SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.
For the quarterly period ended March 31, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.
For the transition period _____ to ______
Commission File Number 1-12577
SITEL CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 47-0684333
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
111 SOUTH CALVERT, STE. 1910
BALTIMORE, MD 21202
(410) 659-5700
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
_____ _____
As of May 4, 1998, the Company had 63,777,115 shares of Common Stock
outstanding.
<PAGE>
SITEL CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets................. 1
Consolidated Condensed Statements of Income........... 2
Consolidated Condensed Statements of Cash Flows....... 3
Notes to Consolidated Condensed Financial Statements.. 4
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition.................. 7
PART II - OTHER INFORMATION
Item 2. Changes in Securities............................... 11
Item 5. Other Information................................... 11
Item 6. Exhibits and Reports on Form 8-K.................... 11
Signature.................................................... 12
<PAGE>
<TABLE>
SITEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
December 31, 1997 and March 31 1998
(dollars in thousands, except share data)
December 31, March 31
ASSETS
1997 1998
____________ ____________
<S> <C> <C>
Current assets:
(unaudited)
Cash and cash equivalents.................... $ 24,285 $ 12,318
Trade accounts receivable (net of allowance for
doubtful accounts of $ 5,099 and $4,904,
respectively................................. 107,697 120,430
Marketable securities........................ 159 --
Prepaid expenses............................. 3,916 5,469
Other assets................................. 9,548 20,438
Deferred income taxes........................ 3,153 2,787
____________ ___________
Total current assets.......... 148,758 161,442
Property and equipment, net....................... 120,600 113,444
Deferred income taxes............................. 11,114 12,689
Goodwill, net..................................... 94,381 92,792
Other assets...................................... 11,027 12,799
____________ ___________
Total assets.................. $ 385,880 $ 393,166
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable - bank.......................... $ 14,376 $ 23,748
Current portion of long-term debt............ 10,793 7,014
Current portion of capitalized lease
obligations............................... 4,934 4,215
Trade accounts payable....................... 27,322 23,459
Income taxes payable......................... 8,398 6,494
Accrued compensation......................... 14,120 14,636
Accrued operating expenses................... 22,984 20,017
Deferred revenue and other................... 6,286 5,044
____________ ___________
Total current liabilities..... 109,213 104,627
Long-term debt, excluding current portion......... 102,505 107,620
Capitalized lease obligations, excluding current
portion........................................... 12,983 11,506
Deferred compensation ............................ 1,407 1,466
Minority interest................................. 1,384 7,707
Stockholders' equity:
Common stock, voting, $.001 par value
200,000,000 shares authorized, 63,099,597
and 63,745,558 shares issued and outstanding,
respectively................................. 63 64
Paid-in capital.............................. 155,326 157,036
Accumulated other comprehensive income....... (6,415) (7,738)
Retained earnings............................ 9,414 10,878
____________ ___________
Total stockholders' equity.... 158,388 160,240
____________ ___________
Total liabilities and
stockholders' equity.......... $ 385,880 $ 393,166
============ ===========
The accompanying notes are an integral part of the consolidated condensed
financial statements.
</TABLE>
<TABLE>
SITEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(unaudited)
For The Three Months Ended
March 31, March 31,
1997 1998
_____________ _____________
<S> <C> <C>
(in thousands, except per share data)
Revenues.................................... $ 104,260 $ 137,748
_____________ _____________
Operating expenses:
Cost of services....................... 56,357 77,820
Selling, general and administrative
expenses............................... 37,242 54,672
_____________ _____________
Total operating expense. 93,599 132,492
_____________ _____________
Operating income........ 10,661 5,256
Other income (expense):
Interest expense, net.................. (534) (2,590)
Other income, net...................... -- 135
_____________ _____________
Income before income taxes
and minority interest.................... 10,127 2,801
Income tax expense.......................... 3,643 1,117
Minority interest........................... 30 (294)
_____________ _____________
Net income from continuing operations....... 6,454 1,978
Extraordinary loss on refinancing of debt,
net of taxes................................ -- 514
_____________ _____________
Net income.................................. $ 6,454 $ 1,464
============= =============
Income from continuing operations per common share:
Basic....................................... $ 0.11 $ 0.03
Diluted..................................... $ 0.10 $ 0.03
Income per common share:
Basic....................................... $ 0.11 $ 0.02
Diluted..................................... $ 0.10 $ 0.02
Weighted average common shares outstanding:
Basic....................................... 59,875 63,295
Diluted..................................... 67,509 69,611
The accompanying notes are an integral part of the consolidated condensed
financial statements.
</TABLE>
<TABLE>
SITEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
For Three Months Ended
(dollars in thousands) March 31, March 31,
1997 1998
_____________ ____________
<S> <C> <C>
Net income.................................. $ 6,454 $ 1,464
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization............. 4,881 9,654
Extraordinary loss on refinancing of debt. -- 792
Gain on marketable securities............. -- (208)
Change in assets and liabilities:
Trade accounts receivable............... (21,528) (12,829)
Other assets............................ (1,204) (4,711)
Trade accounts payable.................. 1,525 (3,808)
Other liabilities....................... (3,133) (4,552)
_____________ ____________
Net cash used in operating activities. (13,005) (14,198)
_____________ ____________
Cash flows from investing activities:
Purchases of property and equipment....... (18,692) (11,683)
Proceeds from sale-leasebacks of
facilities............................... -- 9,336
Acquisition of businesses, net of cash
acquired................................. (20,666) --
Sale of marketable securities............. -- 257
Changes in other assets, net.............. 108 55
______________ ____________
Net cash used in investing activities. (39,250) (2,035)
______________ ____________
Cash flows from financing activities:
Borrowings on note payable................ 28,862 10,720
Repayments of note payable................ (9,291) (1,303)
Borrowings on long-term debt.............. 14,574 125,808
Repayment of long-term debt and
capitalized lease obligations........... (27) (130,354)
State incentive credits received.......... 900 --
Common stock issued for option
exercises............................... 200 76
______________ ____________
Net cash provided by financing
activities.......................... 35,218 4,947
______________ ____________
Effect of exchange rates on cash............ (526) (681)
______________ ____________
Net increase (decrease) in cash....... (17,563) (11,967)
Cash and cash equivalents, beginning of
period..................................... 25,710 24,285
_______________ ____________
Cash and cash equivalents, end of period... $ 8,147 $ 12,318
=============== ============
Supplemental schedule of non-cash financing and investing activities:
_____________________________________________________________________
In the first quarter of 1997, the Company issued approximately 1,298,000 shares
of the Company's common stock in connection with acquisitions.
The accompanying notes are an integral part of the consolidated condensed
financial statements.
</TABLE>
<PAGE>
SITEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATMENTS
1. BASIS OF PRESENTATION:
The consolidated condensed balance sheet of SITEL Corporation and Subsidiaries
(the "Company") at December 31, 1997 was obtained from the Company's audited
balance sheet as of that date. All other financial statements contained herein
are unaudited and, in the opinion of management, contain all adjustments
necessary for a fair presentation of the financial position, operating results,
and cash flows for the periods presented. Such adjustments consist only of
normal recurring items. The consolidated condensed financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto, together with management's discussion and analysis of financial
condition and results of operations, contained in the Company's Form 10-K for
the year ended December 31, 1997.
2. SALE OF STOCK OF SUBSIDIARIES:
During the first quarter of 1998 the Company sold newly issued stock of certain
subsidiaries located in the Asia Pacific region to Lend Lease Corporation
Limited, Sydney, Australia and certain of its subsidiaries ("Lend Lease"). Lend
Lease paid approximately $6.6 million for a 20% interest in these subsidiaries,
which provide outsourced call center solutions throughout the region.
Lend Lease has several options to increase its ownership percentage in amounts
up to a total of 49% which, subject to meeting certain conditions, expire at
various times through on or about March 2004. The option exercise prices are
intended to approximate fair value through formulas tied to the subsidiary's
revenue levels for certain prior periods. The Company also has an option to
reacquire the original shares sold to Lend Lease at an agreed formula price from
on or about March 2000 through on or about March 2001 so long as Lend Lease has
not exercised its option to increase its ownership percentage. Lend Lease also
has an option to sell its shares back to the Company at an agreed formula price
(the "put option"). The put option expires upon the earlier of Lend Lease
exercising its option to increase its ownership percentage or on or about March
2001.
Operations of these subsidiaries are controlled by a management committee on
which Lend Lease and the Company have equal representation. The Company,
however, effectively controls the operations of these subsidiaries through
certain dispute resolution processes that are included in the shareholder
agreements. Should the Company exercise its control through these dispute
resolution processes, Lend Lease has the option to sell its shares back to the
Company at an agreed formula price which is intended to approximate fair value.
Although the purchase price paid by Lend Lease exceeds the book value of the 20%
ownership that they acquired, due to the put option the Company has included the
entire amount of the stock purchase price as minority interest. The Company will
accrete to the put option formula price if earnings credited to the minority
interest are not sufficient to record the amount that would be required to be
paid to Lend Lease upon their exercise of the put option.
3. INCOME TAXES:
The difference between the Company's income tax expense as reported in the
accompanying financial statements and that which would be calculated using the
statutory Federal income tax rate of 34% on income is primarily due to non-
deductible business acquisition expenses and international, state and local
income taxes.
<PAGE>
SITEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATMENTS
4. LONG TERM DEBT AND NOTES PAYABLE:
On March 10, 1998, the Company completed the private placement of $100 million
of 9.25% Senior Subordinated Notes due 2006 (the "Notes"). The proceeds from
the offering were used to repay borrowings outstanding under the Company's long
term revolving credit facility (the "Credit Facility"), which was also amended
on that date.
The Notes, which include interest payable semiannually, are general unsecured
obligations of the Company and will be subordinated in right of payment to all
existing and future senior debt of the Company. The Notes are guaranteed by
certain of the Company's subsidiaries and contain certain covenants that limit
the ability of the Company and certain of its subsidiaries to, among other
things, incur additional indebtedness, pay dividends or make certain other
restricted payments, consummate certain asset sales, enter into certain
transactions with affiliates, incur liens, merge or consolidate with another
company and sell or otherwise dispose of all or substantially all of the assets
of the Company.
The Notes are redeemable, at the Company's option, in whole or in part from time
to time on or after March 15, 2002. If redeemed during the twelve-month period
commencing on March 15 of the year set forth below, the redemption prices are as
follows, plus in each case, accrued and unpaid interest thereon, if any, to the
date of redemption:
Year Percentage
____ __________
2002 ....................... 104.625%
2003 ....................... 103.083%
2004 ....................... 101.542%
2005 and thereafter ........... 100.000%
In addition, the Company may redeem up to 35% of the aggregate principal amount
of the Notes at any time on or prior to March 15, 2001 at 109.25% of the
principal amount thereof, plus accrued interest to the date of redemption, from
the net proceeds of one or more public equity offerings, as defined. Also, upon
a change of control of the Company, as defined, the Company may be required to
repurchase the Notes at a price equal to 101% of the principal amount thereof,
plus accrued interest to the date of repurchase.
In connection with the repayment of the amounts due under the existing Credit
Facility from the proceeds of the Notes, the Company also reached an agreement
with a syndicate of commercial banks to amend the Company's existing Credit
Facility to limit borrowings under the Credit Facility to an amount based upon a
percentage of the Company's eligible domestic accounts receivable, as defined,
up to $75 million. Certain of the financial covenants and restrictions were
amended and the Company's eligible domestic accounts receivable were pledged as
security. As a result of the amendment the Company recognized an extraordinary
charge of $514,000, net of tax, to write off the deferred costs of the original
Credit Agreement.
5. EMPLOYEE STOCK PURCHASE PLAN:
During the first quarter of 1998, the Company implemented an Employee Stock
Purchase Plan ("ESPP" or the "Plan"). The Plan enables eligible employees to
Purchase the Company's stock at 85% of the current market value on a quarterly
basis.
<PAGE>
SITEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATMENTS
6. ACCOUNTING PRONOUNCEMENT:
Statement of Financial Accounting Standard ("SFAS") 130, Reporting Comprehensive
Income establishes standards for the reporting and display of comprehensive
income and its components in a full set of general purpose financial statements.
The standard also requires disclosure of the total of comprehensive income in
interim financial statements. The Company's comprehensive income was $1,706,000
and $141,000 for the three month periods ended March 31, 1997 and 1998,
respectively. The difference between the Company's reported net income and
comprehensive income for those three month periods is primarily due to the
change in the currency exchange adjustment. The accumulated other comprehensive
income included in the Company's Consolidated Condensed Balance Sheet at
December 31, 1997 and March 31, 1998 is primarily the accumulated currency
exchange adjustment.
7. RESTRUCTURING:
In the fourth quarter of 1997, the Company recorded a $15.7 million charge for
restructuring expenses. Included in that charge were severance and other costs
of $3.6 million, of which $3.4 million was recorded as a liability at December
31, 1997, as well as $1.1 million of liabilities related to losses on
contractual obligations. The amount of actual termination benefits paid and
actual losses charged against the liability for contractual obligations during
the three months ended March 31, 1998 was approximately $650,000 and $100,000,
respectively.
<PAGE>
SITEL CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATION AND
FINANCIAL CONDITION.
OVERVIEW
SITEL Corporation and subsidiaries (the "Company") are engaged primarily in
inbound, outbound, and interactive teleservicing activities, servicing the
telecommunications, financial services, insurance, technology, utilities, media
and entertainment, consumer, automotive and travel and hospitality industries.
Operations are primarily located in North America, Europe, the Asia Pacific
region, and Latin America.
The following table sets forth certain financial data and the percentage of
total revenues of the Company for the periods indicated. All amounts are in
thousands.
Three Months Ended March 31,
1997 1998
___________________ ___________________
Revenues........................ $ 104,260 100.0 % $ 137,748 100.0 %
___________________ ___________________
Operating expenses:
Cost of services............... 56,357 54.1 % 77,820 56.5 %
Selling, general, and
administrative expenses........ 37,242 35.7 % 54,672 39.7 %
___________________ ___________________
Total operating expenses..... 93,599 89.8 % 132,492 96.2 %
Operating income............. 10,661 10.2 % 5,256 3.8 %
Interest expense, net........... (534) (0.5) % (2,590) (1.9) %
Other income, net............... -- 0.0 % 135 0.1 %
___________________ ___________________
Income before income taxes and
minority interest............... 10,127 9.7 % 2,801 2.0 %
Income tax expense.............. 3,643 3.5 % 1,117 0.8 %
Minority interest............... 30 0.0 % (294) (0.2) %
___________________ ___________________
Net income from continuing
operations...................... 6,454 6.2 % 1,978 1.4 %
Extraordinary loss on
refinancing of debt, net of
taxes........................... -- -- % 514 0.3 %
___________________ ___________________
Net income...................... $ 6,454 6.2 % $ 1,464 1.1 %
=================== ===================
<PAGE>
SITEL CORPORATION AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31, 1998 VS. THREE MONTHS ENDED MARCH 31, 1997
_______________________________________________________________________
Revenues:
_________
Revenues increased $33.5 million, or 32.1%, to $137.7 million in the three
months ended March 31, 1998 from $104.3 million in the three months ended March
31, 1997. Of this increase, $13.8 million was attributable to services
initiated for new clients, $10.6 million was attributable to increased revenues
from existing clients and $9.1 million was attributable to increased revenues
from businesses acquired under the purchase method of accounting. The increase
in revenues from existing clients was primarily the result of higher calling
volumes rather than higher rates.
Cost of Services:
_________________
Cost of services represents primarily labor and telephone expenses directly
related to teleservicing activities. Cost of services increased $21.5 million,
or 38.1%, to $77.8 million in the three months ended March 31, 1998 from $56.4
million in the three months ended March 31, 1997. As a percentage of revenues,
cost of services increased to 56.5% in the first quarter of 1998 from 54.1% in
the first quarter of 1997. The overall increase includes an offsetting impact of
a one-time re-negotiation of a client contract which included cost of services
at lower than normal levels during the three months ended March 31, 1998. The
overall increase in cost of services was primarily attributable to lower
utilization of labor resources in Europe, which costs were incurred in
anticipation of higher teleservicing campaign revenues, as well as lower margins
in the Asia Pacific region caused by certain under-performing customer
contracts. The Company has renegotiated or resigned certain of these contracts
which should decrease the cost of service as a percentage of revenue in future
periods for that region.
Selling, General and Administrative Expenses:
_____________________________________________
Selling, general and administrative expenses represent expenses incurred to
directly support and manage the operations including costs of management,
administration, facilities expenses, depreciation and maintenance, amortization,
sales and marketing activities, and client support services. Selling, general
and administrative expenses increased $17.4 million, or 46.8%, to $54.7 million
in the three months ended March 31, 1998 from $37.2 million in the three months
ended March 31, 1997. This increase was primarily a result of the Company's
continued growth both internally and through acquisition. The increases caused
by this growth were partially offset by changes in estimates of certain
expenses, including discretionary performance bonuses. As a percentage of
revenues, selling, general and administrative expenses increased to 39.7% in the
first quarter of 1998 from 35.7% in the first quarter of 1997. This increase
was primarily due to lower than anticipated revenues from European operations
and costs associated with start up operations in the Asia Pacific region and
Latin America.
Operating Income:
_________________
Operating income decreased $5.4 million, or 50.7%, to $5.3 million in the three
months ended March 31, 1998 from $10.7 million in the three months ended March
31, 1997. As a percentage of revenues, operating income decreased to 3.8% in
the first quarter of 1998 from 10.2% in the first quarter of 1997. This
decrease was primarily due to the increase in both cost of services and selling,
general and administrative expenses as a percentage of revenue as noted above.
Interest Expense, Net:
______________________
Interest expense, net of interest income, increased to $2.6 million of interest
expense in the three months ended March 31, 1998 from $0.5 million of interest
expense in the three months ended March 31, 1997. This increase was primarily
due to increased borrowings utilized to support the Company's growth, including
acquisitions.
<PAGE>
SITEL CORPORATION AND SUBSIDIARIES
Income Tax Expense:
___________________
Income tax expense decreased to $1.1 million in the three months ended March 31,
1998 from $3.6 million in the three months ended March 31, 1997. This decrease
was primarily attributable to the decrease in operating income noted earlier.
The income tax expense as a percent of income before income taxes and minority
interest increased to 39.9% in the three months ended March 31, 1998 from 36.0%
in the three months ended March 31, 1997 primarily due to the impact of
nondeductible expenses associated with acquisitions combined with lower
operating income. .
Net Income From Continuing Operations and Net Income:
_____________________________________________________
For the reasons discussed above, net income from continuing operations decreased
$4.5 million to $2.0 million in the three months ended March 31, 1998 from $6.5
million in the three months ended March 31, 1997. After the extraordinary loss
on refinancing of debt, net income decreased $5.0 million to $1.5 million in the
three months ended March 31, 1988.
Liquidity and Capital Resources:
________________________________
Cash used in operating activities was approximately $14.2 million during the
first quarter of 1998. This was primarily the result of an increase in accounts
receivable and other assets and decreases in liabilities partially offset by net
income and non-cash charges. The Company anticipates that the accounts
receivable will continue to grow, using working capital, as the Company
continues to grow. Cash used in investing activities in the first quarter of
1998 of approximately $2.0 million was primarily related to capital expenditures
partially offset by the proceeds from sale-leasebacks of facilities. Cash
provided by financing activities in the first quarter of 1998 of approximately
$4.9 million primarily related to borrowings on the Company's notes payable.
During the first quarter of 1998, the Company also completed the private
placement of $100 million of 9.25% Senior Subordinated Notes due 2006. The
proceeds from the offering were used to repay borrowings outstanding under the
Company's long term revolving credit facility.
Year 2000 Issue
_______________
The Company recognizes the need to ensure its operations will not be adversely
impacted by Year 2000 software failures. Specifically, computational errors are
a known risk with respect to dates after December 31, 1999. SITEL has made a
preliminary assessment of its Year 2000 compliance issues, and is in the process
of developing a general plan to address such issues. Although the Company has
not yet estimated the total costs needed for Year 2000 compliance, the Company
believes it will be able to upgrade and maintain its computer systems to
recognize years beginning with 2000 and that the cost to do so will not be
material to its financial position or liquidity. Such costs may, however, be
material to the Company's results of operations, particularly on a short-term
basis.
Quarterly Results and Seasonality
_________________________________
The Company has experienced and expects to continue to experience quarterly
variations in its results of operations principally due to the timing of
clients' teleservicing campaigns and the commencement of new contracts, revenue
mix, and the timing of additional selling, general and administrative expenses
to support new business. The Company experiences periodic fluctuations related
to both the start-up costs associated with expansion into a new region and the
implementation of clients' teleservicing activities. In addition, the Company's
business tends to be slower in the third quarter due to summer holidays in
Europe and, to a lesser degree, in the first quarter due to the changeover of
client marketing strategies which often occurs at the beginning of the year.
<PAGE>
SITEL CORPORATION AND SUBSIDIARIES
Effects of Inflation
____________________
Inflation has not had a significant effect on the Company's operations. However,
there can be no assurance that inflation will not have a material effect on the
Company's operations in the future.
Accounting Pronouncements
_________________________
Statement of Financial Accounting Standard ("SFAS") 131, Disclosures about
Segments of an Enterprise and Related Information, was issued in June, 1997.
SFAS 131 establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in annual financial reports issued to shareholders. It also established
standards for related disclosures about products and services, geographic areas
and major customers. SFAS 131 is effective for fiscal years beginning after
December 15, 1997. The Company anticipates adopting this accounting
pronouncement in 1998; however, management believes that it will not have a
significant impact on the Company's annual consolidated financial statements.
Forward-Looking Statements
__________________________
This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. Such statements
are identified by the use of forward-looking words or phrases which may include
but are not limited to, "intended," "will be positioned," "expects,"
"expected," "anticipates," and "anticipated." The forward-looking statements
are based on the Company's current expectations. All statements other than
statements of historical facts included in this Form 10-Q, including those
regarding the Company's financial position, business strategy, projected costs
and plans and objectives of management for future operations, are forward-
looking statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct. Because forward-
looking statements involve risks and uncertainties, the Company's actual results
could differ materially. Important factors that could cause actual results to
differ materially from the Company's expectations may include, but are not
limited to, the effects of leverage, restrictions imposed by the terms of
indebtedness, reliance on major clients, risks associated with managing a global
business, fluctuations in operating results, reliance on telecommunications and
computer technology, risks associated with the Company's acquisition strategy,
the dependence on telephone service, the competitive industry, dependence on
labor force, foreign currency risks, the effects of business regulation,
dependence on key personnel and control by management. All subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on behalf of the Company are expressly qualified in their entirety by
this paragraph. The Company disclaims, however, any intent or obligation to
update its forward-looking statements
<PAGE>
SITEL CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 2. Changes in Securities.
______________________
(b) In March 1998, the registrant issued Senior Subordinated Notes which
restricts the payment of cash dividends on Common Stock. See footnote
4 to the financial statements contained herein.
Item 5. Other Information.
__________________
The Company announced on May 12, 1998 that Phillip A. Clough, President,
was appointed to the additional post of Chief Executive Officer. Mr.
Clough succeeds Michael P. May, who resigned.
Item 6. Exhibits and Reports on Form 8-K.
_________________________________
(a) Exhibits:
_________
10.3(c) Amendment No. 3 to the Amended and Restated SITEL
Corporation 1995 Employee Stock Option Plan
10.5(a) Second Amendment to SITEL Corporation Executive Wealth
Accumulation Plan
10.12 Amended and Restated SITEL Corporation Employee Stock
Purchase Plan
27 Financial Data Schedule
(b) Reports on Form 8-K. The Company filed the following reports on
____________________
Form 8-K during the quarter for which this report is filed.
1) The Company filed a Form 8-K on January 21, 1998, reporting
under Item 5 that it had signed an agreement with Lend Lease
Corporation Limited, Sydney Australia, for a joint venture to
provide outsourced call center solutions throughout Asia Pacific.
2) The Company filed a Form 8-K on March 10, 1998, reporting under
Item 5 that it had completed the private placement of $100
million of 9 1/4% Senior Subordinated Notes and that it had
amended its revolving credit facility.
<PAGE>
SIGNATURES
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.
Date: May 14, 1998 SITEL Corporation
By: /s/ W. Gar Richlin
____________________________________________
W. Gar Richlin
Executive Vice-President and Chief Financial
Officer (Principal Financial Officer)
<PAGE>
SITEL CORPORATION AND SUBSIDIARIES
Exhibits Index: Page
_______________ ______
10.3(c) Amendment No. 3 to the Amended and Restated SITEL
Corporation 1995 Employee Stock Option Plan 14
10.5(a) Second Amendment to SITEL Corporation Executive
Wealth Accumulation Plan 15
10.12 Amended and Restated SITEL Corporation Employee
Stock Purchase Plan 18
27 Financial Data Schedule 31
_____________________
AMENDMENT NO. 3
TO THE
AMENDED AND RESTATED SITEL CORPORATION
1995 EMPLOYEE STOCK OPTION PLAN
As Adopted February 12, 1998
_________________________
1. Section 2(ee) of the Amended and Restated SITEL Corporation 1995
Employee Stock Option Plan is amended to state in its entirety as follows:
(ee) "Subsidiary" shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation if, at the
time of granting an Option, each of the corporations (other than the last
corporation in the unbroken chain) owns stock possessing 50% or more of the
voting power in one of the other corporations in such chain; provided, however,
that for purposes of Awards consisting of Incentive Stock Options, the above
percentage shall be 80% rather than 50%.
SECOND AMENDMENT TO SITEL CORPORATION
EXECUTIVE WEALTH ACCUMULATION PLAN
As Adopted March 13, 1998
_________________________
1. Section 2.14 of the SITEL Corporation Executive Wealth Accumulation
Plan (the "Plan") is amended in its entirety, effective January 1, 1998, to read
as follows:
2.14 PLAN YEAR. Plan Year means a twelve-month period commencing on January 1
and ending the following December 31, except that the first Plan Year shall
commence on the Effective Date and end on the following May 31 and the Plan Year
commencing on June 1, 1997 shall be a short Plan Year ending on December 31,
1997.
2. Section 4.1 of the Plan is amended in its entirety, effective January
1, 1998, to read as follows:
4.1 PARTICIPATION. Participation in the Plan shall be limited to those key
executives selected by the Committee who elect to participate in the Plan by
filing a Participation Agreement with the Committee. A Participation Agreement
must be filed prior to the December 15, March 15, June 15, or September 15
immediately preceding the calendar quarter in which a Participant's
participation under the agreement will commence; provided, that for the first
Plan Year of the Plan, an initial Participation Agreement may be filed at any
time prior to the deferral of any compensation for such first Plan Year. The
election to participate shall be effective on the first day of the calendar
quarter following receipt by the Committee of a properly completed and executed
Participation Agreement.
With respect to an individual hired or promoted during a Plan year who thereby
becomes eligible to participate herein, an initial Participation Agreement may
be filed within thirty days of the Committee's notification to the Participant
of eligibility to participate. Such election to participate shall be effective
on the first day of the calendar quarter following the Committee's receipt
thereof.
3. Section 4.2 of the Plan is amended in its entirety, effective January
1, 1998, to read as follows:
4.2 MINIMUM AND MAXIMUM DEFERRAL AND LENGTH OF PARTICIPATION. A Participant
may elect in any Participation Agreement to defer a portion of Participant's
Base Salary and/or Incentive Compensation. The minimum and Maximum amounts that
may be deferred under any single Participation Agreement shall be as follows:
Minimum Deferral Maximum Deferral
________________ ________________
With respect to Base
Salary Deferral 5% of Base Salary 25% of Base Salary
With respect to 10% of Incentive 100% of Incentive
Incentive Compensation Compensation Compensation
(a) With respect to Base Salary deferrals, the deferral percentage elected
in each Participation Agreement shall be applied to the Participant's Base
Salary as established for the first pay period of the first calendar
quarter to which the Participation Agreement applies, and the resulting
dollar amount shall be the amount of Base Salary that will be deferred in
each pay period subject to the Participation Agreement. Each Participation
Agreement shall apply to the Participant's Base Salary payable over a
period of one (1) calendar quarter, (or until the Participant's retirement,
whichever occurs first); provided that a Participation Agreement shall
remain in full force and effect with respect to Base Salary deferrals in
subsequent calendar quarters until a revised Participation Agreement or an
election not to participate is filed by the Participant not later than the
December 15, March 15, June 15 or September 15, immediately preceding the
commencement of the next calendar quarter.
Deferrals shall commence with the calendar quarter immediately following
the calendar quarter in which the respective Participation Agreement is
filed. The fixed dollar amount of Base Salary deferral applicable over a
deferral period shall not be changed by virtue of a change in Base Salary
alone.
(b) With respect to Incentive Compensation deferrals, the deferral
percentage selected in each Participation Agreement shall apply to the
Participant's Incentive Compensation payable over a period of four (4) calendar
quarters, (or until the Participant's retirement, whichever occurs first);
provided that a Participation Agreement shall remain in full force and effect
with respect to Incentive Compensation deferrals in subsequent calendar quarters
until a revised Participation Agreement or an election not to participate is
filed by the Participant not later than the December 15, March 15, June 15, or
September 15 immediately preceding the commencement of the calendar quarter.
4. Section 4.3 of the Plan is amended in its entirety, effective January
1, 1998, to read as follows:
4.3 ADDITIONAL PARTICIPATION AGREEMENT. A Participant may enter into a new
Participation Agreement by filing a Participation Agreement with the Committee
prior to the December 15, March 15, June 15 or September 15 immediately
preceding and calendar quarter, stating the amount that the Participant elects
to have deferred for the next calendar quarter. Such new Participation
Agreement shall be effective as to Compensation paid in calendar quarters
beginning after the last day of the calendar quarter in which the respective
agreement is filed with the Committee and shall amend any prior Participation
Agreement filed by such Participant. Each new Participation Agreement is
subject to all of the provisions and requirements set forth in paragraph 4.2.
***
AMENDED AND RESTATED
SITEL CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
As Adopted March 3, 1998
________________________
ARTICLE I
GENERAL
1.1 PURPOSE OF THE PLAN. The purpose of the Amended and Restated SITEL
Corporation Employee Stock Purchase Plan (as such plan may hereafter be further
amended, or amended and restated, from time to time, the "Plan") is to provide
Eligible Employees of the Company and its Subsidiaries with a program for the
regular purchase of Shares of the Company through periodic payroll deductions,
giving Participants the opportunity to acquire a proprietary interest in the
success of the Company.
1.2 DEFINITIONS. For purposes of the Plan, the following words and
phrases shall have the meanings indicated, unless the context clearly indicates
otherwise:
(a) "Adjusted Purchase Price" of a Share means, with respect to any
specified Purchase Date, eighty-five percent (85%) of the Purchase
Price of a Share.
(b) "Agent" means the independent agent appointed pursuant to Section
1.4.
(c) "Company" means SITEL Corporation, a Minnesota corporation.
(d) "Eligible Employee" means a person at least the age of majority
who is a full-time or part-time employee of the Company or a
Subsidiary; provided, however, that the term "Eligible Employee" shall
not include any of the following: (a) a person who has not been
employed at least six months by the Company or any such Subsidiary or
(b) an employee who has been designated by the Board of Directors of
the Company as an executive officer of the Company or who is otherwise
subject to the provisions of Section 16(b) of the Securities Exchange
Act of 1934; provided, further, that an employee who is on the payroll
of a non-U.S. Subsidiary shall not be an Eligible Employee until the
Company has determined that the Company and its Subsidiaries have
satisfied all legal requirements of the country or countries where
such employee works, resides or is a national, as may be applicable,
in order for such employee to participate in the Plan.
(e) "Fair Market Value" of a Share means, with respect to any
specified date, the average of the high and low sales prices of a
Share on such date as reported by the New York Stock Exchange or, if
no Shares were traded on such date, the fair market value of the
Shares as determined in good faith by the Executive Committee of the
Company in its sole discretion; provided, however, that the Purchase
Price, inasmuch as it represents the actual market price of a Share,
shall be deemed to be the Fair Market Value of a Share as of the
Purchase Date.
(f) "Grant Date" means the date on which an Offering commences under
the Plan, which shall be the first day of the Offering Period.
(g) "Offering" means the grant of an opportunity to Participants to
purchase Shares in respect of an Offering Period in accordance with
the provisions of the Plan.
(h) "Offering Period" means a period of three (3) consecutive
calendar months beginning on January 1, April 1, July 1, or October 1
during the term of the Plan, except that the initial Offering Period
shall begin as early as practicable after the Plan becomes effective
and shall end on March 31, 1998.
(i) "Participant" means an Eligible Employee who has elected to
participate in the Plan for an Offering Period by duly and timely
filing a properly completed Subscription Agreement for the Offering
Period in accordance with Section 2.2.
(j) "Payroll Deduction Account" means an individual bookkeeping
account established and maintained by the Company in the name of a
Participant to which is credited the Participant's payroll deductions
under the Plan for an Offering Period. Notwithstanding the foregoing,
a Participant's Payroll Deduction Account shall be unfunded, no assets
shall be set aside with respect to a Participant's Payroll Deduction
Account, and no Participant shall have any rights with respect to any
assets of the Company or any Subsidiary.
(k) "Purchase Date" with respect to an Offering Period means the
fifth (5th) trading day of the first Company trading window which
follows the conclusion of the Offering Period. Trading windows are
established pursuant to the Company's insider trading policy and
generally open forty-eight (48) hours after the Company's quarterly
earnings release in each of February, May, August, and November. The
Purchase Date is the date on which Participants shall be deemed to
have exercised their opportunity under an Offering to purchase Shares
and on which Shares shall be purchased by the Agent for Participants
in respect of an Offering pursuant to this Plan.
(l) "Purchase Price" of a Share means the average price paid by the
Agent on the Purchase Date for Shares purchased for Participants in
respect of the Offering Period which concluded immediately prior to
the Purchase Date.
(m) "Share" means a share of Common Stock, $.001 par value per share,
of the Company. The plural form of such word is "Shares".
(n) "Share Account" means an account established and maintained by
the Agent in the name of a Participant to hold the Shares purchased
pursuant to this Plan for such Participant.
(o) "Subscription Agreement" means the enrollment and payroll
deduction authorization forms prescribed by the Company which are to
be completed by Eligible Employees and filed with the Company or the
Agent, as directed by the Company, in accordance with Section 2.2, in
order to enroll in the Plan and make payroll deduction elections under
the Plan for an Offering Period.
(p) "Subsidiary" means a corporation of which not less than fifty
(50%) of the voting shares are held by the Company or a Subsidiary
whether or not such corporation now exists or hereafter is organized
or acquired by the Company or a Subsidiary of the Company. The plural
form of such word is "Subsidiaries".
1.3 EFFECTIVE DATE AND TERM OF PLAN. The Plan was originally adopted
effective November 18, 1997 and was amended and restated effective March 3,
1998. The Plan shall remain in effect indefinitely, subject to modification or
termination by the Board of Directors of the Company at any time.
1.4 APPOINTMENT AND REMOVAL OF THE AGENT. The Company shall appoint an
independent bank, trust company, brokerage firm, or other financial institution
to administer the Plan (including but not limited to the establishment of such
procedures as reasonably may be necessary to accomplish such administration in a
manner consistent with the purposes of the Plan), keep the records of the Plan
reflecting the interests of Participants, hold Shares acquired under the Plan on
behalf of Participants, and generally act as the agent of Participants in the
manner and to the extent provided in the Plan. The Agent may resign at any time
by giving written notice of such resignation to the Company at least thirty (30)
days prior to the effective date of such resignation. The Company may remove the
Agent at any time by giving written notice to the Agent prior to the effective
date of such removal. In the event of the resignation or removal of the Agent,
the Company promptly shall appoint a new Agent. The Company shall provide the
names and addresses of all Participants to the Agent to facilitate direct
communications by the Agent to the Participants.
1.5 SHARES AVAILABLE UNDER THE PLAN. The maximum number of Shares which
may be acquired by Participants under the Plan is One Million (1,000,000),
subject to proportionate adjustment upon changes in the number of outstanding
Shares by reason of a stock dividend or stock split or similar changes in the
capitalization of the Company as determined by the Board of Directors of the
Company.
1.6 ACTION BY THE COMPANY. Whenever an action is required by or permitted
by the Company under the Plan, unless otherwise expressly provided by the Plan
or the Board of Directors of the Company, such action shall be taken by the
Company's Executive Committee or its delegate.
ARTICLE II
PLAN PARTICIPATION
2.1 SUMMARY OF PLAN'S OPERATION. The Plan shall operate on the basis of
discrete Offering Periods in the following manner:
(a) Each three (3) month Offering Period is separate from other
Offering Periods;
(b) Eligible Employees may elect to be Participants for an Offering
Period by filing the prescribed Subscription Agreement with the Company or
the Agent, as directed by the Company, on or before the applicable date set
forth in Section 2.2;
(c) An Offering under the Plan for an Offering Period shall be only
to Eligible Employees who are Participants for that Offering Period;
(d) Payroll deductions designated by Participants on their individual
Subscription Agreements will be made during the Offering Period in
accordance with Section 2.2;
(e) An election to purchase Shares will be exercised automatically on
the Purchase Date in accordance with Section 2.3 with respect to Shares to
the extent funded by Participants' payroll deductions made during the
Offering Period ending immediately prior to the Purchase Date; and
(f) The Shares purchased by the Agent on the Purchase Date pursuant
to Section 2.7 shall be allocated to the Share Accounts for those
Participants whose payroll deductions during the Offering Period ending
immediately prior to the Purchase Date provided the funds used to acquire
such Shares.
2.2 ENROLLMENT. Participation in the Plan is voluntary. An Eligible
Employee may elect to participate in the Plan for an Offering Period by filing a
properly completed Subscription Agreement authorizing payroll deductions for
such Offering Period with the Human Resources department of the Company or the
Subsidiary which employs the Eligible Employee or with the Agent, as directed by
the Company, no later than the date specified by the Company which is prior to
the first day of such Offering Period. Once properly made, an Eligible
Employee's election to participate in the Plan and Subscription Agreement shall
be automatically renewed for each subsequent Offering Period until modified,
withdrawn, suspended or cancelled as provided in Section 2.4(c).
2.3 OPPORTUNITY TO PURCHASE SHARES. An Offering is made only to those
Eligible Employees who timely and properly elect to be Participants for an
Offering Period in accordance with Section 2.2. An Offering will be deemed to
have been made to Participants in respect of an Offering Period on the Grant
Date pertaining to such Offering Period. The purchase price payable by a
Participant for a Share which is the subject of an Offering made to a
Participant during an Offering Period shall be the Adjusted Purchase Price.
Notwithstanding anything to the contrary in this Plan, the maximum number of
Shares which a Participant shall have the opportunity to purchase in respect of
an Offering Period will be determined by dividing the Participant's aggregate
payroll deductions for such Offering Period made in accordance with Section 2.4
by eighty-five percent (85%) of the Fair Market Value of a Share on the Purchase
Date, subject to the following additional limitations:
(a) A Participant shall not have the opportunity to purchase Shares
if and to the extent that, immediately after the grant of such opportunity,
such Participant (or any other person whose Shares would be attributed to
such Participant pursuant to Section 424(d) of the Internal Revenue Code of
1986, as amended) would own shares of stock of the Company and its
Subsidiaries and/or hold outstanding options to purchase shares of stock of
the Company and its Subsidiaries possessing five percent (5%) or more of
the total combined voting power or value of all classes of stock of the
Company or of any Subsidiary of the Company; and
(b) A Participant shall not have the opportunity to purchase Shares
if and to the extent that such opportunity would permit the Participant's
rights to purchase stock of the Company and its Subsidiaries under all
employee stock purchase plans (described in Section 423 of the Internal
Revenue Code of 1986, as amended) to accrue at a rate which is in excess of
Twenty-Five Thousand Dollars ($25,000) in Fair Market Value of the stock
(determined at the time the opportunity is granted) for each calendar year
in which the opportunity is outstanding.
Whether any of the above limitations apply and the effect of such application
shall be determined by the Company in its sole judgment.
2.4 PAYROLL DEDUCTIONS.
(a) A Participant may make contributions under the Plan to purchase
Shares only through payroll deductions (at the rate the Participant elects
in accordance with Section 2.4(b)) which will be withdrawn from the
Participant's gross wages for each payroll period occurring while the
Participant's Subscription Agreement is in effect. A Participant's payroll
deductions shall be credited to the Participant's Payroll Deduction
Account. A Participant may not make any additional contributions to the
Plan in any other manner.
(b) A Participant shall designate the amount of the Participant's
payroll deductions under the Plan, which shall be expressed in whole dollar
amounts of the Participant's gross wages by properly completing the
appropriate section of the Participant's Subscription Agreement. A
Participant's payroll deductions under the Plan may not be less than $10.00
nor more than $961.53 per biweekly pay period. In the case of Participants
whose compensation is paid in a currency other than United States dollars,
the applicable limits shall be approximate equivalents of such minimum and
maximum amounts fixed from time to time by the Company in administratively
convenient units of such other currency. If a Participant's wages are paid
on a schedule other than biweekly, then the periodic payroll deductions
referred to in this Section 2.4(b) shall be made with respect to such
Participant in accordance with such schedule as is reflected in such
Participant's Subscription Agreement and the Company shall proportionately
adjust the minimum and maximum payroll deductions applicable to such
Participant. For purposes of determining the United States dollar amount
withheld from the gross wages of Participants whose compensation is paid in
a currency other than United States dollars, the amount withheld in such
other currency shall be converted to United States dollars on the basis of
the applicable exchange rate quoted in The Wall Street Journal for the
next-to-the-last business day of the Offering Period involved. The
determination of what constitutes a Participant's "gross wages" shall be
made by the Company and its determination shall be final.
(c) A Participant's payroll deductions for an Offering Period shall
commence on the first day of the payroll period beginning on or immediately
following the Grant Date for such Offering Period. A Participant's payroll
deductions shall continue until the Participant's Subscription Agreement is
modified, withdrawn, suspended or cancelled as follows:
(i) Cancellation of Payroll Deductions. A Participant may
elect to cancel the Participant's payroll deduction election at any
time, which election shall be effective on the first day of the
payroll period which begins fifteen (15) or more days following the
date such cancellation election is made, by duly filing a properly
completed Subscription Agreement with the Human Resources department
of either the Company or the Subsidiary which employs the Participant
or with the Agent, as directed by the Company; provided however that a
Participant who is subject to the Company's insider trading window may
only elect to cancel such Participant's payroll deduction election by
duly filing a properly completed Subscription Agreement prior to the
commencement of a new Offering Period, which cancellation election
shall be effective on the first day of the first payroll period or, if
such first payroll period begins less than fifteen (15) days after
such election is made, the first day of the second payroll period of
the Offering Period which begins after the date such election is made.
(ii) Election to Increase or Decrease Payroll Deductions. A
Participant may elect to increase or decrease the rate of the
Participant's payroll deductions by duly filing a properly completed
Subscription Agreement with the Human Resources department of either
the Company or the Subsidiary which employs the Participant or with
the Agent, as directed by the Company. The Participant's election to
increase or decrease the Participant's payroll deductions shall be
effective on the first day of the first payroll period or, if such
first payroll period begins less than fifteen (15) days after such
election is made, the first day of the second payroll period of the
Offering Period which begins after the filing of such Subscription
Agreement. The Company may elect, at its sole discretion, if the
Agent's procedures will permit more frequent changes, to permit the
elections of Participants (excluding Participants who are subject to
the Company's insider trading window) to increase or decrease payroll
deductions to become effective sooner than the next Offering Period;
if the Company notifies Participants that elections to increase or
decrease payroll deductions may become effective sooner than the next
Offering Period, such elections of Participants (excluding
Participants who are subject to the Company's insider trading window)
shall become effective on the first day of the payroll period which
begins fifteen (15) or more days following the date such change
election is made.
(iii) Automatic Adjustments. A Participant's payroll
deductions shall be automatically decreased or suspended, as
appropriate, in order for the Plan to comply with the limitations set
forth in Sections 2.3(a) and 2.3(b). The Participant's payroll
deductions shall automatically recommence and/or be increased to the
rate provided in such Participant's Subscription Agreement when the
foregoing limitations no longer restrict the Participant's
participation in the Plan.
(d) Except for a Participant who withdraws the Participant's payroll
deduction amount from the Plan for an Offering Period as provided in
Section 2.5, a Participant's election to purchase Shares shall be exercised
automatically on the Purchase Date corresponding to an Offering Period, and
the maximum number of Shares offered to each Participant determined in
accordance with Section 2.3, including fractional shares to the fourth
decimal place, will be purchased for the Participant at the Purchase Price
applying the (a) accumulated payroll deductions credited to the
Participant's Payroll Deduction Account for the Offering Period and (b) the
Company's contribution of funds equal to fifteen percent (15%) of the
Purchase Price. Any cash remaining to the credit of a Participant in the
Participant's Share Account after the purchase of the maximum number of
Shares shall be retained in the Participant's Share Account for the
subsequent Offering Period, subject to earlier withdrawal by the
Participant as provided in Section 2.5.
(e) All withholding taxes payable with respect to the amounts to be
paid to the Agent pursuant to Section 2.6 shall be deducted from the
balance of the Participant's gross wages and shall not reduce the amounts
so to be paid to the Agent.
2.5 WITHDRAWAL OF PAYROLL DEDUCTIONS; TERMINATION OF EMPLOYMENT.
(a) A Participant may withdraw all, but not less than all, of the
payroll deductions then credited to the Participant's Payroll Deduction
Account under the Plan at any time by duly filing a properly completed
Subscription Agreement with the Human Resources department of either the
Company or the Subsidiary which employs the Participant or with the Agent,
as directed by the Company; provided that a Participant who is subject to
the Company's insider trading window may not withdraw the payroll
deductions credited to such Participant's Payroll Deduction Account under
the Plan but may discontinue participation in the Plan effective with the
next Offering Period in accordance with Section 2.4(c)(i); provided further
that the withdrawal election must be filed with the Company or such
Subsidiary or the Agent, as directed by the Company, a sufficient period of
time (as designated by the Company) prior to the Purchase Date in order to
permit the processing of the withdrawal request prior to the Purchase Date.
Subject to the foregoing, the Participant's accumulated payroll deductions
then held will be paid to Participant within fifteen (15) days or as soon
thereafter as administratively possible following the filing of such
withdrawal election in accordance with this Section 2.5(a). The
Participant's payroll deduction election shall be deemed cancelled fifteen
(15) days following the filing of such withdrawal election and the
Participant may not elect to make any further payroll deductions for the
Offering Period.
(b) Upon termination of a Participant's status as an employee of the
Company or a Subsidiary (as determined in the sole judgment of the Company)
for any reason, including retirement or death, the Participant will be
deemed to have elected to withdraw from the Plan and the payroll deductions
credited to the Participant's Payroll Deduction Account will be returned to
the Participant or, in the case of a Participant's death, to the
Participant's designated beneficiary in accordance with Section 2.15, and
the Participant's outstanding opportunity to purchase Shares shall
automatically be cancelled.
(c) A Participant's withdrawal from the Plan for an Offering Period
will have no effect upon the Participant's eligibility to participate in
the Plan for a succeeding Offering Period.
(d) Payroll deductions which may be withdrawn by a Participant
pursuant to this Section 2.5 shall not include any withholding taxes
deducted from the Participant's wages pursuant to Section 2.4(e) which have
been paid or will be paid to the appropriate tax authorities for the
account of Participant.
2.6 PAYMENTS TO AGENT. As soon as administratively possible prior to each
Purchase Date, the Company shall notify the Agent in written or electronic form
of the aggregate United States dollar amount withheld for each Participant
during such Offering Period, less any amounts withdrawn by Participants pursuant
to Section 2.5. Thereafter, as soon as administratively possible the Company
shall notify the Agent of any changes in such information based upon any
additional amounts withdrawn by Participants prior to the Purchase Date pursuant
to Section 2.5. On the Purchase Date or, if permitted by its agreement with the
Agent, on or before the settlement date, the Company shall transfer to the Agent
by wire transfer (a) the aggregate United States dollar amount withheld pursuant
to the Plan for all Participants during such Offering Period, less any amounts
thereof withdrawn by Participants prior to the Purchase Date pursuant to Section
2.5 (the "Aggregate Participant Funds") and (b) as the Company's contribution,
17.65% of the Aggregate Participant Funds (the "Company's Contribution"). The
Company's Contribution of 17.65% of the Aggregate Participant Funds constitutes
15% of the Purchase Price for all Shares to be purchased by the Agent on the
Purchase Date in respect of the then completed Offering Period.
2.7 PURCHASE AND ALLOCATION OF SHARES. On the Purchase Date, the Agent
shall apply the funds received (or to be received on the settlement date) from
the Company pursuant to Section 2.6 above to the purchase at prevailing market
prices of the number of Shares which can be purchased with such funds. In order
that all such funds shall be so applied, a fractional share of the Shares shall
be purchased with such funds where necessary, and the Agent shall purchase for
the separate account of the Company and at the Company's cost such fraction of a
Share as shall, when added to the fractional share purchasable with the funds
received from the Company pursuant to Section 2.6 above, make one full Share.
All purchases of Shares as herein provided shall be made in the name of the
Agent or its nominee. The Shares purchased with the funds received by the Agent
pursuant to Section 2.6 above shall be credited by the Agent pro rata (to the
nearest ten thousandth of a share) to the Share Accounts of the Participants in
accordance with their contributions of the Aggregate Participant Funds used on
such Purchase Date.
2.8 DIVIDENDS AND DISTRIBUTIONS. Dividends and other distributions, if
any, by the Company with respect to Shares held by the Agent under the Plan
shall be allocated or otherwise dealt with by the Agent as follows:
(a) Cash Dividends. Cash dividends received by the Agent on Shares
allocated to Participants' Share Accounts shall be used by the Agent to
acquire additional Shares for such Participants on the Purchase Date which
next follows the receipt of such cash dividends and such additional Shares
shall be credited to the Share Accounts of the respective Participants in
the manner provided in Section 2.7.
(b) Stock Dividends and Stock Splits. Stock dividends and stock
splits received by the Agent on Shares allocated to Participants' Share
Accounts shall be credited to such Participants' Share Accounts (to the
nearest ten thousandth of a Share) in accordance with the Participants'
interests in such Shares.
(c) Stock Rights. If the Company makes available to its stockholders
generally rights to subscribe to additional Shares or other securities,
such rights accruing on Shares held by the Agent under the Plan shall be
sold by the Agent and the net proceeds of such sale applied in the same
manner as cash dividends received by the Agent on Shares allocated to
Participants' Share Accounts.
2.9 ISSUANCE OF STOCK CERTIFICATES; SALES OF SHARES. Upon the written
request of a Participant, the Agent will cause a stock certificate for some or
all of the full Shares in such Participant's Share Account to be issued and
delivered to such Participant as promptly as practicable. Shares to be
delivered to a Participant in accordance with the Plan will be registered in the
name of the Participant or jointly (with right of survivorship) in the name of
the Participant and another person, such as the Participant's spouse, whom the
Participant duly designates in the manner required by the Company. Upon the
issuance of such certificate, such Participant's Share Account will be
appropriately debited. Upon the written request of a Participant, the Agent
will sell for the account of such Participant any or all of the Shares in such
Participant's Share Account and shall remit the proceeds of such sale, net of
applicable brokerage commissions (if any), to such Participant as promptly as
practicable. If a Participant requests that sale proceeds be remitted to such
Participant in a currency other than United States dollars, then the requested
currency exchange shall be made at the prevailing rate for transactions of the
size involved as defined in the sole discretion of the Agent or its designee for
such purpose, and such Participant will bear all expenses incurred by the Agent
in effecting such currency exchange.
2.10 STATEMENTS. The Agent shall send a quarterly statement directly to
each Participant, showing with respect to such Participant acquisitions of
Shares, dividends if any credited to a Participant's Share Account, sales or
distribution of Shares, and any applicable commissions or fees charged to such
Participant during the period covered by such statement.
2.11 STOCKHOLDER RIGHTS. A Participant will have the right to vote the
Shares in his or her Share Account in accordance with the Agent's customary
procedures for the voting of shares held in "street name" or other similar types
of accounts. A Participant shall have no rights as a stockholder of the Company
with respect to any Shares held in such Participant's Share Account until a
certificate for such Shares has been issued in the name of such Participant and
reflected in the stockholder records of the Company.
2.12 EXPENSES. The Company will bear all of the expenses of administering
the Plan, including but not limited to the Agent's fees and any transfer taxes.
A Participant will, however, bear any expense incurred by the Agent in selling
Shares held for such Participant under the Plan, including but not limited to
applicable brokerage commissions and currency exchange expenses, as well as all
taxes applicable to the purchase, holding or sale of the Shares and all fees
charged by the Agent for causing one or more certificates for Shares to be
issued to the Participant.
2.13 TERMINATION OF ELIGIBILITY. If a Participant ceases to be eligible to
participate in the Plan for any reason, including but not limited to the
termination of such Participant's employment by the Company or a Subsidiary,
then the Company promptly shall so notify the Agent. Promptly after its receipt
of such a notification, the Agent shall cause the transfer agent for the Shares
to issue and deliver to such Participant a certificate for the whole Shares then
credited to such Participant's Share Account and shall sell any fraction of a
Share then credited to such Participant's Share Account and remit the net
proceeds of such sale to such Participant. Alternatively, at the request of
such Participant, the Agent shall sell all of the Shares then credited to such
Participant's Share Account and remit the net proceeds of such sale to such
Participant. In the event of the death of a Participant, the Agent shall
maintain the deceased Participant's Share Account pending receipt of
instructions as to the disposition of such account from the duly authorized
representative of the deceased Participant's estate.
2.14 TERMINATION OF PLAN. If the Company terminates the Plan, the Agent
shall then follow the procedures set forth in Section 2.13 with respect to the
disposition of all Shares then credited to Share Accounts of Participants.
2.15 DESIGNATION OF BENEFICIARY. A Participant may file with the Company
or the Subsidiary which employs the Participant, on the form prescribed by the
Company, a written designation of a beneficiary who is to (i) receive any Shares
and/or any cash credited under the Participant's Share Account in the event of
the Participant's death after the Purchase Date pertaining to an Offering Period
but prior to delivery of certificates for Shares and the remaining cash credited
to the Participant's Share Account or (ii) receive any cash from the
Participant's Payroll Deduction Account under the Plan in the event of the
Participant's death during an Offering Period prior to the Purchase Date
pertaining to such Offering Period. A Participant may change the Participant's
designation of beneficiary at any time by filing with the Company or the
Subsidiary which employs the Participant or with the Agent, as directed by the
Company, a written notice of change of beneficiary on the form prescribed by the
Company for this purpose. If a Participant dies without a valid beneficiary
designation form in effect, the Company shall deliver such Shares and cash to
the executor or administrator of the estate of the Participant or, if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company in its discretion may deliver such Shares and cash to the spouse or
to any one or more dependents or relatives of the Participant or, if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate.
ARTICLE III
MISCELLANEOUS
3.1 INTERPRETATION. The Executive Committee of the Company or its delegate
shall have the authority to establish rules and regulations for the operation of
the Plan, to interpret the Plan, and to decide any and all questions which may
arise in connection with the Plan. Any delegate of the Executive Committee for
purposes of the Plan shall not make any discretionary decision which pertains
directly to such delegate as a Participant.
3.2 STATUS OF FUNDS. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose and
the Company shall not be obligated to segregate such payroll deductions. No
interest shall accrue on a Participant's payroll deductions or on a
Participant's Payroll Deduction Account.
3.3 NONASSIGNABILITY. No Participant shall have any right to sell,
assign, transfer, pledge or otherwise encumber or convey such Participant's
Payroll Deduction Account or any payroll deductions credited thereto or such
Participant's Share Account or any Shares and/or cash credited thereto, or any
part thereof, nor any right or opportunity to purchase Shares pursuant to the
Plan (other than by will, the laws or descent or distribution or as provided in
Section 2.15). Any such attempted sale, assignment, transfer, pledge,
encumbrance or conveyance shall have no effect, except that the Company in its
discretion may treat such act as an election to withdraw funds in accordance
with Section 2.5. During a Participant's lifetime, the right or opportunity to
purchase Shares pursuant to an Offering under the Plan is exercisable only by
the Participant.
3.4 EMPLOYMENT RIGHTS. An Eligible Employee's election to participate in
the Plan and the Company's acceptance of such Eligible Employee's enrollment in
the Plan shall not be deemed to constitute a contract of employment between such
Eligible Employee and the Company or any Subsidiary. No provision of the Plan
shall be deemed to give any Participant any right (i) to be retained in the
employ or other service of the Company or any Subsidiary for any specific length
of time, (ii) to interfere with the right of the Company or any Subsidiary to
discipline or discharge the Participant at any time, (iii) to hold any
particular position or responsibility with the Company or any Subsidiary, or
(iv) to receive any particular compensation from the Company or any Subsidiary.
3.5 WITHHOLDING; PAYROLL TAXES. To the extent required by applicable laws
and regulations in effect at the time payroll deductions pursuant to the Plan
are made from a Participant's wages, the Company or the Subsidiary by whom such
Participant's wages are paid shall withhold from the remaining portion of such
wages any taxes or other obligations required to be withheld from such wages by
federal, state, local or other laws by reason of such payroll deductions and the
purchase of Shares under the Plan for the benefit of such Participants at a
price less than Fair Market Value.
3.6 TRANSFER UPON DEATH. The Share Account of a Participant may be
transferred by will or the laws of descent and distribution upon the death of
such Participant.
3.7 AMENDMENT. The Board of Directors of the Company may amend the Plan at
any time in whole or in part without terminating the Plan; however, no amendment
of the Plan shall decrease the number of Shares already credited to the Share
Accounts of Participants. If the Board of Directors of the Company changes the
discount from Fair Market Value at which Shares are to be acquired under the
Plan, then the Company shall not implement such change until the then
Participants have been notified of such change and have been given a reasonable
opportunity to cease participation in the Plan.
3.8 PLAN YEAR. The plan year shall be the calendar year, except that the
first plan year shall begin on the effective date of the Plan and end on
December 31, 1998.
3.9 LIMITATION OF RESPONSIBILITY. Neither the Company, a Subsidiary, nor
the Agent shall have any responsibility or liability, other than liabilities
arising out of the Securities Act, for any act or thing done or left undone,
including without limitation any action taken with respect to the price, time,
quantity, or other conditions and circumstances of the purchase of Shares under
the terms of the Plan. A determination by the Company as to any question that
may arise regarding the Plan's conduct or operation shall be final.
3.10 NOTICES. (a) All notices or other communications by a Participant to
the Company or a Subsidiary under or in connection with the Plan shall be deemed
to have been duly given when received in the form specified by the Company at
the location, or by the person, designated by the Company for receipt thereof.
(b) All notices or other communications by the Company or the Agent to a
Participant under or in connection with the Plan shall be deemed to have been
duly given three (3) days after mailing thereof to the address for such
Participant contained in the Company's or Subsidiary's payroll records.
3.11 GOVERNING LAW. The provisions of the Plan shall be governed by and
construed according to the laws of the State of Nebraska.
3.12 NUMBER AND GENDER. Unless the context otherwise requires, for all
purposes of the Plan, words in the singular include their plural, words in their
plural include their singular, and words of one gender include the other
genders.
3.13 SUCCESSORS. The provisions of the plan shall be binding upon and
inure to the benefit of the Company, each Participant, and their respective
heirs, personal representatives, successors, and permitted assigns (if any).
3.14 SECTION TITLES. The titles of the various sections of the Plan are
for convenient reference only and shall not be considered in the interpretation
of the Plan.
3.15 CURRENCY. References to currency in the Plan shall, as appropriate,
refer to the lawful currency of the United States. Unless otherwise specified
herein, any conversion from the currency of one country to the other shall
employ the exchange rate in effect at the time such conversion is made, as
determined by the Executive Committee of the Company.
3.16 EFFECTIVE DATE. This Plan was originally adopted effective November
18, 1997. The effective date of this Plan as amended and restated is March 3,
1998.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-Q
and is qualified in its entirety by reference to such Form 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 12,318
<SECURITIES> 0
<RECEIVABLES> 125,334
<ALLOWANCES> 4,904
<INVENTORY> 0
<CURRENT-ASSETS> 161,442
<PP&E> 171,484
<DEPRECIATION> 58,040
<TOTAL-ASSETS> 393,166
<CURRENT-LIABILITIES> 104,627
<BONDS> 100,000
0
0
<COMMON> 64
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 393,166
<SALES> 137,748
<TOTAL-REVENUES> 137,748
<CGS> 77,820
<TOTAL-COSTS> 132,492
<OTHER-EXPENSES> (135)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,590
<INCOME-PRETAX> 2,801
<INCOME-TAX> 1,117
<INCOME-CONTINUING> 1,978
<DISCONTINUED> 0
<EXTRAORDINARY> 514
<CHANGES> 0
<NET-INCOME> 1,464
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
