014
Working capital (a)	$	102,895		$	152,272
Adjustments:
Cash and cash equivalents	(7,507		)	(8,857		)
Restricted cash	(4,107		)	(4,159		)
Current portion of long-term debt	29,147			—
Current portion of capital lease obligations	3,324			2,952
Book overdrafts	1,079			2,968
Total adjustments	21,936			(7,096		)
Adjusted working capital	$	124,831		$	145,176

(a) Defined as current assets less current liabilities from the Condensed Consolidated Balance Sheets.

We believe that Adjusted working capital provides a meaningful measure of our operational results and underlying performance.

The computation of Revenues, Costs of services, and SG&A that have been adjusted to exclude the impact of foreign exchange translation is as follows:



	Three Months Ended June 30,
	2015		2014		Dollar Change			Percentage Change		Percentage Change Excluding Foreign Exchange		Foreign Exchange Impact			$ Change without Foreign exchange impact
Total revenues	$	343,330	$	348,747	$	(5,417	)	(1.6	)%	8.0	%	$	(33,426	)	$	28,009
Total costs of services	231,787		237,180		(5,393		)	(2.3	)%	8.9	%	(26,614		)	21,221
Total SG&A	87,112		87,424		(312		)	(0.4	)%	8.4	%	(7,619		)	7,307



	Six Months Ended June 30,
	2015		2014		Dollar Change			Percentage Change		Percentage Change Excluding Foreign Exchange		Foreign Exchange Impact			$ Change without Foreign exchange impact
Total revenues	$	697,923	$	699,226	$	(1,303	)	(0.2	)%	9.0	%	$	(64,238	)	$	62,935
Total costs of services	471,226		474,110		(2,884		)	(0.6	)%	10.2	%	(51,201		)	48,317
Total SG&A	170,448		179,354		(8,906		)	(5.0	)%	3.2	%	(14,624		)	5,718

We believe that the presentation of Revenue, Costs of services, and SG&A excluding the impact of foreign exchange translation provides valuable supplemental information regarding our results of operations, consistent with how we evaluate our performance.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP and may not be comparable to other companies' non-GAAP measures with similar titles.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures About Market Risks” in the Company’s Annual Report on Form 10-K filed with the SEC on February 18, 2015. As of June 30, 2015, there has been no material change in this information.

ITEM 4. CONTROLS AND PROCEDURES

We carried out an evaluation required by the Securities Exchange Act of 1934, as amended (the “1934 Act”), under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the 1934 Act) as of June 30, 2015. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the 1934 Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2015, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There have been no changes in our internal control over financial reporting during the three months ended June 30, 2015 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 9 “Commitments and Contingencies” to the accompanying unaudited interim Condensed Consolidated Financial Statements.

ITEM 1A. RISK FACTORS

For a detailed discussion of the risks and uncertainties associated with our business see “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the SEC on February 18, 2015. There have been no material changes to these risk factors since that report.

ITEM 6. EXHIBITS


a)	Exhibits




No.		Exhibit Description
31.1		CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934
31.2		CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934
32.1		CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. 1350
32.2		CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. 1350
101.INS		XBRL INSTANCE DOCUMENT
101.SCH		XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
101.CAL		XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT
101.DEF		XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT
101.LAB		XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT
101.PRE		XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SITEL Worldwide Corporation



Date:	August 5, 2015	By:	/s/ Patrick Tolbert
			Name:	Patrick Tolbert
			Title:	Chief Operating and Financial Officer and Director
				(Duly authorized officer and principal financial officer)

Attached files

SITEL Worldwide Corp Reports

Also read