8-K

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): July 28, 2004

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) 399-2400

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

TABLE OF CONTENTS

	ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
	ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
SIGNATURES
Exhibit Index
Press Release

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

     (C) Exhibits

Exhibit No.	Description
99.1	Press Release dated July 28, 2004

ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     On July 28, 2004, Startek, Inc. issued a press release reporting on its financial results for the quarter ended March 31, 2004. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

     This press release shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

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: July 29, 2004	By:	/s/ Eugene L. McKenzie, Jr.
	Eugene L. McKenzie, Jr.
	Executive Vice President, Chief Financial Officer,
	Secretary, and Treasurer

Exhibit Index

Exhibit No.	Description
99.1	Press Release dated July 28, 2004

EX-99.1

Exhibit 99.1

FOR RELEASE at 8:00 a.m. EST	Contact: William E. Meade, Jr.
Wednesday, July 28, 2004	President and Chief Executive Officer
	Phone: (303) 262-4500

StarTek Reports Second Quarter 2004 Financials

Strong Sales and Business Growth Drive Earnings Increase of 52 percent
And Quarterly Dividend to $0.40

DENVER, CO — July 28, 2004 — For the quarter ended June 30, 2004, StarTek, Inc. (NYSE:SRT) is pleased to report fully diluted earnings per share rose 51.7% to $0.44 compared to $0.29 for the second quarter of 2003. For the six months ended June 30, 2004, fully diluted earnings per share increased 57.9% to $0.90 from $0.57 for the same period last year.

For the three months ended June 30, 2004, gross profit increased 30.0% on a revenue increase of 17.7% over the second quarter of 2003. The revenue increase was primarily due to continued growth in the Company’s Business Process Management Services platform, both with its core telecommunications clients as well as developing clients in new industries. The 2.5 percentage point increase in gross margin, from 23.4% to 25.9%, was primarily due to a greater proportion of the Company’s revenue portfolio being generated within the higher-margin Business Process Management Services platform. Operating margin increased 4.3 percentage points, from 10.2% to 14.5%. Selling, general and administrative expenses remained relatively flat for the period and total operating expense as a percent of total revenue decreased by 1.9 percentage points thus increasing operating margin even more than gross margin.

For the six months ended June 30, 2004, gross profit increased 40.1% on a revenue increase of 22.7% over the same period last year. The revenue increase was primarily due to additional increase in Business Process Management Services platform volume, the expansion into serving new vertical markets, and ramping up new contact centers. The 3.3 percentage point increase in gross margin, from 23.8% to 27.1%, was primarily due to achieving productivity objectives in both the Business Process Management Services and Supply Chain Management Services platforms. Operating margin increased 4.3 percentage points, from 10.9% to 15.4%. Selling, general and administrative expenses remained relatively flat during the first half of the year with an increase in our revenue base resulting in higher overall operating margins.

In addition, the Board of Directors declared an increase in its quarterly cash dividend to $0.40 per share, payable August 24, 2004, to StarTek shareholders of record as of August 11, 2004. The dividend per share for the 2nd quarter of 2004 was $0.39, which was increased from the 1st quarter 2004 dividend of $0.38.

Revenue growth was slightly stronger in Q1 compared to Q2 due to the slower pace of wireless number porting volumes seen across the overall marketplace. In addition, the Supply Chain Management Services business continued to decline in overall volume.

William E Meade, Jr., President and Chief Executive Officer said, “By leveraging our model of operational excellence, StarTek continues to be rewarded with additional business. Our clients and our shareholders benefit from our focus on customer-centric service and dedication to delivering ongoing operational efficiencies.”

Company Profile

StarTek, Inc. is a leading provider of business process outsourced services, which consist of business process management and supply chain management services. StarTek provides services from nineteen operating facilities, including five in Colorado, five in Canada, two in Europe and one each in Illinois, Louisiana, Oklahoma, Tennessee, Texas, Virginia, and Wyoming. The Company’s primary clients are in the telecommunications and computer software industries, and it also serves clients in the computer hardware, consumer products, cable TV, entertainment, utility, internet, and e-commerce industries. Please visit the Company’s website at www.startek.com.

Conference Call

StarTek will host a one-hour conference call on Thursday, July 29, at 9:00 a.m. EDT to discuss the Company’s second quarter results. It will be hosted by Bill Meade, President and CEO, and Gene McKenzie, CFO. The access information is as follows:

USA:	(866) 835-8904
International:	(703) 639-1411
Conference ID:	521597

A replay will be available by August 3, 2004 at 7:00 p.m. EDT through August 31, 2004. The replay can be accessed from the Investor Relations section of the Company’s website www.startek.com.

Forward Looking Statements

The matters regarding the future discussed in this news release may 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 risks and uncertainties that could cause StarTek’s actual results to differ materially from those expressed or implied by any such forward-looking statements. These include, but are not limited to, loss of its principal clients, concentration of its client base in a few select industries, highly competitive markets, risks related to its contracts, decreases in numbers of vendors used by clients or potential clients, lack of success of StarTek’s clients’ products or services, considerable pricing pressure, risks relating to fluctuations in the value of StarTek’s investment securities portfolio, risks associated

with advanced technologies, inability to grow its business, inability to effectively manage growth, dependence on qualified employees and key management personnel, potential future declines in revenue, lack of a significant international presence, and risks relating to conducting business in Canada and the United Kingdom. Readers are encouraged to review Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Factors and all other disclosures appearing in the Company’s Form 10-K for the year ended December 31, 2003, and subsequent filings with the Securities and Exchange Commission.

STARTEK, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets
(dollars in thousands)

	December 31,		June 30,
	2003		2004
			(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	5,955	$	19,790
Investments		41,812		37,973
Trade accounts receivable, less allowance for doubtful accounts of $790 and $714, respectively		43,388		40,663
Inventories		1,720		2,576
Income tax receivable		805		5,907
Deferred tax assets		2,250		2,593
Prepaid expenses and other current assets		907		2,902
Total current assets		96,837		112,404
Property, plant and equipment, net		54,563		53,675
Long term deferred tax assets		1,743		2,111
Other assets		464		836
Total assets	$	153,607	$	169,026
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,917	$	8,380
Accrued liabilities		10,310		13,458
Current portion of long-term debt		26		2,420
Other current liabilities		358		5
Total current liabilities		19,611		24,263
Long-term debt, less current portion		78		6,906
Other liabilities		918		831
Stockholders’ equity:
Common stock		144		145
Additional paid-in capital		53,917		56,581
Cumulative translation adjustment		446		135
Unrealized gain on investments available for sale		1,462		884
Retained earnings		77,031		79,281
Total stockholders’ equity		133,000		137,026
Total liabilities and stockholders’ equity	$	153,607	$	169,026

STARTEK, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations
(dollars in thousands, except per share data)
(unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2003		2004		2003		2004
Revenues	$	54,528	$	64,204	$	105,056	$	128,899
Cost of services		41,760		47,603		80,101		93,949
Gross profit		12,768		16,601		24,955		34,950
Selling, general and administrative expenses		7,203		7,263		13,553		15,087
Operating profit		5,565		9,338		11,402		19,863
Net interest income and other		1,085		1,134		1,864		1,746
Income before income taxes		6,650		10,472		13,266		21,609
Income tax expense		2,473		4,011		4,935		8,276
Net income	$	4,177	$	6,461	$	8,331	$	13,333
Weighted average shares of common stock		14,209,061		14,440,457		14,206,442		14,399,251
Dilutive effect of stock options		292,933		341,988		283,648		410,608
Common stock and common stock equivalents		14,501,994		14,782,445		14,490,090		14,809,859
Earnings per share:
Basic	$	0.29	$	0.45	$	0.59	$	0.93
Diluted	$	0.29	$	0.44	$	0.57	$	0.90

STARTEK, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)

	Six Months Ended
	June 30,
	2003			2004
Operating Activities
Net income	$	8,331		$	13,333
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4,749			6,364
Deferred income taxes		2,405			(215	)
Gain on sale of assets		(24	)		3
Changes in operating assets and liabilities:
Sales (purchases) of trading securities, net		98			(113	)
Trade accounts receivable, net		6,216			2,725
Inventories		38			(856	)
Prepaid expenses and other assets		(147	)		(2,367	)
Accounts payable		(2,322	)		(537	)
Income taxes payable		(2,977	)		(4,400	)
Accrued and other liabilities		824			2,708
Net cash provided by operating activities		17,191			16,645
Investing Activities
Purchases of investments available for sale		(35,350	)		(11,479	)
Proceeds from disposition of investments available for sale		29,066			14,537
Purchases of property, plant and equipment		(10,616	)		(6,087	)
Proceeds from disposition of property plant and equipment		122			—
Net cash used in investing activities		(16,778	)		(3,029	)
Financing Activities
Proceeds from stock option exercises		359			1,963
Principal payments on borrowings, net		(1,689	)		(778	)
Dividend Payments		—			(11,083	)
Proceeds from borrowings		—			10,000
Net cash provided by (used in) financing activities		(1,330	)		102
Effect of exchange rate changes on cash		(331	)		117
Net increase in cash and cash equivalents		(1,248	)		13,835
Cash and cash equivalents at beginning of period		13,143			5,955
Cash and cash equivalents at end of period	$	11,895		$	19,790