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

 

84-1370538

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

100 Garfield Street, Denver, Colorado 80206

(Address of principal executive offices, Zip Code)

 

 

 

(303) 361-6000

(Registrant’s telephone number, including area code)

 

 

 

 

 

 

(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.

 

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.

 

2



 

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

 

3


Exhibit 99.1

 

FOR RELEASE at 8:00 a.m. EST

 

Contact: A. Emmet Stephenson, Jr.

Wednesday, May 7, 2003

 

Chairman

 

 

Phone: (303) 399-2400 Ext. 0

 

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