-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D9B0b4HrTytnBzaPcuFge5GJ21rvdU75IIABi2lAhaTJkGN4PfaBFY5XwppoJNxQ 7q5ECpDHKwis+hBGDvQsFA== 0000902664-05-002280.txt : 20051123 0000902664-05-002280.hdr.sgml : 20051123 20051123171746 ACCESSION NUMBER: 0000902664-05-002280 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20051123 DATE AS OF CHANGE: 20051123 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: JANA PARTNERS LLC CENTRAL INDEX KEY: 0001159159 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: JANA PARTNERS LLC STREET 2: 536 PACIFIC AVENUE CITY: SAN FRANCISCO STATE: CA ZIP: 94133 BUSINESS PHONE: 2125935955 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SITEL CORP CENTRAL INDEX KEY: 0000943820 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 470684333 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-44769 FILM NUMBER: 051225852 BUSINESS ADDRESS: STREET 1: 7277 WORLD COMMUNICATIONS DR CITY: OMAHA STATE: NE ZIP: 68122 BUSINESS PHONE: 4106595700 MAIL ADDRESS: STREET 1: 7277 WORLD COMMUNICATIONS DR CITY: OMAHA STATE: NE ZIP: 68122 SC 13D/A 1 sc13da.txt SITEL CORPORATION SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------- SCHEDULE 13D* (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) Under the Securities Exchange Act of 1934 (Amendment No. 1) SITEL Corporation - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $0.001 per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 82980K107 - -------------------------------------------------------------------------------- (CUSIP Number) Marc Weingarten, Esq. Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 (212) 756-2000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 23, 2005 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. [ ] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 5 Pages) - -------------------------- * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - ------------------------------ --------------------- CUSIP NO. 82980K107 SCHEDULE 13D/A PAGE 2 OF 5 PAGES - ------------------------------ --------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) JANA PARTNERS LLC - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 10,676,665 ---------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY -0- OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON WITH 10,676,665 ---------------------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 10,676,665 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 14.5% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IA - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! - ------------------------------ --------------------- CUSIP NO. 82980K107 SCHEDULE 13D/A PAGE 3 OF 5 PAGES - ------------------------------ --------------------- The Schedule 13D filed on July 29, 2005 by JANA Partners LLC, a Delaware limited liability company (the "Reporting Person"), relating to the shares ("Shares") of common stock, $0.001 par value, of SITEL Corporation (the "Issuer") is hereby amended as set forth below by this Amendment No. 1 to the Schedule 13D. ITEM 2. IDENTITY AND BACKGROUND. Item 2(a) of the Schedule 13D is hereby amended and restated as follows: (a) This statement is filed by JANA Partners LLC, a Delaware limited liability company (the "Reporting Person"). The Reporting Person is a private money management firm which holds the Shares of the Issuer through JANA Pirahna Master Fund, Ltd., a Cayman Islands exempted company (the "Fund"). The Reporting Person is the investment manager to the Fund and accordingly may be deemed to have beneficial ownership of such Shares. The principals of the Reporting Person are Barry Rosenstein and Gary Claar (the "Principals"). ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Item 3 of the Schedule 13D is hereby amended and restated as follows: The aggregate purchase price of the 10,676,665 Shares owned beneficially by the Reporting Person is $22,153,477.33. Such Shares were acquired with the working capital of the Fund and held in a margin account. ITEM 4. PURPOSE OF TRANSACTION. The last two paragraphs of Item 4 of the Schedule 13D are hereby amended and restated as follows: On November 23, 2005, the Reporting Person sent a letter to the Issuer informing the Issuer that it will promptly receive notification of the Reporting Person's intent to, at the Issuer's 2006 annual meeting of shareholders, nominate three individuals for election to the Board, propose amendments to the By-Laws of the Issuer allowing for the removal (with or without cause) and replacement of members of the Board by the shareholders of the Issuer, and propose the removal of two additional directors and election of their replacements. A copy of the letter is attached hereto as Exhibit B and incorporated herein by reference. A press release disclosing these matters, issued on November 23, 2005, is attached hereto as Exhibit C. The notification was delivered to the Issuer by facsimile and overnight mail on November 23, 2005. The notification states that a representative of the Fund shall appear at the 2006 annual meeting of shareholders in person or by proxy to: (1) nominate the following three individuals to the Board: Stephen L. Key, the sole proprietor of Key Consulting, LLC, Robert H. Getz, a private investor and a Managing Director at Cornerstone Equity Investors, LLC, and Adam Scotch, a Managing Director of the Reporting Person; (2) propose an amendment to the Issuer's bylaws to permit shareholders to remove directors with or without cause and to fill any vacancies on the Board by the vote of a majority of the quorum; and (3) if the proposal allowing shareholders to remove and replace directors with or without cause is approved, to remove from the Board James F. Lynch and Rohit M. Desai and replace them with Thomas M. Hudgins, a former lead partner at Ernst & Young LLP, and Giorgio Caputo, an Investment Analyst of the Reporting Person, respectively. The Reporting Person intends to review its investment in the Issuer on a continuing basis and may engage in further discussions with management, the Board, other shareholders of the Issuer and other relevant parties concerning the business, operations, board composition, management, strategy and future plans of the Issuer. Depending on various factors including, without limitation, the Issuer's financial position and strategic direction, the outcome of the discussions and actions referenced above, price levels of the Shares, conditions in the securities market and general economic and industry conditions, the Reporting Person may in the future take such actions with respect to its investment in the Issuer as it deems appropriate including, without limitation, purchasing additional shares or selling some or all of its Shares, engaging in short selling of or any hedging or similar transactions with respect to the Shares, encouraging the Issuer to maximize shareholder value through one or more strategic transactions and/or otherwise changing its intention with respect to any and all matters referred to in Item 4 of Schedule 13D. Except as set forth above, the Reporting Person has no present plan or proposal that would relate to or result in any of the matters set forth in subparagraphs (a)-(j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. Paragraph (c) of Item 5 of the Schedule 13D is hereby amended and restated as follows: (c) There have been no transactions in the Shares effected by the Reporting Person in the past 60 days. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 1. Exhibit B - Letter to Issuer dated November 23, 2005. 2. Exhibit C - Press Release dated November 23, 2005. - --------------------------- ------------------- CUSIP NO. 82980K107 SCHEDULE 13D/A PAGE 4 OF 5 PAGES - --------------------------- ------------------- SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 23, 2005 JANA PARTNERS LLC By: /s/ Barry Rosenstein --------------------------- Name: Barry Rosenstein Title: Managing Partner By: /s/ Gary Claar --------------------------- Name: Gary Claar Title: Managing Director - --------------------------- ------------------- CUSIP NO. 82980K107 SCHEDULE 13D/A PAGE 5 OF 5 PAGES - --------------------------- ------------------- EXHIBIT INDEX 1. Exhibit B - Letter to Issuer dated November 23, 2005. 2. Exhibit C - Press Release dated November 23, 2005. EX-99 2 exhibit99.txt LETTER TO SWW November 23, 2005 Board of Directors SITEL Corporation 7277 World Communications Drive Omaha, Nebraska 68122 Attention: Mr. James F. Lynch, Chairman and Chief Executive Officer TRANSMITTED BY FACSIMILE AND OVERNIGHT DELIVERY Gentlemen: JANA Partners LLC ("we" or "us") currently beneficially owns 10,676,665, or approximately 14.5%, of the outstanding shares of SITEL Corporation ("SITEL" or the "Company"). We believe that given the current leadership's inability to create shareholder value and failure to grow the Company profitably, the Company should aggressively pursue strategic alternatives to maximize shareholder value, including a sale of the Company. Therefore, we read with great interest the Company's announcement today that it has retained a financial advisor and established a special committee to "evaluate various strategies" to "enhance long-term shareholder value." While we are pleased that the Board of Directors (the "Board") at a minimum appears aware that many of its shareholders believe the Company must aggressively pursue value, there are three important factors to consider. First, today's sudden announcement gives an overwhelming appearance of gamesmanship. The timing of this announcement, shortly before the November 30 deadline for submitting director nominees and other proposed business for the Company's 2006 Annual Meeting (the "Meeting"), causes us to believe that it is designed to discourage shareholders from submitting such proposals prior to the deadline. As you are well aware, we have been advocating an amendment to the Company's bylaws which would give shareholders more time to decide whether to bring shareholder nominees and other business before next year's meeting and have been attempting to work with the Company's representatives to reach a resolution that would provide this additional time and put the Company on a path to pursuing strategic alternatives. This announcement appears designed to dissuade us from that attempt while leaving us and other shareholders with no recourse should the Board fail to legitimately pursue all avenues to achieving maximum shareholder value. Second, we have strong reservations about entrusting the current Board to follow through in a meaningful and timely manner on its already vague commitment to "evaluate various strategies". We have seen no indication prior to today's abrupt announcement that the Board is seriously exploring any potential strategic alternatives. In fact, we are aware that more than one credible buyer has approached the Company regarding a sale or merger but has been rebuffed by the Company. Additionally, we note that the Company's announcement appears deliberately worded to avoid the mention of exploring a sale of the Company, an exercise which we believe is essential to pursuing maximum value given the Company's operating history and failure to create value. Third, the current leadership's history of destroying shareholder value gives us serious concern about entrusting this process to the current members of the Board. For example: o We believe that Company management fails to grasp that revenue growth is not a worthwhile achievement if profitability increases do not follow. Despite growing revenues by approximately 69% since 1998, the Company's EBITDA (excluding charges) has actually fallen by approximately 14% during this period through the twelve months ended September 30, 2005. Corresponding with this decline in EBITDA, SITEL's EBITDA margins have been nearly cut in half (falling to 5.1% for the twelve months ended September 30, 2005 from 10.1% for fiscal year 1998). By comparison, one of SITEL's major competitors, TeleTech Holdings, Inc. ("TeleTech"), has increased revenue by approximately 146% and EBITDA by 75% during this same period, while their EBITDA margin for the twelve months ended September 2005 was 8.6%, adjusted for non-recurring items. Another competitor, Sykes Enterprises Inc. ("Sykes"), had a similarly greater margin for the same period at 10.2%. This demonstrates the inability of SITEL management to compete in terms of generating incrementally profitable revenue. We believe that these substandard margins are the result of a combination of a lack of overall discipline with regard to negotiating new contracts as well as a bloated corporate infrastructure. o SITEL has written off or has announced plans to write off approximately $67 million of asset value since 1998, a significant amount considering that this is more than the Company's entire EBITDA in an average year during this period, which demonstrates in our view a significant ineptitude for investing in long-term productive assets. Viewed another way, the aggregate amount of assets written off since 1998 is equal to approximately 41% of SITEL's then-stated shareholders' equity. o As another relevant measure of management's ineffective deployment of capital coupled with an inability to translate higher revenue into higher profitability, we note that SITEL's margin of EBITDA less capital expenditures (EBITDA less capital expenditures divided by revenue) is substantially lower than its closest competitors. For example, for the twelve months ended September 30, 2005, this margin for SITEL was 2.2%, versus 4.7% for TeleTech and 7.5% for Sykes. o We believe SITEL's high level of days' sales outstanding, or "DSO," is indicative of a failure at the Company to effectively manage its largest current asset, Accounts Receivable. Even allowing for geographic mix (given that countries outside the U.S. traditionally have longer payment terms), SITEL has mismanaged its working capital and squandered significant amounts of potential free cash flow which could have been used for productive purposes, such as paying down debt. This is evident when one compares the Company's DSO to those of its competitors: for the quarter ended September 30, 2005, Teletech and Sykes maintained DSO's of approximately 57 and 64, respectively, while for the same period DSO at SITEL remained unacceptably high at 73 days, based on publicly available information. o Since the return of Chairman and CEO James Lynch in the beginning of April, 2001 until the day prior to the filing of our Schedule 13D (July 28, 2005), the price of SITEL's common stock fell approximately 19%, and since its historic high in October 1996 it has decreased approximately 91%. o Despite this record of destroying shareholder value, the combined annual salary of the Company's five highest paid executives in 2004 was over 30% higher than the combined annual salary of the five highest paid executives in 2001. Mr. Lynch's annual salary in 2004 alone increased by over 40% versus 2001. As Mr. Lynch himself put it in a November, 2002 interview with The Wall Street Transcript, "In the service business all we have is a reputation so if we are not excellent, we have got major problems." We believe the same is true in the business of running a public company. SITEL has had more than ample time to reverse its fortunes and its performance in our opinion has been far from "excellent"; in fact, we think it has been abysmal. Therefore, we are writing to inform you that the Company will receive promptly notification of our nominations for the three open seats on the Board at the Meeting as well as proposed bylaw amendments and proposals providing for the removal and replacement of additional members of the Board by shareholders. Without any real enforcement mechanism, the Board's belated, and to us largely unconvincing, announcement that it intends to evaluate various strategies is a potentially toothless exercise. We have repeatedly attempted to work with you to come up with a solution to the pressure the November 30 deadline imposes, but your unwillingness to address this issue leaves us with no choice but to submit our nominations in accordance with the current deadline in order to protect our interests as shareholders, and today's announcement has done nothing to change our opinion regarding this matter. We assume today's announcement results from the Board's reaching the same conclusion that we have, that the current Board faces the very likely prospect of losing at least three and perhaps additional board seats at the Meeting. We caution you now against any attempts to interfere with our rights as shareholders to protect our interests by bringing our director nominees or other business before the Meeting next year. Sincerely, Barry Rosenstein JANA Partners LLC Managing Partner EX-99 3 exhibit99c.txt EXHIBIT C-PRESS RELEASE FOR IMMEDIATE RELEASE For more information, please contact JANA Partners LLC at (212) 692-7696 JANA PARTNERS LLC ANNOUNCES SITEL BOARD NOMINEES AND INTENTION TO REPLACE ADDITIONAL BOARD MEMBERS New York, New York - November 23, 2005 - JANA Partners LLC ("JANA"), an approximately $4.5 billion hedge fund, announced today that it will promptly send notice to SITEL Corporation (NYSE - SWW) ("SITEL" or the "Company") of its intention to nominate three directors for election at the Company's 2006 Annual Meeting (the "Meeting") and to bring proposals before the Meeting to remove and replace additional members of SITEL's Board of Directors (the "Board"). JANA currently beneficially owns approximately 14.5% of the outstanding common shares of SITEL. In response to an announcement by SITEL today that it had hired a financial advisor and would be evaluating "various strategies" to "enhance long-term shareholder value", JANA Managing Partner Barry Rosenstein questioned both the timing of the announcement and the commitment of the Board to pursue all avenues of maximizing shareholder value, including a sale of the Company. In a letter sent today to the Board, Mr. Rosenstein stated that today's sudden announcement "gives an overwhelming appearance of gamesmanship. The timing of this announcement, shortly before the November 30 deadline for submitting director nominees and other proposed business for the Company's 2006 Annual Meeting, causes us to believe that it is designed to discourage shareholders from submitting such proposals prior to the deadline." "[W]e have strong reservations about entrusting the current Board to follow through in a meaningful and timely manner on its already vague commitment to `evaluate various strategies'," Mr. Rosenstein continued. "We have seen no indication prior to today's abrupt announcement that the Board is seriously exploring any potential strategic alternatives. In fact, we are aware that more than one credible buyer has approached the Company regarding a sale or merger but has been rebuffed by the Company. Additionally, we note that the Company's announcement appears deliberately worded to avoid the mention of exploring a sale of the Company, an exercise which we believe is essential to pursuing maximum value given the Company's operating history and failure to create value." Mr. Rosenstein went on to state in his letter that "the current leadership's history of destroying shareholder value gives us serious concern about entrusting this process to the current members of the Board." As an example, Mr. Rosenstein cited SITEL's inability to translate growth in revenues to proportionate increases in profitability, noting that "Despite growing revenues by approximately 69% since 1998, the Company's EBITDA (excluding charges) has actually fallen by approximately 14% during this period through the twelve months ended September 30, 2005. Corresponding with this decline in EBITDA, SITEL's EBITDA margins have been nearly cut in half (falling to 5.1% for the twelve months ended September 30, 2005 from 10.1% for fiscal year 1998)." Mr. Rosenstein went on to note that the Company's bylaws force shareholders who wish to nominate directors or bring other business before the Annual Meeting to do so almost six months prior to the expected date of the meeting, meaning shareholders who fail to comply with such deadline will be left without recourse at next year's meeting should the Board fail to pursue maximum shareholder value. "Without any real enforcement mechanism, the Board's belated, and to us largely unconvincing, announcement that it intends to evaluate various strategies is a potentially toothless exercise," Mr. Rosenstein stated in the letter. "We have repeatedly attempted to work with you to come up with a solution to the pressure the November 30 deadline imposes, but your unwillingness to address this issue leaves us with no choice but to submit our nominations in accordance with the current deadline in order to protect our interests as shareholders, and today's announcement has done nothing to change our opinion regarding this matter." BACKGROUND JANA Partners LLC, a Delaware limited liability company, is a private money management firm. *** -----END PRIVACY-ENHANCED MESSAGE-----