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)

 

 

 

ITEM 7.                                                     FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

 

(C)                                          Exhibits

 

Exhibit No.		Description
99.1		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.

 

	STARTEK, INC.
Date:  May 7, 2003	By:	/s/ David I. Rosenthal
	David I. Rosenthal Executive Vice President, Chief Financial Officer, Secretary, and Treasurer

 

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Exhibit 99.1

 

 

StarTek, Inc. Reports First Quarter Results

 

DENVER, CO–StarTek, 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 opportunities—our 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 Company’s 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 StarTek’s 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 Company’s

 

 

markets, the loss of its principal clients, the loss or delayed implementation of a large project which could cause quarterly variation in StarTek’s 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 StarTek’s 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 company’s portfolio of investment securities.  Readers are encouraged to review Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors That May Affect Future Results and all other disclosures appearing in the Company’s Form 10-K and 10-Q filings with the Securities and Exchange Commission.

 

 

 

STARTEK, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(dollars in thousands)

(unaudited)

 

		December 31, 2002			March 31, 2003
ASSETS
Current assets:
Cash and cash equivalents		$	13,143		$	34,951
Investments		44,022			36,101
Trade accounts receivable, less allowance for doubtful accounts of $816 and $813, respectively		37,232			26,388
Inventories		1,463			2,914
Income tax receivable		335			—
Deferred tax assets		4,300			3,420
Prepaid expenses and other assets		958			955
Total current assets		101,453			104,729
Property, plant and equipment, net		38,797			38,736
Long term deferred tax assets		110			172
Other assets		61			71
Total assets		$	140,421		$	143,708
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	11,156		$	8,630
Accrued liabilities		7,235			8,853
Income taxes payable		—			339
Current portion of long-term debt		2,221			2,219
Other		462			451
Total current liabilities		21,074			20,492
Long-term debt, less current portion		4,261			3,707
Other		492			431
Stockholders’ equity:
Common stock		142			142
Additional paid-in capital		50,060			50,360
Cumulative translation adjustment		(123		)	(19		)
Unrealized loss on investments available for sale		(738		)	(812		)
Retained earnings		65,253			69,407
Total stockholders’ equity		114,594			119,078
Total liabilities and stockholders’ equity		$	140,421		$	143,708

 

 

 

STARTEK, INC. AND SUBSIDIARIES

 

Condensed Consolidated Income Statements

(dollars in thousands, except per share data)

(unaudited)

 

		Three Months Ended March 31,
		2002			2003
Revenue		$	45,960		$	50,528
Cost of services		34,791			38,341
Gross profit		11,169			12,187
Selling, general and administrative expenses		5,217			6,350
Operating profit		5,952			5,837
Net interest income and other		578			779
Income before income taxes		6,530			6,616
Income tax expense		2,510			2,462
Net income		$	4,020		$	4,154
Weighted average shares of common stock		14,086,561			14,203,794
Dilutive effect of stock options		182,693			275,793
Common stock and common stock equivalents		14,269,254			14,479,587
Earnings per share:
Basic		$	0.29		$	0.29
Diluted		$	0.28		$	0.29

 

 

 

STARTEK, INC. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)

 

		Three Months Ended March 31,
		2002			2003
Operating Activities
Net income		$	4,020		$	4,154
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,232			2,409
Deferred income taxes		2,406			806
Gain on sale of assets		—			(22		)
Changes in operating assets and liabilities:
Sales (purchases) of trading securities, net		(3,990		)	566
Trade accounts receivable, net		1,657			10,844
Inventories		173			(1,451		)
Prepaid expenses and other assets		212			(7		)
Accounts payable		(2,743		)	(2,526		)
Income taxes payable		(750		)	736
Accrued and other liabilities		1,283			1,546
Net cash provided by operating activities		4,500			17,055
Investing Activities
Purchases of investments available for sale		(9,514		)	(13,808		)
Proceeds from disposition of investments available for sale		2,847			21,041
Purchases of property, plant and equipment		(1,401		)	(1,845		)
Proceeds from disposition of property plant and equipment		36			120
Net cash provided by (used in) investing activities		(8,032		)	5,508
Financing Activities
Stock options exercised		279			238
Principal payments on borrowings, net		(1,060		)	(898		)
Net cash used in financing activities		(781		)	(660		)
Effect of exchange rate changes on cash		221			(95		)
Net increase (decrease) in cash and cash equivalents		(4,092		)	21,808
Cash and cash equivalents at beginning of period		14,282			13,143
Cash and cash equivalents at end of period		$	10,190		$	34,951