U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 7, 2003
Commission file number 1-12793
STARTEK, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE |
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84-1370538 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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100 Garfield Street, Denver, Colorado 80206 |
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(Address of principal executive offices, Zip Code) |
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(303) 361-6000 |
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(Registrants telephone number, including area code) |
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(Former name, former address and former fiscal year, if changed since last report) |
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(C) Exhibits
Exhibit No. |
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Description |
99.1 |
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Press Release dated May 7, 2003 |
ITEM 9. REGULATION FD DISCLOSURE
Pursuant to Regulation FD, StarTek, Inc. is filing this 8-K, attaching its press release dated May 7, 2003 regarding first quarter results of operations for 2003.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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STARTEK, INC. |
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Date: May 7, 2003 |
By: |
/s/ David I. Rosenthal |
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David I. Rosenthal |
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Exhibit 99.1
FOR RELEASE at 8:00 a.m. EST |
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Contact: A. Emmet Stephenson, Jr. |
Wednesday, May 7, 2003 |
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Chairman |
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Phone: (303) 399-2400 Ext. 0 |
StarTek, Inc. Reports First Quarter Results
DENVER, COStarTek, Inc. (NYSE:SRT) today reported results for the first quarter ended March 31, 2003. Net income was $4.2 million, or $0.29 earnings per fully diluted share, compared to $4.0 million, or $0.28 earnings per fully diluted share in the first quarter of 2002. Revenue in the first quarter of 2003 was $50.5 million, up from $46.0 million in the same quarter last year.
Chairman A. Emmet Stephenson, Jr. said, As expected, our growth in the first quarter was only modest as we concentrate on adding new capacity for identifiable client demand in the second half of the year. Currently, we are still absorbing start up costs, including training expense, for the two new facilities, one of which will start generating revenue late this quarter with the second one becoming operational shortly thereafter. The year seems to be developing similarly to our historical seasonal pattern, and we expect to be more satisfied with the second half of 2003 than the sluggish first half.
Company Profile
StarTek, Inc. combines two outstanding business opportunitiesour established position as a leading global provider of business process outsourcing services and ownership interests in proprietary Internet web site businesses arising from a portfolio of world class brand Internet domain names. Our integrated process management outsourcing services include business process management for complex telecommunications systems, high-end inbound technical support and customer care, E-commerce support and fulfillment, Internet support, and a comprehensive offering of supply chain management services. StarTek has six facilities in Colorado, four in Canada, and one each in Illinois, Oklahoma, Tennessee, Texas, and Wyoming. Pan-European services are performed from two facilities in the United Kingdom. The Companys clients are in the software, technology, consumer products, Internet, E-commerce, and communications industries; however, we are also targeting financial services and health care companies. Please visit our web site at http://www.startek.com.
Forward Looking Statements
The matters regarding the future discussed in this news release include certain forward-looking statements that involve specific risks and uncertainties. In accordance with the Private Securities Litigation Reform Act of 1995, the following are important factors that could cause StarTeks actual results to differ materially from those expressed or implied by such forward-looking statements. These include, but are not limited to, general economic conditions in the Companys
markets, the loss of its principal clients, the loss or delayed implementation of a large project which could cause quarterly variation in StarTeks revenue and earnings, difficulties of managing rapid growth, dependence on key personnel and our labor force, dependence on key industries and the trend toward outsourcing, risks associated with StarTeks contracts, risks associated with rapidly changing technology, risks of business interruption, risks associated with international operations and expansion, risks from offshore competition, highly competitive domestic and international markets, and risks related to fluctuating values in the companys portfolio of investment securities. Readers are encouraged to review Managements Discussion and Analysis of Financial Condition and Results of OperationsFactors That May Affect Future Results and all other disclosures appearing in the Companys Form 10-K and 10-Q filings with the Securities and Exchange Commission.
Condensed Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
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December
31, |
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March 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
13,143 |
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$ |
34,951 |
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Investments |
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44,022 |
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36,101 |
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Trade accounts receivable, less allowance for doubtful accounts of $816 and $813, respectively |
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37,232 |
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26,388 |
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Inventories |
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1,463 |
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2,914 |
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Income tax receivable |
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335 |
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Deferred tax assets |
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4,300 |
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3,420 |
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Prepaid expenses and other assets |
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958 |
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955 |
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Total current assets |
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101,453 |
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104,729 |
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Property, plant and equipment, net |
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38,797 |
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38,736 |
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Long term deferred tax assets |
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110 |
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172 |
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Other assets |
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61 |
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71 |
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Total assets |
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$ |
140,421 |
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$ |
143,708 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
11,156 |
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$ |
8,630 |
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Accrued liabilities |
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7,235 |
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8,853 |
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Income taxes payable |
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339 |
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Current portion of long-term debt |
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2,221 |
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2,219 |
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Other |
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462 |
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451 |
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Total current liabilities |
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21,074 |
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20,492 |
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Long-term debt, less current portion |
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4,261 |
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3,707 |
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Other |
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492 |
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431 |
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Stockholders equity: |
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Common stock |
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142 |
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142 |
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Additional paid-in capital |
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50,060 |
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50,360 |
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Cumulative translation adjustment |
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(123 |
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(19 |
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Unrealized loss on investments available for sale |
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(738 |
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(812 |
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Retained earnings |
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65,253 |
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69,407 |
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Total stockholders equity |
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114,594 |
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119,078 |
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Total liabilities and stockholders equity |
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$ |
140,421 |
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$ |
143,708 |
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STARTEK, INC. AND SUBSIDIARIES
Condensed Consolidated Income Statements
(dollars in thousands, except per share data)
(unaudited)
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Three
Months Ended |
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2002 |
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2003 |
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Revenue |
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$ |
45,960 |
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$ |
50,528 |
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Cost of services |
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34,791 |
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38,341 |
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Gross profit |
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11,169 |
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12,187 |
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Selling, general and administrative expenses |
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5,217 |
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6,350 |
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Operating profit |
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5,952 |
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5,837 |
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Net interest income and other |
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578 |
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779 |
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Income before income taxes |
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6,530 |
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6,616 |
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Income tax expense |
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2,510 |
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2,462 |
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Net income |
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$ |
4,020 |
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$ |
4,154 |
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Weighted average shares of common stock |
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14,086,561 |
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14,203,794 |
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Dilutive effect of stock options |
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182,693 |
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275,793 |
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Common stock and common stock equivalents |
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14,269,254 |
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14,479,587 |
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Earnings per share: |
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Basic |
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$ |
0.29 |
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$ |
0.29 |
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Diluted |
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$ |
0.28 |
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$ |
0.29 |
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STARTEK, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
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Three Months Ended |
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2002 |
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2003 |
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Operating Activities |
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Net income |
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$ |
4,020 |
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$ |
4,154 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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2,232 |
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2,409 |
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Deferred income taxes |
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2,406 |
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806 |
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Gain on sale of assets |
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(22 |
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Changes in operating assets and liabilities: |
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Sales (purchases) of trading securities, net |
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(3,990 |
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566 |
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Trade accounts receivable, net |
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1,657 |
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10,844 |
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Inventories |
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173 |
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(1,451 |
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Prepaid expenses and other assets |
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212 |
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(7 |
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Accounts payable |
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(2,743 |
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(2,526 |
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Income taxes payable |
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(750 |
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736 |
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Accrued and other liabilities |
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1,283 |
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1,546 |
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Net cash provided by operating activities |
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4,500 |
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17,055 |
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Investing Activities |
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Purchases of investments available for sale |
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(9,514 |
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(13,808 |
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Proceeds from disposition of investments available for sale |
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2,847 |
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21,041 |
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Purchases of property, plant and equipment |
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(1,401 |
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(1,845 |
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Proceeds from disposition of property plant and equipment |
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36 |
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120 |
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Net cash provided by (used in) investing activities |
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(8,032 |
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5,508 |
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Financing Activities |
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Stock options exercised |
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279 |
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238 |
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Principal payments on borrowings, net |
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(1,060 |
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(898 |
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Net cash used in financing activities |
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(781 |
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(660 |
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Effect of exchange rate changes on cash |
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221 |
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(95 |
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Net increase (decrease) in cash and cash equivalents |
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(4,092 |
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21,808 |
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Cash and cash equivalents at beginning of period |
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14,282 |
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13,143 |
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Cash and cash equivalents at end of period |
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$ |
10,190 |
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$ |
34,951 |
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