10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to                

Commission file number 1-12793

StarTek, Inc.

(Exact name of registrant as specified in its charter)

Delaware	84-1370538
(State or other jurisdiction of	(I.R.S. employer
incorporation or organization)	Identification No.)
8200 E. Maplewood Ave., Suite 100
Greenwood Village, Colorado	80111
(Address of principal executive offices)	(Zip code)

(303) 262-4500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.01 par value	New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yeso  No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yeso  Nox

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yesx  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filero	Accelerated filero
Non-accelerated filero	Smaller reporting companyx
(Do not check if a smaller reporting company)

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yeso  Nox

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant on June 30, 2013 was approximately $57.5 million. As of March 3, 2014, there were 15,376,611 shares of Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates certain information by reference from the registrant’s proxy statement to be delivered in connection with its annual meeting of stockholders to be held May 6, 2014.  With the exception of certain portions of the proxy statement specifically incorporated herein by reference, the proxy statement is not deemed to be filed as part of this Form 10-K.

STARTEK, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

ANNUAL REPORT ON FORM 10-K

For the Fiscal Year Ended December 31, 2013

PART I		Page
Item 1	Business	2
Item 1A	Risk Factors	7
Item 1B	Unresolved Staff Comments	13
Item 2	Properties	14
Item 3	Legal Proceedings	14
Item 4	Mine Safety Disclosures	14
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15
Item 6	Selected Financial Data	15
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	23
Item 8	Financial Statements and Supplementary Data	24
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	52
Item 9A	Controls and Procedures	52
Item 9B	Other Information	52
PART III
Item 10	Directors, Executive Officers and Corporate Governance	52
Item 11	Executive Compensation	52
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	52
Item 13	Certain Relationships and Related Transactions, and Director Independence	52
Item 14	Principal Accounting Fees and Services	52
PART IV
Item 15	Exhibits, Financial Statement Schedules	53

Part I

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including the following:

• certain statements, including possible or assumed future results of operations, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;

• any statements regarding the prospects for our business or any of our services;

• any statements preceded by, followed by or that include the words “may,” “will,” “should,” “seeks,” “believes,” “expects,” “anticipates,” “intends,” “continue,” “estimate,” “plans,” “future,” “targets,” “predicts,” “budgeted,” “projections,” “outlooks,” “attempts,” “is scheduled,” or similar expressions; and

• other statements regarding matters that are not historical facts.

Our business and results of operations are subject to risks and uncertainties, many of which are beyond our ability to control or predict. Because of these risks and uncertainties, actual results may differ materially from those expressed or implied by forward-looking statements, and investors are cautioned not to place undue reliance on such statements.  All forward-looking statements herein speak only as of the date hereof, and we undertake no obligation to update any such forward-looking statements. Important factors that could cause actual results to differ materially from our expectations and may adversely affect our business and results of operations include, but are not limited to those items set forth in Item 1A. “Risk Factors” appearing in this Form 10-K.

Unless otherwise noted in this report, any description of “us," “we” or "our" refers to StarTek, Inc. ("STARTEK") and its subsidiaries.  Financial information in this report is presented in U.S. dollars.

ITEM 1. BUSINESS

BUSINESS OVERVIEW

STARTEK is a comprehensive contact center and business process outsourcing service company with employees we call Brand Warriors who for over 25 years have been committed to making a positive impact on our clients’ business results. Our mission is to enable and empower our Brand Warriors to promote our clients’ brands every day and bring value to our stakeholders. We accomplish this by aligning with our clients’ business objectives. The STARTEK Advantage System is the sum total of our culture, customized solutions and processes that enhance our clients’ customer experience.  The STARTEK Advantage System is focused on improving customer experience and reducing total cost of ownership for our clients.  STARTEK has proven results for the multiple services we provide, including sales, order management and provisioning, customer care, technical support, receivables management, and retention programs.  We manage programs using a variety of multi-channel customer interaction capabilities, including voice, chat, email, IVR and back-office support.  STARTEK has delivery centers in the United States, Philippines, Canada, Costa Rica, Honduras and through its STARTEK@Home workforce.

We operate our business within three reportable segments, based on the geographic regions in which our services are rendered: Domestic, Asia Pacific and Latin America.  As of December 31, 2013, our Domestic segment included the operations of seven facilities in the United States and one facility in Canada; our Asia Pacific segment included the operations of three facilities in the Philippines; and our Latin America segment included the operations of one facility in Costa Rica and one facility in Honduras. 

Service Offerings

We provide customer experience management throughout the life cycle of our clients’ customers.  These service offerings include customer care, sales support, inbound sales, complex order processing, accounts receivable management, technical and product support, up-sell and cross-sell opportunities and other industry-specific processes.  We provide these services by leveraging technology, agent performance tools, analytics and self service applications to coach and enable and empower our Brand Warriors.

Technical and Product Support.Our technical and product support service offering provides our clients’ customers with high-end technical support services by telephone, e-mail, chat, facsimile and the Internet, 24 hours per day, seven days per week. Technical support inquiries are generally driven by a customer’s purchase and use of a product or service, or by a customer’s need for ongoing technical assistance.

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Sales Support. Our revenue generation service supports every stage of the customer lifecycle and includes end-to-end pre and post-sales programs. Lead generation, direct sales, account management and retention programs, and marketing analysis and modeling are all available. We have the ability to increase customer purchasing levels, implement product promotion programs, introduce our clients' customers to new products and enhanced service offerings, secure additional customer orders and handle inquires related to post sales support. Unique service offerings are tailored to meet the specific needs of consumers.

Provisioning and Order Processing.  Our services enable our clients to provide large-scale project management and customer relations services to their customers in a more efficient and cost-effective way. Our suite of order processing services range from enterprise level large-scale project management to direct-to-consumer order processing. Our complex order processing services provide our clients with large-scale project management and direct relationship management for their large enterprise customers. These services include full lifecycle order management and technical sales support for high-end communications services, such as wireline, wireless, data and customer premise equipment. In addition, we process order fallout from our clients' automated systems, complete billing review and revenue recovery and perform quality assurance. Our direct-to-consumer services include provisioning, order processing and transfer of accounts between client service providers.

Receivables Management.  We help our clients reduce their bad debt write-offs and days sales outstanding as a natural extension of their operation. We provide billing, credit card support and first-party collections through our receivables management services. These services allow our clients to reduce the risk of non-payment by directly transferring the calls made by delinquent customers to us and our Brand Warrior representatives encourage the customers to “self-cure” in order to continue to receive service. Customers may immediately pay their current bill through credit or debit card payments, electronic checks or money orders.

Up-sell and Cross-sell Programs. Whether providing direct response services for marketing campaigns or enabling companies to test new offerings with existing customers, STARTEK is an expert at converting opportunities to sales. Companies spend a great amount of time and money to develop up-sell and cross-sell opportunities with their customers and we consistently outsell other internal and external providers.

Our goal is to provide higher conversion rates and improve the average revenue per sale. We select managers and representatives who not only have a sales mentality, but are dedicated to helping customers. We also employ a proven sales training methodology that all our sales and service representatives employ and they are supported by dedicated management teams. By working with our clients and providing a true sales team culture, we are able to achieve superior sales results.

Additional Services. We provide other industry-specific processes, including training curriculum development, workforce management, dialer automation and disposition.   These services include both automated and live-agent interaction.

STARTEK's Production Disposition Tools are designed to capture line of business-specific queue metrics and order data, as well as drive order entry accuracy and efficiency; document and capture new orders as a means of validation and audit; capture and assess agent level accuracy on order entry accuracy, completeness and comment field description.

In addition, our Solutions Team engages with clients to understand their specific goals and anticipate the needs of their customers.  As a part of the STARTEK Advantage System, the Solutions Team is involved from the earliest stages of the life cycle of our client engagements through ongoing operations in order to find the right solution from existing STARTEK tools and emerging technologies.

CUSTOMER TRENDS

We have observed a few emerging trends in client requirements of our industry.  Our clients are increasingly focused on improving customer engagement and reducing total overall cost of ownership.  We deliver a high level of customer satisfaction, as evidenced by our clients’ customer service awards and our clients’ ranking of STARTEK relative to other outsourced partners.  Our clients value a combination of on-shore, near-shore, offshore and home agent delivery platforms to optimize their customer support costs.  In response to the demand for offshore solutions, we opened our first facility in the Philippines in 2008 and a second facility in 2010.  In response to the demand for near-shore solutions, we opened a new facility in Costa Rica in 2010 and in Honduras in 2011, which enabled us to provide a near-shore solution, while also increasing our Spanish language capability. Given this demand, we plan to continue to grow the number of offshore and near-shore agents.

We have also observed that our clients are demanding a decrease in the number of contacts it takes for their customers to enjoy their products or services.  Process improvement has also driven further efficiencies for resolution of those contact issues. We are committed to delivering solutions through which we partner with our clients to achieve and deliver these efficiency gains. 

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We believe we are positioned to benefit from this trend as we have developed a comprehensive suite of services that drive continuous improvement on front and back-office transactions.

KEY COMPETITIVE DIFFERENTIATORS

STARTEK Advantage System

The sum total of the STARTEK culture, the STARTEK Operating Platform, customized solutions for every client program and our continuous improvement process is our STARTEK Advantage System.  The STARTEK Advantage System empowers and enables our leaders to deliver consistent execution of operational results while driving year-over-year improvement for our clients’ critical business requirements.

STARTEK’s culture is built on trust and servant leadership. Servant leadership puts the employees first and leads with a focus on solving problems and promoting personal development.   We are a gathering of like-minded professionals determined to make a positive impact for our employees, our clients and our stakeholders. 

STARTEK Operating Platform provides the expertise, best practices and thought leadership to move our clients’ programs toward specific, measurable goals.  It includes execution and innovation in every area of the operation from onboarding our employees, enabling our employees, executing against goals, evaluating performance, improving performance and enhancing our client’s business.

STARTEK deploys solutions that leverage what we have now, what we have learned from experience across a breadth of clients and industries and what we hear and understand from our client’s goals.  We will deliver the right people with the right leadership enabled by the right technology and empowered by the right tools to make a meaningful impact to our clients’ business. Our recent acquisition of Ideal Dialogue gives us the ability to offer a solution for improving customer interactions and, subsequently, customer satisfaction. Ideal Dialogue has developed a unique methodology for training and measuring how we can better engage with customers to improve the customer experience.

We offer a variety of customer management solutions that provide front to back-office capabilities utilizing the right delivery platform including onshore, near shore, offshore and STARTEK@Home sourcing alternatives. We also offer multi-channel interactions across voice, chat, email and IVR channels.  We believe that we are differentiated by our client centric culture, quality of our execution and results, our flexibility and competitive pricing.

Customization

Our solution configuration is aligned with our clients’ unique requirements.  We are flexible in designing solutions around our clients’ strategic goals, and we provide experienced management teams that bring together a trained, productive workforce, equipped with the right tools and technology. 

Consistent Performance

Performance is core to the STARTEK Operating Platform.  Our clients expect consistent performance against the fundamentals of the business no matter the location or method of the service delivery.  The operating platform sets the stage for us to drive continuous improvement and focus on the value-add aspects of our clients’ business.

Cost Competitive

We are confident in our ability to be cost competitive in our solutions for our clients’ needs. Through clearly understanding their needs and striving to reach goal congruency, we can assure that our collective financial goals are aligned in the most efficient way.

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STRATEGY

Successful outsourcing partnerships strike a balance by delivering our clients a better customer experience through an efficient support model while generating a fair return for our stakeholders.  Therefore, our mission is simple.  We enable and empower our Brand Warriors to fight for our clients’ brands every day in order to return value to our stakeholders. Our employees and customer service agents are called Brand Warriors because they are on the front lines protecting and promoting our clients’ brands, which creates loyalty for our clients’ products and services.  Our clients’ business objectives become our business objectives, as we seek to become their trusted partner.  Every day, we strive to better understand our clients’ market and competitive challenges so that we can play a more effective role as a trusted partner in their businesses.  We seek to build customer loyalty and reduce our customers’ costs through specific actionable continuous improvement efforts.  Management believes that empowering and enabling our Brand Warriors is the most important way we can deliver the best possible consistent customer experience.  STARTEK’s leadership team is committed to driving year-over-year continuous improvement for our clients’ businesses, not only in customer experience, but in total cost of ownership.

We seek to become a market leader in providing meaningful impact business process outsourcing ("BPO") services to our clients. Our approach is to develop relationships with our clients that are partnering and collaborative in nature where we are focused, flexible and responsive to their business needs.  In addition, we offer creative industry-based solutions to meet our clients’ ever changing business needs.  The end result is the delivery of a quality customer experience to our clients’ customers. To become a leader in the market, our strategy is to:

• grow our existing client base by deepening and broadening our relationships,

• add new clients and continue to diversify our client base,

• improve the profitability of our business through operational improvements and increased utilization,

• expand our global delivery platform to meet our clients' needs,

• broaden our service offerings by providing more innovative and technology-enabled solutions, and

• expand into new verticals.

During 2013, STARTEK acquired two companies that expand our reach with new and existing customers. Ideal Dialogue, Inc. is a company dedicated to improving client engagement through over 50 years of academic study in the science of human communication. STARTEK also acquired RN's On Call, which operates a nurse telephone triage and patient support service company. Registered nurses, specialized professionals, para-medical resources, call center specialists, quality/compliance officers and workflow analysts provide patient support. The phones are answered by certified medical professionals who can provide patients with immediate assistance by utilizing a combination of medical protocols, on call physicians and standing orders. The acquisition launched STARTEK Health, a division of STARTEK, dedicated to providing service to payers, providers, pharmaceutical companies and medical device producers in the healthcare industry. STARTEK Health recently launched a new website dedicated to showcasing the capabilities of the new division for the healthcare industry at www.startekhealth.com.

HISTORY OF THE BUSINESS

STARTEK was founded in 1987.  At that time, our business was centered on supply chain management services, which included packaging, fulfillment, marketing support and logistics services.  After our initial public offering on June 19, 1997, we began operating contact centers, which primarily focused on customer care, and grew to include our current suite of offerings as described in the “Business Overview” section of this Form 10-K.

SEASONALITY

Our business has been seasonal, dependent on our clients' marketing programs and product launches, which are often geared toward the end of summer and the winter holiday buying season. Our cable and satellite providers also bring a seasonal element towards special sports programming. 

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INDUSTRY

Outsourcing of non-core activities, such as those we provide, offers companies the ability to focus on their core competencies, leverage economies of scale and control variable costs of the business while accessing new technology and trained expert personnel.  As the business environment continues to evolve, it has become more difficult and expensive for some companies to maintain the necessary personnel and service capabilities in-house to provide business process services on a cost-effective basis. Accordingly, we anticipate that outsourced customer care services will grow significantly in the coming years.  In general, we believe that industries having higher levels of customer contact and service volume, such as the communications industry, tend to be more likely to seek outsourced services as a more efficient method of managing their technical support and customer care functions. We believe that outsourced service providers, including ourselves, will continue to benefit from these outsourcing trends.

COMPETITION

We compete with a number of companies that provide similar services on an outsourced basis, including business process outsourcing companies such as Teleperformance; Convergys Corporation; Transcom; NCO Group; Aegis PeopleSupport; Sitel Corporation; Sykes Enterprises, Incorporated; TeleTech Holdings, Inc.; Stream Global Services, Inc. and West Corporation.  We compete with the aforementioned companies for new business and for the expansion of existing business within the clients we currently serve.  Many of these competitors are significantly larger than us in revenue, income, number of contact centers and customer service agents, number of product offerings and market capitalization.  We believe that while smaller than many of our competitors, we are able to compete because of our focus and scale as well as proven performance to add value to our clients.  We believe our success is contingent more on our targeted service offering and performance delivery to our clients than our overall size.  Several of our competitors merged during the last three years, which increased the size and reach of those competitors, which may affect our competitive position.  There are also many private equity backed companies actively pursuing sale so further consolidation in the industry is expected.  However, we believe there are integration challenges involved in consolidations, which may provide us an opportunity to deliver superior customer service to our clients.  Some competitors may offer a broader range of services than we do, which may result in clients and potential clients consolidating their use of outsourced services with larger competitors, rather than using our services.  We primarily compete with the aforementioned companies on the basis of price and quality.  As such, our strategy continues to be to execute on our clients’ quality metrics and rank among the top of all of their outsourced vendors, while continuing to be a cost-effective solution and driving year over year improvement.  We view our competitive advantage as being a large enough company to offer the breadth of service offerings that are often requested by our clients while being agile enough to quickly respond to our clients’ needs.

CLIENTS

We provide service to clients from our locations in North America, Latin America and Asia Pacific. Approximately 65% ofour revenue is derived from clients within the telecommunications industry and 30% from clients within the cable and media industry.

Our three largest customers, AT&T Inc. (“AT&T”), T-Mobile USA, Inc. (“T-Mobile”) and Comcast Cable Communications Management, LLC ("Comcast"), account for a significant percentage of our revenue. While we believe that we have good relationships with these clients, a loss of a large program from one of these clients, a significant reduction in the amount of business we receive from a principal client, renegotiation of pricing on several programs simultaneously for one of these clients, the delay or termination of a principal clients’ product launch or service offering, or the complete loss of one or more of these principal clients would adversely affect our business and our results of operations. Also, our clients may unilaterally reduce their use of our services under our contracts without penalty.

Our work for AT&T is covered by several contracts for a variety of different lines of AT&T business.  These contracts expire between 2014 and 2015.  Our initial master services agreement covering all AT&T work had been extended through January 31, 2013.   On January 25, 2013, we entered into a new master services agreement with AT&T Services, Inc., which expires December 31, 2015 and may be extended upon mutual agreement, but may be terminated by AT&T with written notice.

On July 28, 2011, we entered into a new master services agreement with T-Mobile effective July 1, 2011, which covers all services that we provide to T-Mobile. The new master services agreement with T-Mobile replaces the previous master services agreement dated October 1, 2007, has an initial term of five years and will automatically renew for additional one-year periods thereafter, but may be terminated by T-Mobile upon 90 days written notice.

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On January 4, 2014, we signed a new master services agreement with Comcast, effective June 22, 2013, which provides for the same services as the original master services agreement that was signed in 2011 and would have expired in 2014. The new master services agreement covers all services that we provide to Comcast, has an initial term of one year and will automatically renew for additional one-year periods unless either party gives notice of cancellation. Comcast may terminate the agreement upon 90 days written notice.

GOVERNMENT AND ENVIRONMENTAL REGULATION

We are subject to numerous federal, state, and local laws in the states and territories in which we operate, including tax, environmental and other laws that govern the way we conduct our business.  There are risks inherent in conducting business internationally, including significant changes in domestic government programs, policies, regulatory requirements, and taxation with respect to foreign operations; potentially longer working capital cycles; unexpected changes in foreign government programs, policies, regulatory requirements and labor laws; and difficulties in staffing and effectively managing foreign operations.

EMPLOYEES AND TRAINING

As of December 31, 2013, we employed approximately 11,600 employees. Approximately 3,000 were employed in the United States and approximately 8,600 were employees in foreign countries. None of our employees were members of a labor union or were covered by a collective bargaining agreement during 2013. We believe our overall relations with our workforce are good.

CORPORATE INFORMATION

Our principal executive offices are located at 8200 E. Maplewood Ave., Suite 100, Greenwood Village, Colorado 80111. Our telephone number is (303) 262-4500. Our website address is www.startek.com.  Our stock currently trades on the New York Stock Exchange ("NYSE") under the symbol SRT.

Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) and 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) are available free of charge through our website (www.startek.com) as soon as practicable after we furnish it to the Securities and Exchange Commission (“SEC”). We also make available on the “Investor Relations” page of our corporate website, the charters for the Compensation Committee, Audit Committee and Governance and Nominating Committee of our Board of Directors, as well as our Corporate Governance Guidelines and our Code of Ethics and Business Conduct.

None of the information on our website or any other website identified herein is part of this report. All website addresses in this report are intended to be inactive textual references only.

ITEM 1A.  RISK FACTORS

A substantial portion of our revenue is generated by a limited number of clients. The loss or reduction in business from any of theseclients would adversely affect our business and results of operations.

Revenue from our three largest clients, AT&T, T-Mobile and Comcast, accounted for 25.3%, 27.7% and 19.8%, respectively, of our revenues for the year ended December 31, 2013.

We may not be able to retain our principal clients. If we were to lose any of our principal clients, we may not be able to timely replace the revenue generated by them. Loss of a principal client could result from many factors, including consolidation or economic downturns in our clients' industries, as discussed further below.

The future revenue we generate from our principal clients may decline or grow at a slower rate than expected or than it has in the past. In the event we lose any of our principal clients or do not receive call volumes anticipated from these clients, we may suffer from the costs of underutilized capacity because of our inability to eliminate all of the costs associated with conducting business with that client, which could exacerbate the effect that the loss of a principal client would have on our operating results and financial condition. For example, there are no guarantees of volume under the current contract with AT&T. In addition, the current contract with AT&T provides for a tiered incentive pricing structure that provides for lower pricing at higher volumes. Additional productivity gains could be necessary to offset the negative impact that lower per-minute revenue at higher volume levels would have on our margins in future periods.

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Our contracts generally do not contain minimum purchase requirements and cangenerally be terminated by our customers on short notice without penalty.

We enter into written agreements with each client for our services and seek to sign multi-year contracts with our clients. However these contracts generally permit termination upon 30 to 90 days notice by our clients, do not designate us as our clients' exclusive outsourced services provider, do not penalize our clients for early termination, hold us responsible for work performed that does not meet predefined specifications and do not contain minimum purchase requirements or volume commitments. Accordingly, we face the risk that our clients may cancel or renegotiate contracts we have with them, which may adversely affect our results. If a principal client canceled or did not renew its contract with us, our results would suffer. In addition, because the amount of revenue generated from any particular client is generally dependent on the volume and activity of our clients' customers, as described above, our business depends in part on the success of our clients' products. The number of customers who are attracted to the products of our clients may not be sufficient or our clients may not continue to develop new products that will require our services, in which case it may be more likely for our clients to terminate their contracts with us. Moreover, clients who may not terminate their contacts with us without cause could generally reduce the volume of services they outsource to us, which would have an adverse effect on our revenue, results of operations and overall financial condition.

Our client base is concentrated in the communications industry and our strategypartially depends on a trend of communications companies continuing to outsourcenon-core services. If the communications industry suffers a downturn or the trend towardoutsourcing reverses, our business will suffer.

Our current clients are almost exclusively communications companies, which include companies in the wire-line, wireless, cable and broadband lines of business. Currently, our business is largely dependent on continued demand for our services from clients in this industry and on trends in this industry to purchase outsourced services. A significant change in this trend could have a materially adverse effect on our financial condition and results of operations.

Client consolidation could result in a loss of business that would adversely affect our operating results

The communications industry has had a significant level of consolidation discussion. We cannot assure that additional consolidations will not occur in which our clients acquire additional businesses or are acquired themselves. Such consolidations may decrease our business volume and revenue, which could have an adverse effect on our business, results of operations and financial condition.

Our lack of a wide geographic diversity outside of North America mayadversely affect our ability to serve existing customers or limit our abilityto obtain new customers.

Although we currently conduct operations in Canada, the Philippines, Costa Rica and Honduras, we do not have a wide geographic diversity. Our lack of such diversity could adversely affect our business if one or more of our customers decide to move their existing business process outsourcing services offshore. It may also limit our ability to gain new clients that may require business process service providers to have this greater flexibility across differing geographies.

The movement of business process outsourcing services to other countries has been extensively reported in the press. Most analysts continue to believe that many outsourced services will continue to migrate to other countries with lower wages than those prevailing in the U.S.

If we decide to open facilities in, or otherwise expand into, additional countries, we may not be able to successfully establish operations in the markets that we target. There are certain risks inherent in conducting business in other countries including, but not limited to, exposure to currency fluctuations, difficulties in complying with foreign laws, unexpected changes in government programs, policies, regulatory requirements and labor laws, difficulties in staffing and managing foreign operations, political instability, and potentially adverse tax consequences. There can be no assurance that one or more of such factors will not have a material adverse effect on our business, growth prospects, results of operations, and financial condition.

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Our operating results may be adversely affected if we are unable to maximizeour facility capacity utilization.

Our profitability is influenced by our facility capacity utilization. The majority of our business involves technical support and customer care services initiated by our clients' customers, and as a result, our capacity utilization varies, and demands on our capacity are, to some degree, beyond our control. We have experienced, and in the future may experience periods of idle capacity from opening new facilities where forecasted volume levels do not materialize. In addition, we have experienced, and in the future may experience idle peak period capacity when we open a new facility or terminate or complete a large client program. These periods of idle capacity may be exacerbated if we expand our facilities or open new facilities in anticipation of new client business because we generally do not have the ability to require a client to enter into a long-term contract or to require clients to reimburse us for capacity expansion costs if they terminate their relationship with us or do not provide us with anticipated service volumes. From time to time, we assess the expected long-term capacity utilization of our facilities. Accordingly, we may, if deemed necessary, consolidate or close under-performing facilities in order to maintain or improve targeted utilization and margins.

In 2012, the decision was made to consolidate the business performed in Enid, Oklahoma into another U.S. facility. Enid reopened in the third quarter of 2013. In February 2012, we received a customer notification of its intent to reduce its business in our Decatur, Illinois and Jonesboro, Arkansas facilities. The Decatur facility closed in January 2013. We secured new business for the Jonesboro facility and continued to sell to this capacity until February 2014, when we announced the closure of this site. Operations will cease in the second quarter of 2014 when the business transitions to another facility. We closed our facility in Collinsville, Virginia during the first quarter of 2012. During 2012, we recognized $4.1 million in impairment losses and restructuring charges related to facility closures and assets whereby the carrying value did not support future cash flows. In February 2013, we announced the closure of our Cornwall, Ontario facility due to an end-of-life client program. In the fourth quarter of 2013, we recognized impairment losses in our Latin America segment associated with the furniture, fixtures and leasehold improvements at our site in Costa Rica after an impairment analysis indicated estimated future cash flows were insufficient to support the carrying values.

We may incur further impairment losses and restructuring charges during 2014 related to any additional planned closures. There can be no assurance that we will be able to achieve or maintain optimal facility capacity utilization.

If client demand declines due to economic conditions or otherwise, we would not leverage our fixed costs as effectively, which would have a material adverse effect on our results of operations and financial condition.

Our operations in Canada, the Philippines, Costa Rica and Honduras subject us to the risk of currency exchangefluctuations.

Because we conduct a material portion of our business outside the United States, in Canada, the Philippines, Costa Rica and Honduras, we are exposed to market risk from changes in the value of the Canadian dollar, Philippine peso, Costa Rican colon and the Honduran lempira. Material fluctuations in exchange rates impact our results through translation and consolidation of the financial results of our foreign operations and, therefore, may negatively impact our results of operations and financial condition. We have contracts wherein the revenue we earn is denominated in U.S. dollars, but the costs we incur to fulfill our obligations under those contracts are denominated in Canadian dollars, Philippine pesos and, to a lesser extent, the Costa Rican colon and Honduran lempira. Therefore, the fluctuations in the U.S. dollar to the Canadian dollar, Philippine peso, Costa Rican colon or Honduran lempira exchange rates can cause significant fluctuations in our results of operations. We engage in hedging activities relating to our exposure to such fluctuations in the value of the Canadian dollar and the Philippine peso. During 2013, we did not enter into hedging agreements for the Costa Rican colon or Honduran lempira. Our hedging strategy, including our ability to acquire the desired amount of hedge contracts, may not sufficiently protect us from further strengthening of these currencies against the U.S. dollar.

As a global company, we are subject to social, political and economic risks of doing business in many countries.

We conduct a significant portion of our business and employ a substantial number of people outside of the United States. During 2013, we generated approximately 58.8% or $135.9 million of our revenue from operations outside the United States. Circumstances and developments related to international operations that could negatively affect our business, financial condition or results of operations include, but are not limited to, the following factors:

• difficulties and costs of staffing and managing international operations in certain regions;

• differing employment practices and labor issues;

• local businesses and cultural factors that differ from our usual standards and practices;

• volatility in currencies;

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• currency restrictions, which may prevent the transfer of capital and profits to the United States;

• unexpected changes in regulatory requirements and other laws;

• potentially adverse tax consequences;

• the responsibility of complying with multiple and potentially conflicting laws, e.g., with respect to corrupt practices, employment and licensing;

• the impact of regional or country-specific business cycles and economic instability;

• political instability, uncertainty over property rights, civil unrest, political activism or the continuation or escalation of terrorist activities; and

• access to capital may be more restricted, or unavailable on favorable terms or at all in certain locations.

Our global growth (including growth in new regions in the United States) also subjects us to certain risks, including risks associated with funding increasing headcount, integrating new offices, and establishing effective controls and procedures to regulate the operations of new offices and to monitor compliance with regulations such as the Foreign Corrupt Practices Act and similar laws.

Although we have committed substantial resources to expand our global platform, if we are unable to successfully manage the risks associated with our global business or to adequately manage operational fluctuations, our business, financial condition and results of operations could be harmed.

If we are not able to hire and retain qualified employees, our ability toservice our existing customers and retain new customers will be adverselyaffected.

Our success is largely dependent on our ability to recruit, hire, train and retain qualified employees. Our business is labor intensive and, as is typical for our industry, continues to experience high personnel turnover. Our operations, especially our technical support and customer care services, generally require specially trained employees, which, in turn, requires significant recruiting and training costs. Such turnover adversely affects our operating efficiency, productivity and ability to fully respond to client demand, thereby adversely impacting our operating results.   Some of this turnover can be attributed to the fact that we compete for labor not only with other call centers but also with other similar-paying jobs, including retail, services industries, food service, etc.  As such, improvements in the local economies in which we operate can adversely affect our ability to recruit agents in those locations.  Further increases in employee turnover or failure to effectively manage these high attrition rates would have an adverse effect on our results of operations and financial condition. 

The addition of new clients or implementation of new projects for existing clients may require us to recruit, hire, and train personnel at accelerated rates. We may not be able to successfully recruit, hire, train, and retain sufficient qualified personnel to adequately staff for existing business or future growth, particularly if we undertake new client relationships in industries in which we have not previously provided services. Because a substantial portion of our operating expenses consists of labor-related costs, labor shortages or increases in wages (including minimum wages as mandated by the U.S. and Canadian federal governments, employee benefit costs, employment tax rates, and other labor related expenses) could cause our business, operating profits, and financial condition to suffer. Economic and legislative changes in the U.S. may encourage organizing efforts in the future which, if successful, could further increase our recruiting and training costs and could decrease our operating efficiency and productivity.

Our operating costs may increase as a result of higher labor costs.

During the past economic downturns, we, like a number of companies in our industry, sought to limit our labor costs by limiting salary increases and payment of cash bonuses to our employees. During 2012, the local economies in some of the locations in which we operate experienced growth, which causes pressure on labor rates to remain competitive within the local economies. If these growth trends continue, we may need to further increase salaries or otherwise compensate our employees at higher levels in order to remain competitive. Higher salaries or other forms of compensation are likely to increase our cost of operations. If such increases are not offset by increased revenue, they will negatively impact our financial results. Conversely, if labor rates decrease due to higher unemployment in the current economic downturn, our cost of operations may decrease. In the past, some of our employees have attempted to organize a labor union, and economic and legislative changes may encourage organizing efforts in the future, which, if successful, could further increase our recruiting and training costs and could decrease our operating efficiency and productivity.

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We have experienced significant management turnover and need to retain key management personnel.

In June 2011, Chad A. Carlson was named as our President and Chief Executive Officer. Lisa Weaver became the Chief Financial Officer in October of 2011. Joe Duryea was hired to lead Sales & Marketing in April 2012. Rod Leach became the Senior Vice President of Global Operations in August 2012. Jay Kirksey became the Senior Vice President, Global Human Resources in February 2013, Emily Millar was promoted to Senior Vice President, Client Solutions and Strategy in July 2013 and Pat Hain was promoted to Senior Vice President, Information Services in July 2013. We must successfully integrate any new management personnel whom we hire within our organization in order to achieve our operating objectives. Changes in other key management positions may temporarily affect our financial performance and results of operations as the new management becomes familiar with our business. Accordingly, our future financial performance will depend to a significant extent on our ability to motivate and retain key management personnel.

Our strategypartially depends on a trend of companies continuing to outsourcenon-core services.

Our existing clients and a number of clients we are currently targeting have been decreasing the number of firms they rely on to outsource their business process outsourced services. Due to financial uncertainties and the potential reduction in demand for our clients' products and services, our clients and prospective clients may decide to further consolidate the number of firms on which they rely for their business process outsourced services to reduce costs. Under these circumstances, our clients may cancel current contracts with us, or we may fail to attract new clients, which will adversely affect our financial condition. In addition, they may seek price reductions on our contracts as means to lower their costs. If global economic and market conditions remain uncertain or persist, spread, or deteriorate further, we may experience material impacts on our business, operating results, and financial condition.

Our business relies heavily on technology and computer systems, which subjects us to various uncertainties.

We have invested significantly in sophisticated and specialized communications and computer technology and have focused on the application of this technology to meet our clients' needs. We anticipate that it will be necessary to continue to invest in and develop new and enhanced technology on a timely basis to maintain our competitiveness. Significant capital expenditures may be required to keep our technology up-to-date. There can be no assurance that any of our information systems will be adequate to meet our future needs or that we will be able to incorporate new technology to enhance and develop our existing services. Moreover, investments in technology, including future investments in upgrades and enhancements to software, may not necessarily maintain our competitiveness. Our future success will also depend in part on our ability to anticipate and develop information technology solutions that keep pace with evolving industry standards and changing client demands.

Increases in the cost of telephone and data services or significantinterruptions in such services could adversely affect our business.

We depend on telephone and data services provided by various local and long distance telephone companies. Because of this dependence, any change to the telecommunications market that would disrupt these services or limit our ability to obtain services at favorable rates could affect our business. We have taken steps to mitigate our exposure to the risks associated with rate fluctuations and service disruption by entering into long-term contracts with various providers for telephone and data services and by investing in redundant circuits. There is no obligation, however, for the vendors to renew their contracts with us or to offer the same or lower rates in the future, and such contracts are subject to termination or modification for various reasons outside of our control. In addition, there is no assurance that a redundant circuit would not also be disrupted. A significant increase in the cost of telephone services that is not recoverable through an increase in the price of our services or any significant interruption in telephone services, could adversely affect our business.

Unauthorized disclosure of sensitive or confidential client and customer data could expose us to protracted and costly litigation and penalties and may cause us to lose clients.

We are dependent on IT networks and systems to process, transmit and store electronic information and to communicate among our locations around the world and with our alliance partners and clients. Security breaches of this infrastructure could lead to shutdowns or disruptions of our systems and potential unauthorized disclosure of confidential information. We are also required at times to manage, utilize and store sensitive or confidential client or customer data. As a result, we are subject to contractual terms and numerous U.S. and foreign laws and regulations designed to protect this information, such as various U.S. federal and state laws governing the protection of health or other individually identifiable information. If any person, including any of our employees, negligently disregards or intentionally breaches our established controls with respect to such data or otherwise mismanages or misappropriates that data, we could be subject to monetary damages, fines and/or criminal prosecution.

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Although we maintain cyber liability insurance, such insurance may not adequately or timely compensate us for all losses we may incur. Unauthorized disclosure of sensitive or confidential client or customer data, whether through systems failure, employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose clients. Similarly, unauthorized access to or through our information systems or those we develop for our clients, whether by our employees or third parties, could result in negative publicity, legal liability and damage to our reputation, business, financial condition, results of operations and cash flows.

We process, transmit and store personally identifiable information and unauthorized access to or the unintended release of this information could result in a claim for damage or loss of business and create unfavorable publicity.

We process, transmit and store personally identifiable information, both in our role as a service provider and as an employer. This information may include social security numbers, financial and health information, as well as other personal information. As a result, we are subject to certain contractual terms as well as federal, state and foreign laws and regulations designed to protect personally identifiable information. We take measures to protect against unauthorized access and to comply with these laws and regulations. We use the Internet as a mechanism for delivering our services to clients, which may expose us to potential disruptive intrusions. Unauthorized access, system denials of service, or failure to comply with data privacy laws and regulations may subject us to contractual liability and damages, loss of business, damages from individual claimants, fines, penalties, criminal prosecution and unfavorable publicity, any of which could negatively affect our operating results and financial condition. In addition, third party vendors that we engage to perform services for us may have an unintended release of personally identifiable information.

We are required to comply with laws governing the transmission, security and privacy of protected health information.

In relation to our acquisition of a business process outsourcing provider focusing on health care, we are required to comply with applicable laws governing the transmission, security and privacy of health information, including, among others, the standards of The Health Insurance Portability and Accountability Act (“HIPAA”). The failure to comply with any of these laws could make it difficult to expand our recently acquired health care business process outsourcing business and/or cause us to incur significant liabilities.

If we make acquisitions, we could encounter difficulties that harm our business.

We may acquire companies, products, or technologies that we believe to be complementary to our business. If we engage in such acquisitions, we may have difficulty integrating the acquired personnel, operations, products or technologies. Acquisitions may dilute our earnings per share, disrupt our ongoing business, distract our management and employees, increase our expenses, subject us to liabilities, and increase our risk of litigation, all of which could harm our business. If we use cash to acquire companies, products, or technologies, it may divert resources otherwise available for other purposes or increase our debt. If we use our common stock to acquire companies, products, or technologies, we may experience a change of control or our stockholders may experience substantial dilution or both.

If we are unable to meet the debt covenant requirements under our revolving credit facility, potential growth and results of operations may suffer.

As of December 31, 2013, we had a $15.0 million secured revolving credit facility with Wells Fargo Bank, which has a term of four years. As of December 31, 2013, we had $1.0 million outstanding borrowings on our credit facility. If we do not meet the debt covenant requirements under the new revolving credit facility with Wells Fargo Bank, we may lose an important source of liquidity and be unable to meet short-term cash needs required for growth opportunities and we could face adverse effects on our financial statements, including payments for waivers or higher interest rate obligations.

Our largest stockholder has the abilityto significantly influence corporate actions.

A. Emmet Stephenson, Jr., one of our co-founders, owned approximately 19.0% of our outstanding common stock as of March 3, 2014. Under an agreement we have entered into with Mr. Stephenson, so long as Mr. Stephenson beneficially owns 10% or more (but less than 30%) of our outstanding common stock, Mr. Stephenson will be entitled to designate one of our nominees for election to the board, although he has not currently exercised this right. In addition, our bylaws allow that any holder of 10% or more of our outstanding common stock may call a special meeting of our stockholders. The concentration of voting power in Mr. Stephenson's hands, and the control Mr. Stephenson may exercise over us as described above, may discourage, delay or prevent a change in control that might otherwise benefit our stockholders.

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Our stock price has been volatile and may decline significantly andunexpectedly.

The market price of our common stock has been volatile, and could be subject to wide fluctuations, in response to quarterly variations in our operating results, changes in management, the degree of success in implementing our business and growth strategies, announcements of new contracts or contract cancellations, announcements of technological innovations or new products and services by us or our competitors, changes in financial estimates by securities analysts, the perception that significant stockholders may sell or intend to sell their shares, or other events or factors we cannot currently foresee. We are also subject to broad market fluctuations, given the overall volatility of the current U.S. and global economies, where the market prices of equity securities of many companies experience substantial price and volume fluctuations that have often been unrelated to the operating performance of such companies. These broad market fluctuations may adversely affect the market price of our common stock. Additionally, because our common stock trades at relatively low volume levels, any change in demand for our stock can be expected to substantially influence market prices thereof. The trading price of our stock varied from a low of $3.93 to a high of $7.24 during 2013.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

Smaller reporting companies are not required to provide the information required by this item; however, there were none.

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ITEM 2.  PROPERTIES

As of December 31, 2013, we owned or leased the following facilities, containing in the aggregate approximately 864,000 square feet:

Properties	Year Opened	Approximate Square Feet	Leased or Owned
Domestic:
U.S. Facilities
Greeley, Colorado	1998	35,000	Leased (a)
Laramie, Wyoming	1998	22,000	Company Owned (b)
Enid, Oklahoma	2000	47,500	Company Owned (c)
Grand Junction, Colorado	2000	54,500	Leased
Lynchburg, Virginia	2004	41,300	Leased (d)
Victoria, Texas	2008	54,100	Leased (e)
Mansfield, Ohio	2008	50,000	Leased
Jonesboro, Arkansas	2008	65,400	Leased
Greenwood Village, Colorado	2012	14,100	Leased
Lutz, Florida	2013	3,600	Leased
Colorado Springs, Colorado	2013	28,000	Leased
Canadian Facilities
Kingston, Ontario	2001	49,000	Leased
Asia Pacific:
Philippine Facilities
Makati City, Philippines	2008	78,000	Leased
Ortigas, Philippines	2010	158,000	Leased
Angeles City, Philippines	2013	61,000	Leased
Latin America:
Costa Rica Facility
Heredia, Costa Rica	2010	37,200	Leased
Honduras Facility
San Pedro Sula, Honduras	2011	65,200	Leased

(a) Our Greeley, Colorado facility was sold under a sale-leaseback agreement effective December 31, 2013.

(b) Our Laramie, Wyoming facility ceased operations in January 2010.

(c) Our Enid, Oklahoma facility ceased operations in March 2012 and reopened in September 2013.

(d) Our Lynchburg, Virginia facility moved to this larger space nearby in September 2013.

(e) Our Victoria, Texas facility ceased operations in January 2010 and is currently being sublet through the remaining lease term.

Substantially all of our facility space can be used to support any of our business process outsourced services. We believe our existing facilities are adequate for our current operations. We intend to maintain efficient levels of excess capacity to enable us to readily provide for needs of new clients and increasing needs of existing clients.

ITEM 3.  LEGAL PROCEEDINGS

None.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

Part II

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ITEM 5.  MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET FOR COMMON STOCK

Our common stock has been listed on the NYSE under the symbol “SRT” since the effective date of our initial public offering on June 19, 1997. The following table sets forth the quarterly high and low sales prices of our common stock as reported on the NYSE for the periods shown:

	High		Low
2013
First Quarter	$	5.99	$	3.93
Second Quarter	$	7.24	$	4.14
Third Quarter	$	6.51	$	4.58
Fourth Quarter	$	6.60	$	5.84
2012
First Quarter	$	3.35	$	1.95
Second Quarter	$	3.40	$	1.77
Third Quarter	$	3.24	$	2.68
Fourth Quarter	$	4.26	$	2.85

HOLDERS OF COMMON STOCK

As of March 3, 2014, there were approximately 1,655 stockholders of record and 15,376,611 shares of common stock outstanding.  See Item 1A.  “Risk Factors,” set forth in this Form 10-K for a discussion of risks related to control that may be exercised over us by our principal stockholders.

DIVIDEND POLICY

On January 22, 2007, our board of directors announced it would not declare a quarterly dividend on our common stock in the first quarter of 2007, and did not expect to declare dividends in the near future, making the dividend paid in November 2006 the last quarterly dividend that will be paid for the foreseeable future.  We plan to invest in growth initiatives in lieu of paying dividends.

STOCK REPURCHASE PROGRAM

Effective November 4, 2004, our board of directors authorized repurchases of up to $25 million of our common stock. The repurchase program will remain in effect until terminated by the board of directors, and will allow us to repurchase shares of our common stock from time to time on the open market, in block trades and in privately-negotiated transactions. Repurchases will be implemented by the Chief Financial Officer consistent with the guidelines adopted by the board of directors, and will depend on market conditions and other factors. Any repurchased shares will be held as treasury stock, and will be available for general corporate purposes. Any repurchases will be made in accordance with SEC rules. As of the date of this filing, no shares have been repurchased under this program.

The balance of the information required by Item 201 of Regulation S-K is omitted in accordance with the regulatory relief available to smaller reporting companies.

ITEM 6.  SELECTED FINANCIAL DATA

Smaller reporting companies are not required to provide the information required by this item.

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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion analyzes our consolidated financial condition as of December 31, 2013 and 2012, and our consolidated results of operations for the years then ended. We are considered a "smaller reporting company" under applicable regulations of the SEC and are therefore eligible for relief from certain disclosure requirements. In accordance with such provisions, we have elected to provide our audited consolidated statements of operations and comprehensive (loss), cash flows and changes in stockholders' equity for two, rather than three, years.

OVERVIEW

STARTEK is a comprehensive contact center and business process outsourcing service company with employees we call Brand Warriors who for over 25 years have been committed to making a positive impact on our clients’ business results. Our mission is to enable and empower our Brand Warriors to promote our clients’ brands every day and bring value to our stakeholders. We accomplish this by aligning with our clients’ business objectives.

STARTEK has proven results for the multiple services we provide, including sales, order management and provisioning, customer care, technical support, receivables management, and retention programs.  We manage programs using a variety of multi-channel customer interaction capabilities, including voice, chat, email, IVR and back-office support.  STARTEK has delivery centers in the United States, Philippines, Canada, Costa Rica, Honduras and through its STARTEK@Home workforce.

SIGNIFICANT DEVELOPMENTS DURING THE YEAR ENDED DECEMBER 31, 2013

Decatur, Illinois

In February 2012, we received written notifications that a client would be reducing business in our Decatur, Illinois facility. We recorded a $0.5 million restructuring reserve in the second quarter of 2012. The restructuring plan was completed during the first quarter of 2013.

Regina, Saskatchewan

The lease for this facility was due to expire July 31, 2013. We were successful in negotiating an early termination of the lease; therefore, the restructuring plan was completed during the first quarter of 2013 and we do not expect to incur any additional restructuring liabilities for this location.

Cornwall, Ontario

In February 2013, we announced the closure of our Cornwall, Ontario facility due to an end-of-life client program. Operations ceased during the first quarter of 2013, which was earlier than initially expected.

Laramie, Wyoming

In the fourth quarter 2010, we classified our Laramie facility as an asset held for sale. Due to the duration of the held for sale classification, we reclassified the asset back to assets in use during the second quarter of 2013, resulting in a depreciation charge of $0.1 million.

Enid, Oklahoma

We reopened our Enid facility in the third quarter of 2013; therefore, we reclassified the asset from assets held for sale to assets in use, resulting in a depreciation charge of $0.3 million.

Angeles City, Philippines

We began operating in our new location in Angeles City, Philippines in September 2013.

Colorado Springs, Colorado

Our healthcare division began operations in July 2013 in Colorado Springs, Colorado.

Lutz, Florida

We acquired Ideal Dialogue Company, LLC in March 2013.

Myrtle Beach, South Carolina

We are developing a new customer support center in Myrtle Beach, South Carolina.

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SUBSEQUENT EVENTS

In February 2014, we announced the closure of our Jonesboro, Arkansas site. Operations will cease in the second quarter of 2014 when the business transitions to another facility. The lease will terminate in June 2015.

In February 2014, we signed a lease for a new contact center in Tegucigalpa, Honduras.

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RESULTS OF OPERATIONS — YEARS ENDED DECEMBER 31, 2013 AND DECEMBER 31, 2012

 The following table summarizes our revenues and gross profit for the periods indicated, by reporting segment:

	For the Year Ended December 31,
	2013					2012
	(in 000s)			(% of Total)		(in 000s)			(% of Total)
Domestic:
Revenue	$	120,928		52.3	%	$	99,827		50.4	%
Cost of services	107,637			52.0	%	92,431			52.8	%
Gross profit	$	13,291		54.6	%	$	7,396		32.2	%
Gross profit %	11.0		%			7.4		%
Asia Pacific:
Revenue	81,082			35.1	%	$	79,683		40.2	%
Cost of services	71,108			34.4	%	63,207			36.1	%
Gross profit	9,974			41.0	%	$	16,476		71.6	%
Gross profit %	12.3		%			20.7		%
Latin America:
Revenue	29,247			12.6	%	$	18,582		9.4	%
Cost of services	28,187			13.6	%	19,457			11.1	%
Gross profit	1,060			4.4	%	$	(875	)	(3.8	)%
Gross profit %	3.6		%			(4.7		)%
Company Total:
Revenue	$	231,257		100.0	%	$	198,092		100.0	%
Cost of services	206,932			100.0	%	175,095			100.0	%
Gross profit	$	24,325		100.0	%	$	22,997		100.0	%
Gross profit %	10.5		%			11.6		%

Revenue

Revenue increased by $33.2 million, or 16.7%, from $198.1 million in 2012 to $231.3 million in 2013.  The increase was due to performance within the Domestic and Latin America segments.  Revenue in the Domestic segment increased by 21.1%, or $21.1 million, due to $33.1 million of new business and growth from existing programs, partially offset by a $7.7 million reduction from closed facilities, and a $4.3 million reduction for other program reductions. Asia Pacific revenue increased 1.8%, or $1.4 million, from $79.7 million in 2012 to $81.1 million in 2013 due primarily to the ramp up of new business of $13.4 million, partially offset by $10.7 million from lower call volumes and lost programs.  Revenue in our Latin America segment increased $10.7 million, or 57.4%, from $18.6 million in 2012 to $29.2 million in 2013 primarily due to growth from existing clients of $12.3 million.

Cost of Services and Gross Profit

Included in gross profit are one-time charges of $1.5 million related to the IT transformation costs and $0.4 million for depreciation charges for the Enid and Laramie reclassifications from held for sale. Cost of services increased by $31.8 million, or 18.2%, from $175.1 million in 2012 to $206.9 million in 2013, primarily to support the 16.7% revenue growth.  Gross profit as a percentage of revenue decreased from 11.6% in 2012 to 10.5% in 2013 due to IT transformation costs, segment mix, and labor efficiency performance issues in Asia Pacific that more than offset improvements in the Domestic and Latin America segments.  Domestic cost of services increased by approximately $15.2 million due to the new business and growth mentioned above. Domestic gross profit as a percentage of revenue increased to 11.0% in 2013 from 7.4% in 2012 due to labor efficiency and capacity utilization improvements. Cost of services in the Asia Pacific segment increased by approximately $7.9 million, or 12.5%. Asia Pacific gross profit as a percentage of revenue decreased from 20.7% in 2012 to 12.3% in 2013. The unfavorable variances were due to program mix changes, new site start up and ramp related costs and inefficiencies across two key programs. Cost of services in Latin America increased by approximately $8.7 million, or 44.9%. The increase was primarily due to the continued ramp of our Honduras facility and investment in growth in Costa Rica. Latin America gross profit as a percentage of revenue increased from (4.7%) to 3.6% due to the higher headcount and asset utilization.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased from $29.6 million in 2012 to $28.8 million in 2013 and decreased significantly as a percentage of revenue in 2013 compared with 2012 from 15.0% to 12.5%, respectively. The decrease as a percentage of revenue was the result of revenue growth and continued focus on cost control.

Impairment Losses and Restructuring Charges, Net

During 2013, we recognized $0.5 million in impairment losses in our Latin America segment associated with the furniture, fixtures and leasehold improvements at our site in Costa Rica after an impairment analysis indicated estimated future cash flows were insufficient to support the carrying values. We also reversed $0.4 million of restructuring charges during this period due to expenses reimbursable under the sublease at our Victoria, Texas facility.

Impairment losses and restructuring charges totaled $4.1 million for 2012. The $4.1 million expense in 2012 consisted of the following activities in our Domestic segment:

• $3.1 million of impairment losses related to long-lived assets such as computer equipment, software, equipment and furniture and fixtures for which the future cash flows did not support the carrying value of the assets in our Decatur, Illinois and Jonesboro, Arkansas facilities;

• $0.5 million of restructuring charges related to lease, utilities, maintenance, and security expense that will continue to be incurred for the Decatur, Illinois location;

• $0.7 million of restructuring charges related to revised estimates of our expected lease term for our Regina, Saskatchewan site; partially offset by

• a reversal of $0.2 million of restructuring charges related to our Grand Junction, Colorado site that was re-opened in the third quarter of 2012.

Interest and Other Income (Expense), Net

Interest and other income (expense), net for 2013 was $1.6 million compared to $(0.3) million in 2012. The $1.6 million includes losses on disposal of assets related to our IT transformation project of $1.0 million, loss on sale leaseback transaction of $0.5 million and loss on disposal of assets previously held for sale of $0.1 million.

Income Tax

Income tax expense for 2013 was $0.2 million compared to $0.1 million in 2012.  The current period income tax expense is the tax impact of the income tax provision for Canadian operations.  Our U.S. operations have a valuation allowance recorded on U.S. deferred tax assets and we have tax holidays in the Philippines, Costa Rica and Honduras.

Net Loss

As a result of the factors described above, net loss was $6.4 million for the year ended December 31, 2013, compared to $10.5 million for the year ended December 31, 2012.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are generally cash flows generated by operating activities and from available borrowings under our revolving credit facility. We have historically utilized these resources to finance our operations and make capital expenditures associated with capacity expansion, upgrades of information technologies and service offerings, and business acquisitions. Due to the timing of our collections of large billings with our major customers, we have historically needed to draw on our line of credit periodically for ongoing working capital needs. Based on current expectations, we believe our cash from operations and capital resources will be sufficient to operate our business for at least the next 12 months.

As of December 31, 2013, working capital totaled $31.6 million and our current ratio was 2.11:1, compared to working capital of $36.4 million and a current ratio of 2.50:1 at December 31, 2012.

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Net cash flows provided by operating activities in 2013 was $6.2 million compared to net cash provided by operating activities of $2.9 million for 2012. The $3.3 million increase in net cash flows from operating activities was due to a $1.8 million decrease in non-cash items such as depreciation and amortization, impairment charges, losses on asset disposals and stock-based compensation, offset by a $1.0 million net decrease in cash flows from assets and liabilities and a $4.1 million decrease in net loss.

Net cash used in investing activities in 2013 of $5.6 million primarily consisted of $8.8 million of capital expenditures and cash paid for acquisitions of $2.1 million, partially offset by the proceeds from the sale of assets of $3.4 million and proceeds from a sale leaseback transaction of $1.3 million. This compares to 2012 net cash used in investing activities of $2.8 million primarily for capital expenditures of $7.3 million, partially offset by the proceeds from the sale leaseback transaction of our Kingston, Ontario property of $3.9 million.

Net cash provided by financing activities in 2013 of $1.2 million was primarily attributed to borrowings from our line of credit. During the year ended December 31, 2013 we borrowed approximately $41.4 million and repaid approximately $40.4 million on our credit facility. This compares to 2012 net cash provided by financing activities of seven thousand, primarily for proceeds from purchases of our common stock under our Employee Stock Purchase Plan offset by payments on capital lease obligations.

Cash and cash equivalents held by the Company's foreign subsidiaries was $1.0 million and $1.3 million at December 31, 2013 and 2012, respectively. Under current tax laws and regulations, if cash and cash equivalents held outside the United States are distributed to the United States in the form of dividends or otherwise, we may be subject to additional U.S. income taxes and foreign withholding taxes.

Secured Revolving Credit Facility. We have a secured revolving credit facility, with a current borrowing capacity of $15.0 million, which can increase to $20.0 million at our option, to provide liquidity for working capital needs and a source of financing growth opportunities. After consideration of $1.0 million of borrowings outstanding under the credit facility and letters of credit outstanding thereunder of $0.08 million, our remaining borrowing capacity was $13.9 million at December 31, 2013.

Debt Covenants. Our secured revolving credit facility contains standard affirmative and negative covenants that may limit or restrict our ability to sell assets, incur additional indebtedness and engage in mergers and acquisitions. We were in compliance with all debt covenants at December 31, 2013.

CONTRACTUAL OBLIGATIONS

As a smaller reporting company we are not required to provide tabular disclosure of contractual obligations.

OFF-BALANCE SHEET ARRANGEMENTS

We have no material off-balance sheet transactions, unconditional purchase obligations or similar instruments and we are not a guarantor of any other entities’ debt or other financial obligations.

VARIABILITY OF OPERATING RESULTS

We have experienced and expect to continue to experience some quarterly variations in revenue and operating results due to a variety of factors, many of which are outside our control, including: (i) timing and amount of costs incurred to expand capacity in order to provide for volume growth from existing and future clients; (ii) changes in the volume of services provided to principal clients; (iii) expiration or termination of client projects or contracts; (iv) timing of existing and future client product launches or service offerings; (v) seasonal nature of certain clients’ businesses; and (vi) variability in demand for our services by our clients depending on demand for their products or services and/or depending on our performance.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of consolidated financial statements requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our accounting estimates on historical experience and other factors that we believe to be reasonable under the circumstances. Actual results could differ from those estimates.

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We have discussed the development and selection of critical accounting policies and estimates with our Audit Committee. We believe that the following critical accounting policies involve our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Impairment of Long-Lived Assets

We periodically, on at least an annual basis, evaluate potential impairments of our long-lived assets.  In our annual evaluation or when we determine that the carrying value of a long-lived asset may not be recoverable, based upon the existence of one or more indicators of impairment, we evaluate the projected undiscounted cash flows related to the assets. If these cash flows are less than the carrying values of the assets, we measure the impairment based on the excess of the carrying value of the long-lived asset over the long-lived asset’s fair value.  Where appropriate we use a probability-weighted approach to determine our future cash flows, based upon our estimate of the likelihood of certain scenarios, primarily whether we expect to sell new business within a current location.  These estimates are consistent with our internal projections and external communications and public disclosures.  Our projections contain assumptions pertaining to anticipated levels of utilization and revenue that may or may not be under contract but are based on our experience and/or projections received from our customers.  If our estimate of the probability of different scenarios changed by 10%, the impact to our financial statements would not be material.  During the year ended December 31, 2013, we recognized impairment losses in our Latin America segment associated with the furniture, fixtures and leasehold improvements at our site in Costa Rica after an impairment analysis indicated estimated future cash flows were insufficient to support the carrying values. Given that the impairment losses were valued using internal estimates of future cash flows, we have classified the remaining fair value of long-lived assets as Level 3 in the fair value hierarchy.

Restructuring Charges

On an ongoing basis, management assesses the profitability and utilization of our facilities and in some cases management has chosen to close facilities.  Severance payments that occur from reductions in workforce are in accordance with our postemployment plans and/or statutory requirements that are communicated to all employees upon hire date; therefore, severance liabilities are recognized when they are determined to be probable and reasonably estimable.  Other liabilities for costs associated with an exit or disposal activity are recognized when the liability is incurred, instead of upon commitment to an exit plan.  A significant assumption used in determining the amount of the estimated liability for closing a facility is the estimated liability for future lease payments on vacant facilities.  We determine our estimate of sublease based on our ability to successfully negotiate early termination agreements with landlords, a third-party broker or management’s assessment of our ability to sublease the facility based upon the market conditions in which the facility is located. If the assumptions regarding early termination and the timing and amounts of sublease payments prove to be inaccurate, we may be required to record additional losses, or conversely, a future gain.  We did not incur any restructuring charges during 2013. The only remaining restructuring plan at December 31, 2013 is related to our Victoria facility, which will be completed in 2014.  

Accrued restructuring costs were valued using a discounted cash flow model.  Significant assumptions used in determining the amount of the estimated liability for closing a facility are the estimated liability for future lease payments on vacant facilities and the discount rate utilized to determine the present value of the future expected cash flows. The cash flows consist of the future lease payment obligations required under the lease agreement.  In the future, if we sublease for periods that differ from our assumption or if our estimate of a buy-out differs from our assumption, we may be required to record a gain or loss.  Future cash flows also include estimated property taxes through the remainder of the lease term, which are valued based upon historical tax payments.  Given that the restructuring charges were valued using our internal estimates using a discounted cash flow model, we have classified the accrued restructuring costs as Level 3 in the fair value hierarchy.

Derivative Instruments and Hedging Activities

We record derivative instruments as either an asset or liability measured at its fair value, with changes in the fair value of qualifying hedges recorded in other comprehensive income. As of December 31, 2013, we recorded a gross derivative liability related to our unrealized losses of approximately $2.2 million.  Changes in a derivative’s fair value are recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative’s gains and losses to offset the related results of the hedged item and requires that we must formally document, designate and assess the effectiveness of transactions that receive hedge accounting treatment.

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We are generally able to apply cash flow hedge accounting, which associates the results of the hedges with forecasted future expenses.  The current mark-to-market gain or loss is recorded in accumulated other comprehensive income and will be re-classified to operations as the forecasted expenses are incurred, typically within one year.  During 2013 and 2012, our cash flow hedges were highly effective and hedge ineffectiveness was not material. While we expect that our derivative instruments that have been designated as hedges will continue to meet the conditions for hedge accounting, if hedges do not qualify as highly effective or if we do not believe that forecasted transactions will occur, the changes in the fair value of the derivatives used as hedges will be reflected in earnings.

Income Taxes

Income taxes are accounted for under the asset and liability method.  Deferred income taxes reflect net effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. We are subject to foreign income taxes on our foreign operations. We are required to estimate our income taxes in each jurisdiction in which we operate. This process involves estimating our actual current tax exposure, together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes. The tax effects of these temporary differences are recorded as deferred tax assets or deferred tax liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period during which such rates are enacted.  We record a valuation allowance when it is more likely than not that we will not realize the net deferred tax assets in a certain jurisdiction.

We consider all available evidence to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become realizable.  Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), and projected taxable income in assessing the realizability of deferred tax assets.  In making such judgments, significant weight is given to evidence that can be objectively verified.  Based on all available evidence, in particular our historical cumulative losses, recent operating losses and a U.S. pre-tax loss for the fiscal year ending December 31, 2013, we recorded a valuation allowance against our U.S. net deferred tax assets.  The valuation allowance for deferred tax assets as of December 31, 2013 and 2012 was $20.0 million and $16.6 million, respectively.  In order to fully realize the U.S. deferred tax assets, we will need to generate sufficient taxable income in future periods before the expiration of the deferred tax assets governed by the tax code.  As of December 31, 2013, we had gross federal net operating loss carry forwards of approximately $34,560 expiring beginning in 2030 and gross state net operating loss carry forwards of approximately $60,435 expiring beginning in 2014.

We record tax benefits when they are more likely than not to be realized. 

Recently Issued Accounting Standards

In July 2013, the FASB issued ASU 2013-11, Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, an amendment to FASB Accounting Standards Codification (“ASC”) Topic 740, Income Taxes (“FASB ASC Topic 740”). This update clarifies that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction or the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This ASU is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this ASU is not expected to have a material impact on our financial statements.

In March 2013, the FASB issued ASU 2013-05 Topic 830 - Foreign Currency Matters (“ASU 2013-05”). ASU 2013-05 resolves the diversity in practice about whether Subtopic 810-10, Consolidation-Overall, or Subtopic 830-30, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity. In addition, the amendments in this ASU resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. ASU 2013-05 is effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The adoption of this ASU is not expected to have a material impact on our financial statements.

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ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Risks

We are exposed to market risk from foreign currency exchange rate fluctuations when subsidiaries with functional currencies other than the U.S. dollar (“USD”) are translated into our USD consolidated financial statements. To mitigate this risk, we enter into forward currency exchange contracts to reduce the effects on our operating results and cash flows caused by volatility in foreign currency exchange rates. The contracts cover periods commensurate with expected exposure, generally three to nine months, and are principally unsecured. The cumulative translation effects for subsidiaries using functional currencies other than the USD are included in “Accumulated other comprehensive income (loss)” in stockholders’ equity. Movements in non-U.S. dollar currency exchange rates may negatively or positively affect our competitive position, as exchange rate changes may affect business practices and/or pricing strategies of non-U.S. based competitors.

We serve many of our U.S.-based clients in several non-U.S. locations, such as Canada, the Philippines, Costa Rica and Honduras. Our client contracts are primarily priced and invoiced in U.S. dollars, however, the functional currencies of our Canadian and Philippine operations are the Canadian dollar ("CAD") and the Philippine peso ("PHP"), respectively. In Costa Rica and Honduras, our functional currency is the USD and the majority of our costs are denominated in U.S. dollars.

In order to hedge a portion of our anticipated cash flow requirements denominated in the Canadian dollar and Philippine peso, we had outstanding forward contracts as of December 31, 2013 with notional amounts totaling $46.4 million. The average contractual exchange rate for the CAD contracts is 1.04 and for the PHP contracts is 42.1. As of December 31, 2013, we had net total derivative liabilities associated with these contracts with a fair value of $2.2 million, which will settle within the next 12 months. If the USD were to weaken against the Canadian dollar and Philippine peso by 10% from current period-end levels, we would incur a loss of approximately $4.9 million on the underlying exposures of the derivative instruments. However, this loss would be mitigated by corresponding gains on the underlying exposures. As of December 31, 2013, we have not entered into any arrangements to hedge our exposure to fluctuations in the Costa Rican colon or the Honduran lempira relative to the U.S. dollar.

Interest Rate Risk

We currently have a $15 million secured credit facility, which can increase to $20 million. The interest rate on our credit facility is variable based upon the LIBOR index, and, therefore, is affected by changes in market interest rates. If the LIBOR increased 100 basis points, there would not be a material impact to our Condensed Consolidated Financial Statements.

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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

StarTek, Inc. and Subsidiaries:

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2013 and 2012

Consolidated Balance Sheets as of December 31, 2013 and 2012

Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2013 and 2012

Notes to Consolidated Financial Statements

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of StarTek, Inc.

We have audited the accompanying consolidated balance sheets of StarTek, Inc. and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of operations and comprehensive loss, cash flows, and stockholders’ equity for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of StarTek, Inc. and subsidiaries at December 31, 2013 and 2012, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Denver, Colorado

March 7, 2014

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STARTEK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except per share data)

	Year Ended December 31,
	2013			2012
Revenue	$	231,257		$	198,092
Cost of services	206,932			175,095
Gross profit	24,325			22,997
Selling, general and administrative expenses	28,828			29,645
Impairment losses and restructuring charges, net	94			4,066
Operating loss	(4,597		)	(10,714		)
Interest and other income (expense), net	(1,579		)	342
Loss before income taxes	(6,176		)	(10,372		)
Income tax expense	230			116
Net loss	$	(6,406	)	$	(10,488	)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(898		)	413
Change in fair value of derivative instruments	(2,640		)	614
Comprehensive loss	$	(9,944	)	$	(9,461	)
Net loss per common share - basic and diluted	$	(0.42	)	$	(0.69	)
Weighted average common shares outstanding - basic and diluted	15,339			15,241

See Notes to Consolidated Financial Statements.

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STARTEK, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	As of December 31,
	2013			2012
ASSETS
Current assets:
Cash and cash equivalents	$	10,989		$	9,183
Trade accounts receivable, net	43,708			41,070
Deferred income tax assets	157			288
Derivative asset	—			733
Prepaid expenses	2,939			2,045
Assets held for sale	—			4,969
Current portion of note receivable	645			660
Other current assets	1,626			1,332
Total current assets	60,064			60,280
Property, plant and equipment, net	22,210			26,310
Long-term deferred income tax assets	2,151			3,930
Long-term note receivable, net of current portion	—			602
Intangible assets, net	1,164			—
Goodwill	1,637			—
Other long-term assets	2,491			2,010
Total assets	$	89,717		$	93,132
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,477		$	7,174
Accrued liabilities:
Accrued payroll	9,196			7,035
Accrued compensated absences	2,469			2,591
Other accrued liabilities	1,901			2,150
Line of credit	1,000			—
Derivative liability	2,160			253
Deferred revenue	486			638
Deferred income tax liabilities	766			2,390
Other current liabilities	2,043			1,648
Total current liabilities	28,498			23,879
Deferred rent	1,445			2,202
Other liabilities	1,600			772
Total liabilities	31,543			26,853
Commitments and contingencies
Stockholders’ equity:
Common stock, 32,000,000 non-convertible shares, $0.01 par value, authorized; 15,368,356 and 15,298,947 shares issued and outstanding at December 31, 2013 and 2012, respectively	154			153
Additional paid-in capital	74,273			72,435
Accumulated other comprehensive (loss) income	(1,009		)	2,529
Accumulated deficit	(15,244		)	(8,838		)
Total stockholders’ equity	58,174			66,279
Total liabilities and stockholders’ equity	$	89,717		$	93,132

See Notes to Consolidated Financial Statements.

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STARTEK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year Ended December 31,
	2013			2012
Operating Activities
Net loss	$	(6,406	)	$	(10,488	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	12,527			12,957
Impairment losses	531			3,086
Losses (gains) on disposal of assets	1,074			(45		)
Loss on sale leaseback transaction	475			—
Share-based compensation expense	1,607			1,275
Amortization of deferred gain on sale leaseback transaction	(273		)	(47		)
Deferred income taxes	166			410
Other, net	—			249
Changes in operating assets and liabilities:
Trade accounts receivable, net	(2,711		)	(3,287		)
Prepaid expenses and other assets	(2,264		)	1,113
Accounts payable	435			(121		)
Income taxes, net	(348		)	334
Accrued and other liabilities	1,429			(2,525		)
Net cash provided by operating activities	6,242			2,911
Investing Activities
Proceeds from note receivable	658			660
Proceeds from sale of assets	3,394			—
Proceeds from sale leaseback transaction	1,337			3,884
Purchases of property, plant and equipment	(8,843		)	(7,305		)
Cash paid for acquisitions of businesses	(2,097		)	—
Net cash used in investing activities	(5,551		)	(2,761		)
Financing Activities
Proceeds from stock option exercises	141			—
Proceeds from line of credit	41,390			28,641
Principal payments on line of credit	(40,390		)	(28,641		)
Payment of payroll taxes relating to vesting of restricted stock	(6		)	—
Net proceeds from the issuance of common stock	97			103
Principal payments on capital lease obligations	(19		)	(96		)
Net cash provided by financing activities	1,213			7
Effect of exchange rate changes on cash	(98		)	(693		)
Net increase (decrease) in cash and cash equivalents	1,806			(536		)
Cash and cash equivalents at beginning of period	9,183			9,719
Cash and cash equivalents at end of period	$	10,989		$	9,183
Supplemental Disclosure of Cash Flow Information
Cash paid for interest	$	54		$	78
Cash paid for income taxes	$	533		$	5
Supplemental Disclosure of Noncash Investing Activities
Assets acquired through capital lease	$	1,413		$	—

See Notes to Consolidated Financial Statements.

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STARTEK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

					Additional Paid-In Capital			Accumulated Other Comprehensive (Loss) Income			Retained Earnings (Accumulated Deficit)			Total Stockholder's Equity
	Common Stock
	Shares		Amount
Balance, December 31, 2011	15,249,829		$	152	$	71,058		$	1,502		$	1,650		$	74,362
Restricted shares granted	38,126		—		—			—			—			—
Restricted shares forfeited	(38,302	)	—		—			—			—			—
Shares withheld for taxes on restricted stock vested	(1,023	)	—		—			—			—			—
Issuance of common stock pursuant to Employee Stock Purchase Plan	50,317		1		102			—			—			103
Share-based compensation expense	—		—		1,275			—			—			1,275
Net loss	—		—		—			—			(10,488		)	(10,488		)
Change in accumulated other comprehensive income	—		—		—			1,027			—			1,027
Balance, December 31, 2012	15,298,947		153		72,435			2,529			(8,838		)	66,279
Stock options exercised	38,577		1		140			—			—			141
Stock issued for services	8,318		—		45			—			—			45
Restricted shares forfeited	(1,067	)	—		(3		)	—			—			(3		)
Shares withheld for taxes on restricted stock vested	(823	)	—		(6		)	—			—			(6		)
Issuance of common stock pursuant to Employee Stock Purchase Plan	24,404		—		97			—			—			97
Share-based compensation expense	—		—		1,565			—			—			1,565
Net loss	—		—		—			—			(6,406		)	(6,406		)
Change in accumulated other comprehensive income	—		—		—			(3,538		)	—			(3,538		)
Balance, December 31, 2013	15,368,356		$	154	$	74,273		$	(1,009	)	$	(15,244	)	$	58,174

See Notes to Consolidated Financial Statements.

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STARTEK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013

(In thousands, except share and per share data)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

StarTek, Inc. ("STARTEK") is a comprehensive contact center and business process outsourcing service company. For over 25 years, we have partnered with our clients to effectively handle their customers throughout the customer life cycle. We have provided customer experience management solutions that solve strategic business challenges so that businesses can effectively manage customer relationships across all contact points. Headquartered in Greenwood Village, Colorado, we operate facilities in the U.S., Canada, the Philippines, Costa Rica and Honduras.  We operate within three business segments:  Domestic, Asia Pacific and Latin America.  Refer to Note 16, "Segment Information," for further information.

We are considered a "smaller reporting company" under the applicable disclosure rules of the Securities and Exchange Commission and accordingly, have elected to provide our audited statements of operations and comprehensive loss, cash flows and changes in stockholders' equity for two, rather than three, years.

Consolidation

Our consolidated financial statements include the accounts of all wholly-owned subsidiaries after elimination of significant intercompany balances and transactions.

Use of Estimates

The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes.  Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period they are determined to be necessary.

Concentration of Credit Risk

We are exposed to credit risk in the normal course of business, primarily related to accounts receivable and derivative instruments.  Historically, the losses related to credit risk have been immaterial.  We regularly monitor credit risk to mitigate the possibility of current and future exposures resulting in a loss.  We evaluate the creditworthiness of clients prior to entering into an agreement to provide services and on an on-going basis as part of the processes of revenue recognition and accounts receivable.  We do not believe we are exposed to more than a nominal amount of credit risk in our derivative hedging activities, as the counter parties are established, well-capitalized financial institutions.

Foreign Currency Translation

The assets and liabilities of our foreign operations that are recorded in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Revenues and expenses are translated at the weighted-average exchange rate during the reporting period. Resulting translation adjustments, net of applicable deferred income taxes, are recorded in accumulated other comprehensive income.  Foreign currency transaction gains and losses are included in the accompanying consolidated statements of operations and comprehensive loss. Such gains and losses were not material for any period presented.

Revenue Recognition

Business Process Outsourcing Services —We invoice our clients monthly in arrears and recognize revenues for such services when completed. Substantially all of our contractual arrangements are based either on a production rate, meaning that we recognize revenue based on the billable hours or minutes of each call center agent, or on a rate per transaction basis.  These rates could be based on the number of paid hours the agent works, the number of minutes the agent is available to answer calls, or the number of minutes the agent is actually handling calls for the client, depending on the client contract.  Production rates vary by client contract and can fluctuate based on our performance against certain pre-determined criteria related to quality and performance. Additionally, some clients are contractually entitled to penalties when we are out of compliance with certain quality and/or performance obligations defined in the client contract. Such penalties are recorded as a reduction to revenue as incurred based on a measurement of the appropriate penalty under the terms of the client contract.  Likewise, some client

30

contracts stipulate that we are entitled to bonuses should we meet or exceed these predetermined quality and/or performance obligations.  These bonuses are recognized as incremental revenue in the period in which they are earned.

As a general rule, our contracts do not include multiple elements.  We provide initial training to customer service representatives upon commencement of new contracts and recognize revenues for such training as the services are provided based upon the production rate (i.e., billable hours and rates related to the training services as stipulated in our contractual arrangements). Accordingly, the corresponding training costs, consisting primarily of labor and related expenses, are recognized as incurred.

Allowance for Doubtful Accounts

An allowance for doubtful accounts is provided for known and estimated potential losses arising from sales to customers based on a periodic review of these accounts.  There was no allowance for doubtful accounts as of December 31, 2013 or 2012.

Fair Value of Financial Instruments

The carrying value of our cash and cash equivalents, accounts receivable, notes receivable, accounts payable and line of credit approximate fair value because of their short-term nature.

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.

Accounting guidance for the measurement of fair value establishes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The levels of the fair value hierarchy are described below:

Level 1 Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3Valuation is generated from model-based techniques that use significant assumptions not observable in the market.  These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability.  Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Refer to Note 8, “Fair Value Measurements,” for additional information on how we determine fair value for our assets and liabilities.

Cash and Cash Equivalents

We consider cash equivalents to be short-term, highly liquid investments readily convertible to known amounts of cash and so near their maturity at purchase that they present insignificant risk of changes in value because of changes in interest rates.

Restricted cash of $456 included in other current assets at December 31, 2013 represents escrowed funds related to the sales leaseback of our Greeley North property.

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Derivative Instruments and Hedging Activities

Our derivative instruments consist of foreign currency forward contracts and are recorded as either an asset or liability measured at its fair value, with changes in the fair value of qualifying hedges recorded in other comprehensive income.  Changes in a derivative’s fair value are recognized currently in the statements of operations unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative’s gains and losses to offset the related results of the hedged item and requires that we must formally document, designate and assess the effectiveness of transactions that receive hedge accounting treatment.

We generally are able to apply cash flow hedge accounting which associates the results of the hedges with forecasted future expenses.  The current mark-to-market gain or loss is recorded in accumulated other comprehensive income and will be re-classified to operations as the forecasted expenses are incurred, typically within one year.  During 2013 and 2012, our cash flow hedges were highly effective and hedge ineffectiveness was not material. While we expect that our derivative instruments that have been designated as hedges will continue to meet the conditions for hedge accounting, if hedges do not qualify as highly effective or if we do not believe that forecasted transactions will occur, the changes in the fair value of the derivatives used as hedges will be reflected in earnings.

Property, Plant and Equipment

Property, plant, and equipment are stated at depreciated cost. Additions and improvement activities are capitalized. Maintenance and repairs are expensed as incurred. Depreciation and amortization is computed using the straight-line method based on their estimated useful lives, as follows:

	Estimated Useful Life
Buildings and building improvements	15-30 years
Telephone and computer equipment	3-5 years
Software	3 years
Furniture, fixtures, and miscellaneous equipment	5-7 years

We depreciate leasehold improvements associated with operating leases over the shorter of the expected useful life or remaining life of the lease.  Depreciation for assets obtained under a capital lease is included in depreciation expense.

Impairment of Long-Lived Assets

We periodically, on at least an annual basis, evaluate potential impairments of our long-lived assets.  In our annual evaluation or when we determine that the carrying value of a long-lived asset may not be recoverable, based upon the existence of one or more indicators of impairment, we evaluate the projected undiscounted cash flows related to the assets. If these cash flows are less than the carrying values of the assets, we measure the impairment based on the excess of the carrying value of the long-lived asset over the long-lived asset’s fair value.  Our projections contain assumptions pertaining to anticipated levels of utilization and revenue that may or may not be under contract but are based on our experience and/or projections received from our customers.

Goodwill

Goodwill is recorded at fair value and not amortized, but is reviewed for impairment at least annually or more frequently if impairment indicators arise. Our goodwill is allocated by reporting unit and is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, that the fair value of the reporting unit may be more likely than not less than carrying amount, or if significant changes to macro-economic factors related to the reporting unit have occurred that could materially impact fair value, a quantitative goodwill impairment test would be required. Additionally, we can elect to forgo the qualitative assessment and perform the quantitative test.

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The first step of the quantitative test is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to have a potential impairment and the second step of the quantitative impairment test is not necessary. However, if the carrying amount of a reporting unit exceeds its fair value, the second step is performed to determine if goodwill is impaired and to measure the amount of impairment loss to recognize, if any. The second step compares the implied fair value of goodwill with the carrying amount of goodwill. If the implied fair value of goodwill exceeds the carrying amount, then goodwill is not considered impaired. However, if the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination (i.e., the fair value of the reporting unit is allocated to all the assets and liabilities, including any unrecognized intangible assets, as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was determined as the exit price a market participant would pay for the same business). We have elected to perform the annual impairment assessment for goodwill in the fourth quarter.

We completed the acquisitions of two companies during 2013 for which one has finalized purchase price accounting. No events or changes in circumstances have occurred since the closing of these acquisitions to indicate any impairment at December 31, 2013 to the carrying amount of the newly acquired goodwill; therefore, based on our qualitative assessment, it is not more likely than not an impairment has occurred.

Intangible Assets

We amortize all acquisition-related intangible assets that are subject to amortization based using the straight-line method over the estimated useful life based on economic benefit as follows:

	Estimated Useful Life
Developed technology	8 years
Customer base and customer relationships	3 years
Trade name	6 years
Noncompete agreement	2 years

We perform a review of intangible assets to determine if facts and circumstances indicate that the useful life is shorter than we had originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, we assess recoverability by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful life is shorter than originally estimated, we accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life.

For further discussion of identified intangible assets, refer to Note 3, "Goodwill and Intangible Assets."

Assets Held for Sale

We classify an asset as held for sale when the facts and circumstances meet the criteria for such classification, including the following (a) we have committed to a plan to sell the asset, (b) the asset is available for immediate sale, (c) we have initiated actions to complete the sale, (d) the sale is expected to be completed within one year, (e) the asset is being actively marketed at a price that is reasonable relative to its fair value and (f) the plan to sell is unlikely to be subject to significant changes or termination.  Assets held for sale are reported at the lower of cost or fair value less costs to sell.

Restructuring Charges

On an ongoing basis, management assesses the profitability and utilization of our facilities and in some cases management has chosen to close facilities.  Severance payments that occur from reductions in workforce are in accordance with our postemployment policy and/or statutory requirements that are communicated to all employees upon hire date; therefore, severance liabilities are recognized when they are determined to be probable and estimable. Other liabilities for costs associated with an exit or disposal activity are recognized when the liability is incurred, instead of upon commitment to an exit plan. A significant assumption used in determining the amount of the estimated liability for closing a facility is the estimated liability for future lease payments on vacant facilities.  We determine our estimate of sublease payments based on our ability to successfully negotiate early termination agreements with landlords, a third-party broker or management’s assessment of our ability to sublease the facility based upon the market conditions in which the facility is located. If the assumptions regarding

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early termination and the timing and amounts of sublease payments prove to be inaccurate, we may be required to record additional losses, or conversely, a future gain.

Leases

Rent holidays, landlord/tenant incentives and escalations are included in some instances in the base price of our rent payments over the term of our operating leases. We recognize rent holidays and rent escalations on a straight-line basis over the lease term. The landlord/tenant incentives are recorded as deferred rent and amortized on a straight line basis over the lease term.

Assets held under capital leases are included in property, plant and equipment, net in our consolidated balance sheets and depreciated over the term of the lease. Rent payments under the leases are recognized as a reduction of the capital lease obligation and interest expense.

Deferred Gains on Sale and Leaseback Transactions

We amortize deferred gains on the sale and leaseback of properties under operating leases over the life of the lease. The amortization of these gains is recorded as a reduction to rent expense. The deferred gain is recorded in our consolidated balance sheet in current and other current liabilities.

Income Taxes

Income taxes are accounted for under the asset and liability method.  Deferred income taxes reflect net effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. We are subject to foreign income taxes on our foreign operations. We are required to estimate our income taxes in each jurisdiction in which we operate. This process involves estimating our actual current tax exposure, together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes. The tax effects of these temporary differences are recorded as deferred tax assets or deferred tax liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period during which such rates are enacted.  We record a valuation allowance when it is more likely than not that we will not realize the net deferred tax assets in a certain jurisdiction.

We record tax benefits when they are more likely than not to be realized.  Our policy is to reflect penalties and interest as part of income tax expense as they become applicable. 

Stock-Based Compensation

We recognize expense related to all share-based payments to employees, including grants of employee stock options, based on the grant-date fair values amortized straight-line over the period during which the employees are required to provide services in exchange for the equity instruments.  We include an estimate of forfeitures when calculating compensation expense.  We use the Black-Scholes method for valuing stock-based awards.  See Note 11, “Share-Based Compensation and Employee Benefit Plans,” for further information regarding the assumptions used to calculate share-based payment expense.

Recently Adopted Accounting Standards

In July 2012, the FASB issued Accounting Standard Update 2012-02, Intangibles-Goodwill and Other: Testing Indefinite-Lived Intangible Assets for Impairment ("ASU 2012-02"). The intent of ASU 2012-02 is to simplify how registrants test indefinite-lived intangible asset for impairment and to improve consistency in impairment testing guidance among long-lived asset categories. ASU 2012-02 permits registrants to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with U.S. GAAP. An entity will have an option not to calculate annually the fair value of an indefinite-lived intangible asset if the entity determines that it is not more likely than not that the asset is impaired. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. We adopted this new guidance during 2013 and the adoption of the new guidance did not impact our financial position, results of operations, comprehensive income or cash flows, other than related disclosures.

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Recently Issued Accounting Standards

In July 2013, the FASB issued ASU 2013-11, Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, an amendment to FASB Accounting Standards Codification (“ASC”) Topic 740, Income Taxes (“FASB ASC Topic 740”). This update clarifies that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction or the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This ASU is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this ASU is not expected to have a material impact on our financial statements.

In March 2013, the FASB issued ASU 2013-05 Topic 830 - Foreign Currency Matters (“ASU 2013-05”). ASU 2013-05 resolves the diversity in practice about whether Subtopic 810-10, Consolidation-Overall, or Subtopic 830-30, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity. In addition, the amendments in this ASU resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. ASU 2013-05 is effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The adoption of this ASU is not expected to have a material impact on our financial statements.

2.  ACQUISITIONS

Ideal Dialogue Company, LLC

On March 18, 2013, we acquired Ideal Dialogue Company, LLC (“IDC”) for approximately $1,500 in cash. IDC uses analysis and unique methodologies based on more than 50 years of research in the science of human communication to optimize agent-customer interactions. IDC provides solutions that improve hiring, training, leadership development, quality monitoring and executive insight to enable customer management organizations to consistently create engaging conversations with customers.

We paid minimal acquisition-related expenses as part of the IDC purchase, which are recorded in selling, general and administrative expenses. Financial results of IDC from the date of acquisition are included in the results of operations within our Domestic segment.

We finalized our purchase price allocation during the three months ended December 31, 2013. The following summarizes the final purchase price allocation of the fair values of the assets acquired as of the acquisition date:

	Acquisition Date Fair Value
Property, plant and equipment	$	13
Developed technology	390
Customer base	130
Trade name	70
Noncompete agreement	10
Goodwill	887
Total purchase price	$	1,500

The goodwill recognized was attributable primarily to the assembled and trained workforce that developed the technology, expected synergies and other factors.

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RN's On Call

On July 24, 2013, we acquired RN's On Call, a business process outsourcing provider in the health care industry, for approximately $1,500. The company provides health care related services to patients on behalf of the professional medical community.

As of December 31, 2013, we paid $597 of the purchase price with the remaining balance to be paid by January 2015, which is included in other accrued liabilities and other liabilities in the consolidated balance sheet. Minimal acquisition-related expenses were paid, which are recorded in selling, general and administrative expenses. Financial results from the date of acquisition are included in the results of operations within our Domestic segment.

The following summarizes the preliminary estimated fair values of the identifiable assets acquired as of the acquisition date. There were no other assets or liabilities acquired. The estimates of fair value of identifiable assets acquired are preliminary, pending completion of a valuation, thus are subject to revisions that may result in adjustments to the values presented below:

	Preliminary Estimate of Acquisition Date Fair Value
Customer relationships	$	750
Goodwill	750
Total purchase price	$	1,500

The customer relationships have a preliminary estimated useful life of three years. The goodwill recognized was attributable primarily to the acquired workforce and our ability to expand into the health care industry.

3. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The goodwill of $1,637 recognized from our acquisitions during 2013 was assigned to our Domestic segment.

Intangible Assets

The following table presents our intangible assets as of December 31, 2013:

	Gross Intangibles		Accumulated Amortization		Net Intangibles		Weighted Average Amortization Period (years)
Developed technology	$	390	$	37	$	353	4.14
Customer base and customer relationships	880		137		744		1.67
Trade name	70		9		61		3.14
Noncompete agreement	10		4		6		1.20
	$	1,350	$	186	$	1,164	3.52

We estimated future amortization expense for the succeeding years relating to the intangible assets resulting from acquisitions as follows:

Year Ending December 31,	Amount
2014	$	359
2015	355
2016	217
2017	60
2018	60
Thereafter	113

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4.  IMPAIRMENT LOSSES AND RESTRUCTURING CHARGES

Impairment Losses

We recognized impairment losses of $531 in the fourth quarter of 2013 in our Latin America segment associated with the furniture, fixtures and leasehold improvements at our site in Costa Rica after an impairment analysis indicated estimated future cash flows were insufficient to support the carrying values.  We continue to own and use the impaired assets at our site in Costa Rica. During the year ended December 31, 2012, we incurred $3,086 of impairment losses in our Domestic segment associated with two facilities where we received customer notification of a ramp-down in business. We were able to secure new business for one of the facilities and the other facility was closed in January 2013 when the lease expired.

Disposal of Long-Lived Assets

During 2013, we implemented a plan to outsource a significant portion of our IT platform.  As a result, we transferred certain IT assets to the provider, resulting in a loss on disposal of $966, which is included in interest and other income (expense), net. The useful life of the remaining impacted assets has been shortened to the transition period, resulting in accelerated depreciation charges of $637 in cost of services.

Assets Held for Sale

During 2013, we reclassified our Laramie, Wyoming facility, previously held for sale to assets held and used, as the held for sale criteria were no longer met due to the duration of the held for sale classification. We also reclassified our Enid, Oklahoma facility, previously held for sale, to assets held and used, as the held for sale criteria were no longer met due to the reopening of this site. The assets were measured at the carrying value of the assets before being classified as held for sale, adjusted for any depreciation expense that would have been recognized had the assets been continuously held and used. As a result of this measurement, we recognized $151 and $271 of depreciation expense for the Laramie and Enid facilities, respectively, which is included in cost of services.

During the fourth quarter of 2013, we sold our Greeley, Colorado facility, previously held for sale. Refer to Note 9, "Property, Plant & Equipment," for additional information.

Restructuring Charges

A summary of the activity under the restructuring plans as of December 31, 2013, and changes during the years ended December 31, 2013 and 2012 are presented below:

	Facility-Related Costs
	Victoria			Laramie			Grand Junction			Decatur			Regina			Total
Balance as of January 1, 2012	$	483		$	63		$	252		$	—		$	852		$	1,650
Expense (reversal)	—			(20		)	(138		)	464			671			977
Payments, net of receipts for sublease	54			(43		)	(114		)	(378		)	(1,197		)	(1,678		)
Foreign currency translation adjustment	—			—			—			—			8			8
Balance as of December 31, 2012	$	537		$	—		$	—		$	86		$	334		$	957
Expense (reversal)	(443		)	—			—			(56		)	—			(499		)
Payments, net of receipts for sublease	(78		)	—			—			(30		)	(328		)	(436		)
Foreign currency translation adjustment	—			—			—			—			(6		)	(6		)
Balance as of December 31, 2013	$	16		$	—		$	—		$	—		$	—		$	16

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The reserves listed above are net of expected sublease rental income. We previously entered into a sublease agreement for our Victoria, Texas facility through the remainder of its respective lease term in 2014. We have recorded an accrual for certain property taxes we still owe in Victoria, which we expect to pay through 2014. During 2013, we reversed $443 of the restructuring reserve based on an updated analysis of pass-through expenses. During 2012, we reversed the balance of $138 associated with our Grand Junction facility as we re-opened the facility due to new business and a ramp-up of activities with existing customers. The restructuring plan for our Laramie, Wyoming facility was completed in 2012, at which time we reversed the remaining balance of $20. During 2012, we increased our reserve for Regina, Saskatchewan by $671 based on updated forecasts of expected sublease income and we established a reserve of $464 for our Decatur, Illinois facility, which was closed in January 2013.

The Regina, Saskatchewan and Decatur, Illinois restructuring plans were completed in the first quarter of 2013 and we do not expect to incur any additional restructuring liabilities in future periods for either of these locations.

We expect to pay $16 in our Domestic segment over the remaining term of the restructuring plans, including lease payments offset by sublease receipts, personal and real property taxes and other miscellaneous facility related costs.  The cumulative amount paid as of December 31, 2013 related to the closures was $9,870 in our Domestic segment in facility-related costs and termination benefits.

Note Receivable

In connection with the sublease of our Victoria, Texas facility, the sublessee is making payments to us for certain furniture, fixtures, equipment and leasehold improvements in the facility.  The payments will be made over the remainder of the lease term, or December 1, 2014, after which time the sublessee will own the assets.  As of December 31, 2013, we have recorded the remaining balance due in 2014 on the note receivable of $645, net of unearned interest income of approximately $18.  The note receivable bears interest at a rate of 4.4% per annum. 

5. NET LOSS PER SHARE

Basic net loss per common share is computed on the basis of our weighted average number of common shares outstanding.  Diluted earnings per share is computed on the basis of our weighted average number of common shares outstanding plus the effect of dilutive stock options and non-vested restricted stock using the treasury stock method.  Securities totaling 2,302,417 and 1,803,199 for the years ended December 31, 2013 and 2012, respectively, have been excluded from loss per share because their effect would have been anti-dilutive.

6. PRINCIPAL CLIENTS

The following table represents revenue concentration of our principal clients:

	Year Ended December 31,
	2013			2012
	Revenue		Percentage	Revenue		Percentage
AT&T Services, Inc. and AT&T Mobility, LLC, subsidiaries of AT&T, Inc. (1)	$	58,395	25.3%	$	63,904	32.3%
T-Mobile USA, Inc., a subsidiary of Deutsche Telekom (2)	$	64,095	27.7%	$	55,916	28.2%
Comcast Cable Communications Management, LLC, subsidiary of Comcast Corporation (2)	$	45,887	19.8%	*		*

* less than 10%

(1) Revenue from this customer is generated through our Domestic and Asia Pacific segments.

(2) Revenue from this customer is generated through our Domestic, Asia Pacific and Latin America segments.

Our work for AT&T is covered by several contracts for a variety of different lines of AT&T business.  These contracts expire between 2014 and 2015.  Our initial master services agreement covering all AT&T work had been extended through January 31, 2013.   On January 25, 2013, we entered into a new master services agreement with AT&T Services, Inc., which expires December 31, 2015 and may be extended upon mutual agreement, but may be terminated by AT&T with written notice.

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On July 28, 2011, we entered into a new master services agreement with T-Mobile effective July 1, 2011, which covers all services that we provide to T-Mobile. The new master services agreement with T-Mobile replaces the previous master services agreement dated October 1, 2007, has an initial term of five years and will automatically renew for additional one-year periods thereafter, but may be terminated by T-Mobile upon 90 days written notice.

On January 4, 2014, we signed a new master services agreement with Comcast, effective June 22, 2013, which provides for the same services as the original master services agreement that was signed in 2011 and would have expired in 2014. The new master services agreement covers all services that we provide to Comcast, has an initial term of one year and will automatically renew for additional one-year periods unless either party gives notice of cancellation. Comcast may terminate the agreement upon 90 days written notice.

7.  DERIVATIVE INSTRUMENTS

We use derivatives to partially offset our business exposure to foreign currency exchange risk. We enter into foreign currency exchange contracts to hedge our anticipated operating commitments that are denominated in foreign currencies.  The contracts cover periods commensurate with expected exposure, generally three to nine months, and are principally unsecured foreign exchange contracts.  The market risk exposure is essentially limited to risk related to currency rate movements.  We operate in Canada, the Philippines, Costa Rica and Honduras.  The functional currencies in Canada and the Philippines are the Canadian dollar and the Philippine peso, respectively, which are used to pay labor and other operating costs in those countries. However, our client contracts generate revenues that are paid to us in U.S. dollars.  In Costa Rica and Honduras, our functional currency is the U.S. dollar and the majority of our costs are denominated in U.S. dollars.

During the years ended December 31, 2013 and 2012, we entered into Canadian dollar forward contracts for a notional amount of 10,860 and 18,640 Canadian dollars, respectively, to hedge our foreign currency risk with respect to labor costs in Canada.  During the years ended December 31, 2013 and 2012, we entered into Philippine peso non-deliverable forward contracts for a notional amount of 2,515,110 and 3,013,540 Philippine pesos, respectively, to hedge our foreign currency risk with respect to labor costs in the Philippines.  As of December 31, 2013, we have not entered into any arrangements to hedge our exposure to fluctuations in the Costa Rican colon or the Honduran lempira relative to the U.S. dollar.

The following table shows the notional principal of our derivative instruments as of December 31, 2013:

	Currency	Notional Principal
Instruments qualifying as accounting hedges:
Foreign exchange contracts	Canadian dollar	10,860
Foreign exchange contracts	Philippine peso	1,511,910

The above Canadian dollar and Philippine peso foreign exchange contracts are to be delivered periodically through December 2014 at a purchase price of approximately $10,448 and $35,948, respectively, and as such we expect unrealized gains and losses reported in accumulated other comprehensive income will be reclassified to earnings during the next twelve months.  Refer to Note 8, “Fair Value Measurements,” for additional information on the fair value measurements for all assets and liabilities, including derivative assets and derivative liabilities.

The following table shows our derivative instruments measured at gross fair value as reflected in the consolidated balance sheets in derivative asset/liability as of December 31, 2013 and 2012:

	As of December 31, 2013				As of December 31, 2012
	Assets		Liabilities		Assets		Liabilities
Foreign exchange contracts	$	—	$	2,160	$	733	$	253

The following table shows the effect of our derivative instruments designated as cash flow hedges for the years ended December 31, 2013 and 2012:

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	Gain (Loss) Recognized in AOCI, net of tax Years Ended December 31,					Gain (Loss) Reclassified from AOCI into Income Years Ended December 31,
	2013			2012		2013			2012
Cash flow hedges:
Foreign exchange contracts	$	(4,590	)	$	1,749	$	(1,950	)	$	758

8.  FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

The values of our derivative instruments are derived from pricing models using inputs based upon market information, including contractual terms, market prices and yield curves.  The inputs to the valuation pricing models are observable in the market, and as such are generally classified as Level 2 in the fair value hierarchy.

Restructuring Charges

Accrued restructuring costs were valued using a discounted cash flow model.  Significant assumptions used in determining the amount of the estimated liability for closing a facility are the estimated liability for future lease payments on vacant facilities and the discount rate utilized to determine the present value of the future expected cash flows. If the assumptions regarding early termination and the timing and amounts of sublease payments prove to be inaccurate, we may be required to record additional losses, or conversely, a future gain, in the consolidated statements of operations and comprehensive income (loss).

In the future, if we sublease for periods that differ from our assumption or if an actual buy-out of a lease differs from our estimate, we may be required to record a gain or loss.  Future cash flows also include estimated property taxes through the remainder of the lease term, which are valued based upon historical tax payments.  Given that the restructuring charges were valued using our internal estimates using a discounted cash flow model, we have classified the accrued restructuring costs as Level 3 in the fair value hierarchy.

Long-Lived Assets

We periodically, on at least an annual basis, evaluate potential impairments of our long-lived assets.  In our annual evaluation or when we determine that the carrying value of a long-lived asset may not be recoverable, based upon the existence of one or more indicators of impairment, we evaluate the projected undiscounted cash flows related to the assets. If these cash flows are less than the carrying values of the assets, we measure the impairment based on the excess of the carrying value of the long-lived asset over the long-lived asset’s fair value.  Where appropriate, we use a probability-weighted approach to determine our future cash flows, based upon our estimate of the likelihood of certain scenarios, primarily whether we expect to sell new business within a current location.  These estimates are consistent with our internal projections and external communications and public disclosures.  There were no long-lived assets impaired during 2013 or 2012.

In 2010, we committed to a plan to sell the buildings and land at our closed facilities in Laramie, Wyoming and Greeley, Colorado.  We received estimates of the selling prices of this real estate, and have reduced the value of the buildings and land to fair value, less costs to sell, or approximately $4,102 at December 31, 2012. The measurement of the fair value of the buildings was based upon our third-party real estate broker’s non-binding estimate of fair value using the observable market information regarding sale prices of comparable assets.  During 2012, we committed to sell our Enid, Oklahoma facility, which had a carrying value of $867.  As these inputs to the determination of fair value are based upon non-identical assets and use significant unobservable inputs, we have classified the assets as Level 3 in the fair value hierarchy as of December 31, 2012.

During 2013, we reclassified our Laramie, Wyoming facility to held and used, sold the Greeley, Colorado facility (refer to Note 9, "Property, Plant & Equipment," for additional information) and reopened our Enid, Oklahoma facility; therefore, we had no assets held for sale at December 31, 2013.

Fair Value Hierarchy

The following tables set forth our assets and liabilities measured at fair value on a recurring basis and a non-recurring basis by level within the fair value hierarchy.  Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

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	Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2013
	Level 1		Level 2		Level 3		Total
Liabilities:
Foreign exchange contracts	$	—	$	2,160	$	—	$	2,160
Total fair value of liabilities measured on a recurring basis	$	—	$	2,160	$	—	$	2,160

	Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2012
	Level 1		Level 2		Level 3		Total
Assets:
Foreign exchange contracts	$	—	$	733	$	—	$	733
Total fair value of assets measured on a recurring basis	$	—	$	733	$	—	$	733
Liabilities:
Foreign exchange contracts	$	—	$	253	$	—	$	253
Total fair value of liabilities measured on a recurring basis	$	—	$	253	$	—	$	253

	Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis During the Year ended December 31, 2013
	Level 1		Level 2		Level 3		Total
Assets:
Property, plant and equipment, net	$	—	$	—	$	531	$	531
Total fair value of assets measured on a non-recurring basis	$	—	$	—	$	531	$	531
Liabilities:
Accrued restructuring costs	$	—	$	—	$	16	$	16
Total fair value of liabilities measured on a non-recurring basis	$	—	$	—	$	16	$	16

	Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis During the Year ended December 31, 2012
	Level 1		Level 2		Level 3		Total
Assets:
Assets held for sale	$	—	$	—	$	4,969	$	4,969
Total fair value of assets measured on a non-recurring basis	$	—	$	—	$	4,969	$	4,969
Liabilities:
Accrued restructuring costs	$	—	$	—	$	957	$	957
Total fair value of liabilities measured on a non-recurring basis	$	—	$	—	$	957	$	957

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9. PROPERTY, PLANT & EQUIPMENT

 Our property, plant and equipment as of December 31, 2013 and 2012, consisted of the following, by asset class:

	2013			2012
Land	$	70		$	272
Buildings and improvements	26,264			25,824
Telephone and computer equipment	40,414			42,917
Software	37,192			39,948
Furniture, fixtures, and miscellaneous equipment	16,952			19,664
Construction in progress	1,222			2,603
	122,114			131,228
Less accumulated depreciation	(99,904		)	(104,918		)
Total property, plant and equipment, net	$	22,210		$	26,310

In December 2013, we completed a sale and sale leaseback transaction involving land, building and related building improvements at our Greeley, Colorado properties. Sales proceeds, net of direct costs of the transaction, totaled approximately $4,731. Our Greeley North property was sold in a sale leaseback transaction and is currently used for operating a call center and our Greeley West property was sold, which had been held for sale since 2011.

The Greeley North property transaction qualified for sale-leaseback accounting treatment under the provisions of ASC Topic 840-40, Sale-Leaseback Transactions. We evaluated the lease at inception and accounted for it as a capital lease by recording the revalued assets to building and capital lease obligation equal to the fair market value of approximately $1,413. We also recognized a loss of approximately $475 on the sold property, which was measured as the difference between the net sales proceeds, as allocated based on the relative fair values, and the net book value of the sold assets. The loss is recorded in our consolidated statement of operations and comprehensive loss in interest and other income (expense), net. The lease term is seven years with an option to extend.

The sale of the Greeley West property resulted in a loss of approximately $106, which is recorded in our consolidated statement of operations and comprehensive loss in interest and (income) expense, net.

In October 2012, we completed a sale leaseback transaction involving land, building and related building improvements at our Kingston, Ontario property. Sales proceeds, net of direct costs of the transaction, totaled approximately $3,884.

The transaction qualified for sale-leaseback accounting treatment under the provisions of ASC Topic 840-40, Sale-Leaseback Transactions, and met the criteria for operating lease classification. As a result, the sold property was removed from our consolidated balance sheet and the gain was measured as the difference between the net sales proceeds, as allocated based on the relative fair values, and the net book value of the sold assets. The resulting gain of approximately $840 is recorded in our consolidated balance sheet in other current liabilities and other liabilities and will be amortized to rent expense over the lease term, which is three years.

10. DEBT

Effective February 28, 2012, we entered into a secured revolving credit facility ("Credit Agreement") with Wells Fargo Bank, which replaced the prior credit facility with UMB Bank. The Credit Agreement has a maturity date of February 28, 2016.  The amount we may borrow under the Credit Agreement is the lesser of the borrowing base calculation and $10,000, and, so long as no default has occurred, we may increase the maximum availability to $20,000 in $2,500 increments.  We may request letters of credit under the Credit Agreement in an aggregate amount equal to the lesser of the borrowing base calculation (minus outstanding advances) and $5,000. The borrowing base is generally defined as 85% of our eligible accounts receivable less reserves for foreign exchange forward contracts and other reserves as defined in the Credit Agreement. As of December 31, 2013, we had $1,000 outstanding borrowings on our credit facility and available capacity was $13,920, net of $80 of letters of credit backed by the facility.

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Borrowings under the Credit Agreement bear interest at the daily three-month LIBOR index plus 2.50% to 3.00% depending on the calculation of the fixed charge coverage ratio, as defined in the Credit Agreement (3.25% at December 31, 2013).  We will pay letter of credit fees on the average daily aggregate available amount of all letters of credit outstanding monthly at a rate per annum of 3.00% and a monthly unused fee at a rate per annum of 0.30% on the aggregate unused commitment under the Credit Agreement. Indebtedness under the Credit Agreement is guaranteed by certain of our present and future domestic subsidiaries. We granted Wells Fargo a security interest in all of our assets, including all cash and cash equivalents, accounts receivable, general intangibles, owned real property, equipment and fixtures.  Under the Credit Agreement, we are subject to certain standard affirmative and negative covenants, including the following financial covenants: 1) maintaining a minimum adjusted EBITDA, as defined in the Credit Agreement, of no less than the cumulative month-end minimum amounts set forth in an amendment to the Credit Agreement and 2) limiting non-financed capital expenditures to no more than the cumulative month-end maximum amounts set forth in an amendment to the Credit Agreement. We were in compliance with all such covenants as of December 31, 2013.

On February 25, 2013, the Company and Wells Fargo agreed on the financial covenants for 2013 and the first quarter of 2014, constituting the Third Amendment to the Credit Agreement. This amendment also clarified certain definitions and extended the term of the Credit Agreement one year to February 28, 2016. The Company and Wells Fargo are required to agree on financial covenants for the remaining term of the Credit Agreement beyond March 2014, and failure to do so would constitute an event of default. Subsequent amendments to the Credit Agreement further revised certain definitions.

11. SHARE-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS

We have a 2008 Equity Incentive Plan (the “Plan”), which reserves 900,000 shares of common stock for issuance pursuant to the terms of the Plan plus 274,298 shares that remained available for future issuance under prior plans on the effective date of the Plan, which was May 5, 2008. As of December 31, 2013, there were 129,961 shares available for future grant under the Plan. Our plan is administered by the Compensation Committee (the "Committee") of the Board of Directors. The types of awards that may be granted under the Plan include stock options, stock appreciation rights, restricted stock, restricted stock units, performance units or other stock-based awards.  The terms of the awards granted under the Plan will expire no later than ten years from the grant date.  The Committee determines the vesting conditions of awards; however, subject to certain exceptions, an award that is not subject to the satisfaction of performance measures may not fully vest or become fully exercisable earlier than three years from the grant date, and the performance period for an award subject to performance measures may not be shorter than one year.

At the beginning of each quarter, members of the board of directors, at their option, may elect to receive as compensation 1) stock options to purchase shares of common stock with a fair value equivalent of $22,500 (calculated using the Black-Scholes pricing model), 2) shares of common stock with a grant date fair value of $22,500, 3) deferred stock units with a fair value equivalent of $22,500 (calculated using the Black-Scholes pricing model), with ownership of the common stock vesting immediately or over a period determined by the Committee and stated in the award or 4) any combination of options and common stock. Upon the date of grant, the members of the board of directors are immediately vested in the stock options or common stock.

Stock Options

A summary of stock option activity under the Plan as of December 31, 2013, and changes during the year ended December 31, 2013 are presented below: 

	Shares		Weighted Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)
Outstanding as of January 1, 2013	1,789,127		$	4.00
Granted	762,763		4.82
Exercised	(38,577	)	3.64
Forfeited	(208,230	)	4.64
Expired	(6,000	)	25.95
Outstanding as of December 31, 2013	2,299,083		$	4.16	8.01
Vested and exercisable as of December 31, 2013	1,167,772		$	4.45	7.36
Vested and expected to vest as of December 31, 2013	2,089,628		$	4.17	8.05

43

The weighted-average grant date fair value of options granted during the years ended December 31, 2013 and 2012 was $3.44 and $1.24, respectively.  The total fair value of shares vested during the years ended December 31, 2013 and 2012 was $965 and $1,153, respectively.

The assumptions used to determine the value of our stock-based awards under the Black-Scholes method are summarized below:

	2013	2012
Risk-free interest rate	0.36% - 2.7%	0.37% - 1.6%
Dividend yield	—%	—%
Expected volatility	56.5% - 67.6%	56.8% - 77.9%
Average expected life in years	7.0	5.0

The risk-free interest rate is based on the U.S. Treasury strip yield in effect at the time of grant with a term equal to the expected term of the stock option granted.  Average expected life and volatilities are based on historical experience, which we believe will be indicative of future experience.

Restricted Stock Awards and Deferred Stock Units

A summary of restricted stock awards and deferred stock units activity under the Plan as of December 31, 2013, and changes during the year then ended are presented below: 

	Number of Restricted Shares and Units		Weighted-Average Grant Date Fair Value
Nonvested balance as of January 1, 2013	13,656		$	4.08
Vested	(9,255	)	4.41
Forfeited	(1,067	)	6.58
Nonvested balance as of December 31, 2013	3,334		$	2.35

The total fair value of restricted stock awards and deferred stock units vested during the years ended December 31, 2013 and 2012 was $41 and $251, respectively.

Share-based Compensation Expense

The compensation expense that has been charged against income for stock option awards, restricted stock and deferred stock units for December 31, 2013 and 2012 was $1,607, and $1,275, respectively, and is included in selling, general and administrative expense.  As of December 31, 2013, there was $1,940 of total unrecognized compensation expense related to nonvested stock options, which is expected to be recognized over a weighted-average period of 2.1 years.  As of December 31, 2013, there was $5 of total unrecognized compensation expense related to nonvested restricted stock awards, which is expected to be recognized over a weighted-average period of 0.8 years.

Employee Stock Purchase Plan

Under the terms of our employee stock purchase plan ("ESPP"), eligible employees may authorize payroll deductions up to 10% of their base pay to purchase shares of our common stock at a price equal to 85% of the lower of the closing price at the beginning or end of each quarterly stock purchase period.  On May 7, 2012, an additional 100,000 shares were authorized for issuance under the ESPP; therefore, a total of 400,000 shares were authorized under the ESPP and 107,475 shares were available for issuance as of December 31, 2013.

During 2013 and 2012, 24,404 and 50,317 shares were purchased under this plan at an average price of $3.97 and $2.05, respectively.  Total expense recognized related to the ESPP during the years ended December 31, 2013 and 2012 was $26 and $35, respectively.  The assumptions used to value the shares under the ESPP using the Black-Scholes method were as follows:

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	2013	2012
Risk-free interest rate	0.02% - 0.07%	0.02% - 0.10%
Dividend yield	—%	—%
Expected volatility	24.2% - 64.7%	48.9% - 93.1%
Expected life in years	3 months	3 months

The weighted average grant date fair value of these shares was $1.07, and $0.70 per share during the years ended December 31, 2013 and 2012, respectively.

401(k) Plan

We have a safe harbor 401(k) plan that allows participation by all eligible employees as of the first day of the quarter following their hire date.  Eligible employees may contribute up to the maximum limit determined by the Internal Revenue Code. Participants receive a matching contribution after completing one year of service and the minimum number of hours required under the plan. We match 100% of the participant’s contribution for the first 3% and 50% of the participant’s contribution for the next 2%.  Company matching contributions to the 401(k) plan totaled $288 and $320 for the years ended December 31, 2013 and 2012, respectively.

12. INTEREST AND OTHER INCOME (EXPENSE), NET

Interest and other income (expense), net for the years ended December 31, 2013 and 2012 were composed of the following:

	Year Ended December 31,
	2013			2012
Interest income	$	88		$	86
Interest (expense)	(114		)	(78		)
Gain (loss) on disposal of assets	(1,549		)	45
Other income (expense)	(4		)	289
Interest and other income (expense), net	$	(1,579	)	$	342

13. INCOME TAXES

The domestic and foreign source component of income (loss) from continuing operations before income taxes was:

	Year Ended December 31,
	2013			2012
U.S.	$	(15,452	)	$	(21,244	)
Foreign	9,276			10,872
Total	$	(6,176	)	$	(10,372	)

Significant components of the provision for income taxes from continuing operations were:

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	Year Ended December 31,
	2013			2012
Current:
Federal	$	—		$	(548	)
State	—			(77		)
Foreign	(29		)	499
Total current (benefit)	$	(29	)	$	(126	)
Deferred:
Federal	$	25		$	(10	)
State	2			(1		)
Foreign	232			253
Total deferred expense	$	259		$	242
Income tax expense	$	230		$	116

GAAP requires all items be considered, including items recorded in other comprehensive income, in determining the amount of tax benefit that results from a loss from continuing operations that should be allocated to continuing operations.

Significant components of deferred tax assets and deferred tax liabilities included in the accompanying consolidated balance sheets as of December 31, 2013 and 2012 were:

	Year Ended December 31,
	2013			2012
Current deferred tax assets (liabilities):
Accrued restructuring costs	$	(41	)	$	218
Other accrued liabilities	15			90
Derivative instruments	816			(176		)
Prepaid expenses	(209		)	(480		)
Cumulative translation adjustment	(1,397		)	(1,760		)
Other	373			438
Total current net deferred tax liabilities	$	(443	)	$	(1,670	)
Long-term deferred tax assets (liabilities):
Fixed assets	$	2,969		$	3,385
Accrued stock compensation	3,085			2,556
Accrued restructuring costs	47			89
Foreign tax credit carryforward	—			525
Work opportunity credit carryforward	4,988			4,988
Operating loss carryforward	10,653			8,443
Intangibles and goodwill	22			—
Other	221			114
Total long-term net deferred tax assets	$	21,985		$	20,100
Subtotal	$	21,542		$	18,430
Valuation allowance	(20,000		)	(16,602		)
Total net deferred tax asset	$	1,542		$	1,828

We consider all available evidence to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become realizable.  Management considers the scheduled

46

reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), and projected taxable income in assessing the realizability of deferred tax assets.  In making such judgments, significant weight is given to evidence that can be objectively verified.  In order to fully realize the U.S. deferred tax assets, we will need to generate sufficient taxable income in future periods before the expiration of the deferred tax assets governed by the tax code. 

We do not provide for deferred taxes on the excess of the financial reporting basis over the tax basis in our investments in foreign subsidiaries that are essentially permanent in duration. In general, it is our practice and intention to reinvest the earnings of our foreign subsidiaries in those operations. Generally, the earnings of our foreign subsidiaries become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. Exceptions may be made on a year-by-year basis to repatriate current year earnings of certain foreign subsidiaries based on cash needs in the U.S. As of December 31, 2013, we have not provided for U.S. income taxes on undistributed earnings of our foreign subsidiaries, since such earnings are considered indefinitely reinvested.

At December 31, 2013 and 2012, U.S. income and foreign withholding taxes have not been provided for on approximately $1,300 and $244, respectively, of unremitted earnings of subsidiaries operating outside of the U.S. These earnings are estimated to represent the excess of the financial reporting over the tax basis in our investments in those subsidiaries and would become subject to U.S. income tax if they were remitted to the U.S. If we had not intended to utilize the undistributed earnings in our foreign operations for an indefinite period of time, the deferred tax liability as of December 31, 2013 would have been approximately $455.

Differences between U.S. federal statutory income tax rates and our effective tax rates for the years ended December 31, 2013 and 2012 for continuing operations were: 

	Year Ended December 31,
	2013		2012
U.S. statutory tax rate	35.0	%	35.0	%
Effect of state taxes (net of federal benefit)	-1.0	%	5.8	%
Effect of change in Canadian tax rate	1.5	%	-0.3	%
Other permanent differences (including meals and entertainment)	1.8	%	-0.4	%
Stock based compensation	-0.9	%	-0.8	%
Rate differential on foreign earnings	48.5	%	29.5	%
Foreign income taxed in the U.S.	-95.0	%	-43.2	%
Uncertain tax positions	19.5	%	-45.4	%
Unremitted foreign earnings of subsidiary	27.7	%	-16.5	%
Tax expense allocation to other comprehensive income	—	%	6.1	%
Valuation allowance	-33.5	%	28.0	%
Expiration of foreign tax credit carryforward	-8.5	%	—	%
Other, net	1.1	%	1.1	%
Total	-3.8	%	-1.1	%

As of December 31, 2013, we had gross federal net operating loss carry forwards of approximately $34,560 expiring beginning in 2030 and gross state net operating loss carry forwards of approximately $60,435 expiring beginning in 2014.

We have been granted “Tax Holidays” as an incentive to attract foreign investment by the governments of the Philippines, Costa Rica and Honduras. Generally, a Tax Holiday is an agreement between us and a foreign government under which we receive certain tax benefits in that country, such as exemption from taxation on profits derived from export-related activities. In the Philippines, we had been granted approval for a Tax Holiday, whereby we had an exemption from income tax until late 2012 after which time the tax rate will be 5%; however, we have applied for an extension and are awaiting approval.  In Costa Rica, we have been granted approval for an exemption equal to 100% of income tax through 2018, and for 50% of income tax for the four years thereafter.  In Honduras, we have been granted approval for an indefinite exemption from income taxes.  The exemption could be lifted at any time if the Honduran government approves legislation to appeal the exemption.  The aggregate reduction in income tax expense for the years ended December 31, 2013 and 2012 was $2,620 and $2,383, respectively, which had a favorable impact on net loss of $0.17 per share and $0.16 per share, respectively.

Under accounting standards for uncertainty in income taxes (ASC 740-10), a company recognizes a tax benefit in the financial statements for an uncertain tax position only if management’s assessment is that the position is “more likely than not” (i.e., a likelihood greater than 50 percent) to be allowed by the tax jurisdiction based solely on the technical merits of the position. The

47

term “tax position” in the accounting standards for income taxes refers to a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods.

The following table indicates the changes to our unrecognized tax benefits for the years ended December 31, 2013 and 2012. The term “unrecognized tax benefits” in the accounting standards for income taxes refers to the differences between a tax position taken or expected to be taken in a tax return and the benefit measured and recognized in the financial statements. If recognized, all of these benefits would impact our income tax expense, before consideration of any related valuation allowance.

	Year Ended December 31,
	2013			2012
Unrecognized, January 1,	$	4,705		$	—
Additions based on tax positions taken in current year	1,090			4,705
Reductions based on tax positions taken in prior year	(2,293		)	—
Unrecognized, December 31,	$	3,502		$	4,705

We file numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and in many state jurisdictions, as well as in Canada, the Philippines, Costa Rica and Honduras.  Our U.S. federal returns and most state returns for tax years 2008 and forward are subject to examination.  Canadian returns for tax years 2007 and forward are subject to examination.  Our returns since our commencement of operations in the Philippines in 2008, Costa Rica in 2010 and Honduras in 2011 are subject to examination. 

14.  ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) consisted of the following items:

	Foreign Currency Translation Adjustment			Derivatives Accounted for as Cash Flow Hedges			Total
Balance at January 1, 2012	$	2,385		$	(883	)	$	1,502
Foreign currency translation	670			—			670
Reclassification to operations	—			(758		)	(758		)
Unrealized gains (losses)	—			1,749			1,749
Tax (benefit)	(257		)	(377		)	(634		)
Balance at December 31, 2012	$	2,798		$	(269	)	$	2,529
Foreign currency translation	(898		)	—			(898		)
Reclassification to operations	—			1,950			1,950
Unrealized gains (losses)	—			(4,590		)	(4,590		)
Balance at December 31, 2013	$	1,900		$	(2,909	)	$	(1,009	)

Reclassifications out of accumulated other comprehensive income for the years ended December 31, 2013 and 2012 were as follows:

Details About Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income					Affected Line Item in the Statement Where Net Income is Presented
	Year Ended December 31,
	2013		2012
(Gains) losses on cash flow hedges
Foreign exchange contracts	$	1,828	$	(758	)	Cost of services
Foreign exchange contracts	122		—			Selling, general and administrative expenses
	$	1,950	$	(758	)

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15.  COMMITMENTS AND CONTINGENCIES

Operating Leases

We lease facilities and equipment under various non-cancelable operating leases.  Some of these leases have renewal clauses that vary both in length and fee, based on our negotiations with the lessors. Rent expense, including equipment rentals, for 2013 and 2012 was $9,691, and $9,153, respectively.  As of December 31, 2013, approximate minimum annual rentals under operating leases and approximate minimum payments to be received under annual non-cancelable subleases and leases were as follows. 

	Minimum Lease Payments		Minimum Sublease/Lease Receivable
2014	$	10,103	$	306
2015	7,392		—
2016	5,818		—
2017	5,794		—
2018	4,370		—
Thereafter	1,052		—
Total minimum lease payments	$	34,529	$	306

Capital Leases

We lease equipment and a facility under various non-cancelable capital leases.  As of December 31, 2013, approximate minimum annual rentals under capital leases were as follows.

	Minimum Lease Payments
2014	$	371
2015	370
2016	377
2017	384
2018	392
Thereafter	808
Total minimum lease payments	$	2,702
Less amount representing interest	(1,280		)
Present value of obligations under capital leases	1,422
Less current portion of obligations under capital leases	(113		)
Obligations under capital leases, excluding current portion	$	1,309

Legal Proceedings

We have been involved from time to time in litigation arising in the normal course of business, none of which is expected by management to have a material adverse effect on our business, consolidated financial condition, results of operations or cash flows.

16.  SEGMENT INFORMATION

We operate our business within three reportable segments, based on the geographic regions in which our services are rendered: Domestic, Asia Pacific and Latin America. As of December 31, 2013, our Domestic segment included the operations of seven facilities in the U.S. and one facility in Canada. Our Asia Pacific segment included the operations of three facilities in the Philippines and our Latin America segment included one facility in Costa Rica and one facility in Honduras.

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We primarily evaluate segment operating performance in each reporting segment based on net sales, gross profit and working capital. Certain operating expenses are not allocated to each reporting segment; therefore, we do not present income statement information by reporting segment below the gross profit level.

Information about our reportable segments, which correspond to the geographic areas in which we operate, for the years ended December 31, 2013 and 2012 is as follows:

	Year Ended December 31,
	2013		2012
Revenue:
Domestic	$	120,928	$	99,827
Asia Pacific	81,082		79,683
Latin America	29,247		18,582
Total	$	231,257	$	198,092
Gross profit:
Domestic	$	13,291	$	7,396
Asia Pacific	9,974		16,476
Latin America	1,060		(875		)
Total	$	24,325	$	22,997
Depreciation:
Domestic	$	7,340	$	7,450
Asia Pacific	4,193		4,659
Latin America	994		848
Total	$	12,527	$	12,957
Capital expenditures:
Domestic	$	5,555	$	4,757
Asia Pacific	1,254		1,728
Latin America	2,034		820
Total	$	8,843	$	7,305

	As of December 31,
	2013		2012
Total assets:
Domestic	$	76,224	$	77,032
Asia Pacific	10,520		12,779
Latin America	2,973		3,321
Total	$	89,717	$	93,132

The following tables present certain financial data based upon the geographic location where the services are provided:

	As of December 31,
	2013		2012
Revenue:
United States	$	95,333	$	69,403
Canada	25,595		30,424
Philippines	81,082		79,683
Latin America	29,247		18,582
Total	$	231,257	$	198,092

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	As of December 31,
	2013		2012
Total property, plant and equipment, net:
United States	$	12,875	$	13,549
Canada	96		420
Philippines	7,050		9,921
Latin America	2,189		2,420
Total	$	22,210	$	26,310

17.  SUBSEQUENT EVENTS

In February 2014, we announced the closure of our Jonesboro, Arkansas site. Operations will cease in the second quarter of 2014 when the business transitions to another facility. The lease will terminate in June 2015.

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ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.  CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

As of December 31, 2013, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).  Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2013, our disclosure controls and procedures were effective and were designed to ensure that all information required to be disclosed by us in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2013, based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992). Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2013.

This Annual Report does not include an attestation report of the Company's independent registered public accounting firm regarding internal control over financial reporting. Management's report is not subject to attestation by the Company's independent registered public accounting firm pursuant to permanent relief accorded to smaller reporting companies in the Dodd-Frank Act.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2013, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

Part III

ITEMS 10 THROUGH 14

Information required by Item 10 (Directors, Executive Officers and Corporate Governance), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters), Item 13 (Certain Relationships and Related Transactions, and Director Independence), and Item 14 (Principal Accounting Fees and Services) will be included in our definitive proxy statement to be delivered in connection with our 2014 annual meeting of stockholders and is incorporated herein by reference.

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Part IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as a part of this Form 10-K:

1.  Consolidated Financial Statements.  See the index to the Consolidated Financial Statements of StarTek, Inc. and its subsidiaries that appears in Item 8 of this Form 10-K.

2.  The Index of Exhibits is incorporated herein by reference.

INDEX OF EXHIBITS

Exhibit		Incorporated Herein by Reference
No.	Exhibit Description	Form	Exhibit	Filing Date
3.1	Restated Certificate of Incorporation of StarTek, Inc.	S-1	3.1	1/29/1997
3.2	Amended and Restated Bylaws of StarTek, Inc.	8-K	3.2	11/1/2011
3.3	Certificate of Amendment to the Certificate of Incorporation of StarTek, Inc. filed with the Delaware Secretary of State on May 21, 1999	10-K	3.3	3/8/2000
3.4	Certificate of Amendment to the Certificate of Incorporation of StarTek, Inc. filed with the Delaware Secretary of State on May 23, 2000	10-Q	3.4	8/14/2000
4.1	Specimen Common Stock certificate	10-Q	4.2	11/6/2007
10.1	Investor Rights Agreement by and among StarTek, Inc., A. Emmet Stephenson Jr., and Toni E. Stephenson	10-K	10.48	3/9/2004
10.2†	StarTek, Inc. Stock Option Plan, as amended	Def 14a	A	3/27/2007
10.3†	StarTek, Inc. Employee Stock Purchase Plan	Def#14a	A	3/20/2008
10.4†	StarTek, Inc. 2008 Equity Incentive Plan	Def#14a	B	3/20/2008
10.5†	Form of Non-Statutory Stock Option Agreement (Employee) pursuant to StarTek, Inc. 2008 Equity Incentive Plan	8-K	10.2	5/5/2008
10.6†	Form of Non-Statutory Stock Option Agreement (Director) pursuant to StarTek, Inc. 2008 Equity Incentive Plan	8-K	10.3	5/5/2008
10.7†	Form of Incentive Stock Option Agreement pursuant to StarTek, Inc. 2008 Equity Incentive Plan	8-K	10.4	5/5/2008
10.8†	Form of Restricted Stock Award Agreement (Employee) pursuant to StarTek, Inc. 2008 Equity Incentive Plan	8-K	10.5	5/5/2008
10.9†	Form of Restricted Stock Award Agreement (Director) pursuant to StarTek, Inc. 2008 Equity Incentive Plan	8-K	10.6	5/5/2008
10.10†	Form of Indemnification Agreement between StarTek, Inc. and its Officers and Directors	10-K	10.49	3/9/2004
10.11#	Services Agreement and Statement of Work by and between StarTek, Inc. and T-Mobile USA, Inc. for certain call center services dated effective October 1, 2007	10-Q	10.120	11/6/2007
10.12#	Amendment No. 1 effective February 24, 2008 to Services Agreement and Statement of Work by and between StarTek, Inc. and T-Mobile USA, Inc. for certain call center services dated effective October 1, 2007	10-Q	10.7	5/6/2008
10.13#	Contact Call Center Agreement No. 20070105.006.C between StarTek, Inc. and AT&T Services, Inc., effective January 26, 2007	10-Q	10.90	5/8/2007

53

10.14#	Amendment 20070105.006.A.001 effective October 31, 2007 to Master Services Agreement 20070105.006.C entered on January 26, 2007 between StarTek, Inc. and AT&T Services, Inc.	10-K	10.50	2/29/2008
10.15#	Amendment No. 2 to T-Mobile USA, Inc. Services Agreement Call Center Services dated April 1, 2009 between T-Mobile USA, Inc. and StarTek USA, Inc.	10-Q	10.12	7/31/2009
10.16	Settlement and Standstill Agreement by and among StarTek, Inc., A. Emmett Stephenson, Jr., Privet Fund LP, Privet Fund Management LLP, Ryan Levenson, Ben Rosenzweig and Toni E. Stephenson dated as of May 5, 2011	8-K	10.1	5/6/2011
10.17†	Amended and Restated Employment Agreement of Chad A. Carlson dated June 24, 2011	8-K	10.1	6/29/2011
10.18&	Order No. 20070105.006.S.28 effective August 1, 2011 pursuant to Agreement No. 20060105.006.C between StarTek, Inc. and AT&T Services, Inc	10-Q	10.1	11/2/2011
10.19&	Services Agreement and Statement of Work by and between StarTek, Inc. and T-Mobile USA, Inc. for certain call center services dated effective July 1, 2011	10-Q	10.2	11/2/2011
10.20†	Form of Non-Statutory Stock Option Agreement (Director) pursuant to StarTek, Inc. 2008 Equity Incentive Plan	10-Q	10.3	11/2/2011
10.21†	Employment Agreement by and between StarTek, Inc. and Lisa Weaver	8-K	10.1	11/3/2011
10.22†	Form of Deferred Stock Unit Master Agreement (Director) pursuant to StarTek, Inc. 2008 Equity Incentive Plan	10-K	10.36	3/9/2012
10.23&	Credit and Security Agreement by and among StarTek, Inc. and StarTek USA, Inc. as Borrowers and Wells Fargo Bank, N.A., as Lender dated as of February 28, 2012	10-K	10.37	3/9/2012
10.24†	2012 Incentive Bonus Plan	10-Q	10.1	11/6/2012
10.25	First Amendment to Credit and Security Agreement, by and among Wells Fargo Bank, National Association, and StarTek, Inc.	10-Q	10.2	11/6/2012
10.26	Second Amendment to Credit and Security Agreement, by and among Wells Fargo Bank, National Association, and StarTek, Inc.	10-K	10.40	3/8/2013
10.27	Third Amendment to Credit and Security Agreement, by and among Wells Fargo Bank, National Association, and StarTek, Inc.	10-K	10.41	3/8/2013
10.28&	Agreement No. 20120124.035.C, Contact Center Services Master Agreement effective January 25, 2013 between StarTek, Inc. and AT&T Services, Inc.	10-K	10.42	3/8/2013
10.29	Fourth Amendment to Credit and Security Agreement, by and among Wells Fargo Bank, National Association, and StarTek, Inc.	10-Q	10.1	11/8/2013
10.30&	Amendment No. 20120124.035.A.001 to Contact Center Services Master Agreement between StarTek, Inc. and AT&T Services, Inc.	10-Q	10.2	11/8/2013
10.31*	Fifth Amendment to Credit and Security Agreement, by and among Wells Fargo Bank, National Association, and StarTek, Inc.
10.32*	Amendment to Investor Rights Agreement by and among StarTek, Inc. and A. Emmet Stephenson Jr.
10.33†*	2013 Executive Incentive Plan
10.34†*	2013 Sales Commission Plan

54

21.1*	Subsidiaries of the Registrant
23.1*	Consent of Ernst & Young, LLP, Independent Registered Public Accounting Firm
31.1*	Certification of Chad A. Carlson pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Lisa A. Weaver pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Written Statement of the Chief Executive Officer and Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*	The following materials are formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2013 and 2012, (ii) Consolidated Balance Sheets as of December 31, 2013 and 2012, (iii) Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012, (iv) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2013 and 2012 and (v) Notes to Consolidated Financial Statements tagged in block text

*	Filed with this Form 10-K.
†	Management contract or compensatory plan or arrangement.
#	The Securities and Exchange Commission has granted our request that certain material in this agreement be treated as confidential.  Such material has been redacted from the exhibit as filed.
&	Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately with the Securities and Exchange Commission

55

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-K to be signed on its behalf by the undersigned thereunto duly authorized.

STARTEK, INC.
By:	/s/ CHAD A. CARLSON	Date: March 7, 2014
	Chad A. Carlson
	President and Chief Executive Officer
	(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. 

/s/ CHAD A. CARLSON	President and Chief Executive Officer (principal executive officer)	Date: March 7, 2014
Chad A. Carlson
/s/ LISA A. WEAVER	Senior Vice President, Chief Financial Officer and Treasurer (principal financial and accounting officer)	Date: March 7, 2014
Lisa A. Weaver
/s/ ED ZSCHAU	Chairman of the Board	Date: March 7, 2014
Ed Zschau
/s/ ROBERT SHEFT	Director	Date: March 7, 2014
Robert Sheft
/s/ BENJAMIN L. ROSENZWEIG	Director	Date: March 7, 2014
Benjamin L. Rosenzweig
/s/ JACK D. PLATING	Director	Date: March 7, 2014
Jack D. Plating

56

EX-10.34

FIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT

THIS AMENDMENT (this “Amendment”) is entered into as of December 11, 2013, by and among WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”) and STARTEK, INC., a Delaware corporation, STARTEK USA, INC. , a Colorado corporation, and STARTEK HEALTH SERVICES, INC., a Colorado corporation (each a “Borrower”).

RECITALS

Each Borrower and Lender are parties to a Credit and Security Agreement dated as of February 28, 2012 (as amended from time to time, the “Credit Agreement”). Capitalized terms used in these recitals have the meanings given to them in the Credit Agreement unless otherwise specified.

Each Borrower has requested that certain amendments be made to the Credit Agreement, which Lender is willing to make pursuant to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows:

1.Defined Terms. Capitalized terms used in this Amendment which are defined in the Credit Agreement shall have the same meanings as defined therein, unless otherwise defined herein. In addition, Schedule 1.1 of the Credit Agreement is amended by adding or amending and restating, as the case may be, the following definitions (in the case of “Eligible Accounts,” there is no change to any part of the definition except subsection (k)):

“Adjusted EBITDA” means, with respect to any fiscal period, Borrowers’ consolidated net income (or loss), minus (i) extraordinary gains and non-cash gains related to asset sales, (ii) interest income, (iii) non-operating income and income tax benefits, and (iv) decreases in any change in LIFO reserves, plus (v) non-cash extraordinary losses and non-cash losses related to asset sales, (vi) Interest Expense, (vii) income taxes, (viii) depreciation and amortization, (ix) increases in any change in LIFO reserves for such period and (x) non-cash stock compensation, in each case determined on a consolidated basis in accordance with GAAP.

“AT&T Services, Inc.” means AT&T Services, Inc., a Delaware corporation, and/or any of its various Subsidiaries and Affiliates who are Account Debtors under Accounts owed to any Borrower that may be purchased by Citibank under the terms of the Citibank Supplier Agreement.

“Citibank” means Citibank, N.A., a national banking association.

{Z0024848/1 }

“Citibank Supplier Agreement” means that certain Supplier Agreement dated as of October 17, 2013 between Citibank and StarTek, Inc., as such agreement may be amended, supplemented or modified from time to time, through which Citibank is permitted to purchase Accounts owed to StarTek, Inc. on which AT&T Services, Inc. is the Account Debtor.

“Eligible Accounts” means those Accounts created by each Borrower in the ordinary course of its business, that arise out of such Borrower’s sale of Goods or rendition of services, that comply with each of the representations and warranties respecting Eligible Accounts made in the Loan Documents, and that are not excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided, however, that such criteria may be revised from time to time by Lender in Lender’s Permitted Discretion. In determining the amount to be included, Eligible Accounts shall be calculated net of customer deposits, credits and unapplied cash. Eligible Accounts shall not include the following:

(k)    Accounts owing by a single Account Debtor or group of Affiliated Account Debtors (other than AT&T Services, Inc., Time Warner Cable Inc., T-Mobile USA, Inc. and Comcast Corporation) whose total obligations owing to Borrower exceed twenty percent (20%) of the aggregate amount of all otherwise Eligible Accounts, such Accounts owing by AT&T Services, Inc. which exceed fifty percent (50%) of the aggregate amount of all otherwise Eligible Accounts, such Accounts owing by Time Warner Cable Inc. which exceed thirty-five percent (35%) of the aggregate amount of all otherwise Eligible Accounts, such accounts owing by T-Mobile USA, Inc. which exceed forty-five percent (45%) of the aggregate amount of all otherwise Eligible Accounts, such Accounts owing by Comcast Corporation which exceed forty percent (40%) of the aggregate amount of all otherwise Eligible Accounts, and the accounts owing by AT&T Services, Inc., Time Warner Cable Inc., T-Mobile USA and Comcast Corporation which, combined, exceed eighty-five percent (85%) of the aggregate amount of all otherwise Eligible Accounts (but the portion of the Accounts not in excess of the foregoing applicable percentages may be deemed Eligible Accounts), such percentages being subject to reduction if the creditworthiness of such Account Debtor deteriorates; provided, however, that so long as the Citibank Supplier Agreement has not been terminated, Eligible Accounts shall not include any Accounts owing by AT&T Services, Inc. to any Borrower.    

2.Section 2.4(b) of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

“(b)    Payments by Account Debtors. Borrowers shall either (i) instruct all Account Debtors to make payments directly to the Lockbox for deposit by Lender directly to the Collection Account, or (ii) instruct them to deliver such payments to Lender by wire transfer, ACH, or other means as Lender may direct for deposit to the Lockbox or Collection Account or for direct application to reduce the outstanding

{Z0024848/1 }    -2-

Advances; provided, however, that so long as (A) no Default or Event of Default shall have occurred and be continuing and (B) excess Availability has not been less than $5,000,000 for any period of five consecutive days, Borrowers may instruct one or more Account Debtor to make payments directly to the Designated Account and Borrowers may retain such payments in the Designated Account. Otherwise, if any Borrower receives a payment or Proceeds of Collateral directly, such Borrower will promptly deposit the payment or Proceeds into the Collection Account, and until so deposited, such Borrower will hold all such payments and Proceeds in trust for Lender without commingling with other funds or property.”

3.Article 7 of the Credit Agreement (Negative Covenants) is hereby amended by adding a new Section 7.17 to read in its entirety as follows:

“7.17    Citibank Supplier Agreement. Amend, supplement, modify or terminate the Citibank Supplier Agreement without first obtaining Lender’s prior written consent, which consent shall be subject to Lender’s Permitted Discretion.”

4.Section 8(b) of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

“(b)    Non-Financed Capital Expenditures. Incur or contract to incur Non-Financed Capital Expenditures, measured on a month-end basis, in an amount less than or equal to the applicable amount set forth in the following table for the applicable period set forth opposite thereto:

Applicable Amount	Applicable Period
$9,000,000	For the 10-month period ending October 31, 2013
$11,000,000	For the 11-month period ending November 30, 2013
$11,000,000	For the 12-month period ending December 31, 2013
$11,000,000	For the 12-month period ending January 31, 2014
$11,000,000	For the 12-month period ending February 28, 2014
$11,000,000	For the 12-month period ending March 31, 2014

5.Article 9 of the Credit Agreement (Events of Default) is hereby amended by adding a new Section 9.17 to read in its entirety as follows:

{Z0024848/1 }    -3-

“9.17    If StarTek, Inc. defaults on any of its obligations under the Citibank Supplier Agreement.”

6.Compliance Certificate. The form of Compliance Certificate attached as Exhibit A to the Credit Agreement is hereby amended and restated in its entirety by the form of Compliance Certificate attached as Exhibit A to this Amendment.

7.Schedule 2.12. Schedule 2.12 (Fees) is hereby amended by adding a new subsection (f) to the Monthly Fees section of the schedule to read in its entirety as follows:

“(f) Lockbox Waiver Fee. Until such time as the Citibank Supplier Agreement is terminated, and no Account Debtor of any Borrower is permitted to make payments directly to the Designated Account, a Lockbox Waiver Fee of $2,000 per month.”

8.Schedule P-2. Schedule P-2 (Permitted Liens) is hereby amended by adding the following Permitted Lien:

“Liens in favor of Citibank against Accounts of AT&T Services, Inc., including collections thereon and proceeds thereof, purchased from StarTek, Inc. under the terms of the Citibank Supplier Agreement.”

9.No Other Changes. Except as explicitly amended by this Amendment, all of the terms and conditions of the Credit Agreement shall remain in full force and effect and shall apply to any advance or letter of credit thereunder.

10.Conditions Precedent. This Amendment shall be effective when Lender shall have received an executed original hereof, together with each of the following, each in substance and form acceptable to Lender in its sole discretion:

(a)The Acknowledgment and Agreement of each of StarTek Canada Services, Ltd., StarTek Honduras, SA de CV, StarTek International Limited and StarTek Philippines, Inc. (each a “Subordinated Creditor”) set forth at the end of this Amendment, duly executed by each Subordinated Creditor.

(b)An original Lien Release and Acknowledgement Agreement executed by Citibank; Each Borrower acknowledges receiving a copy of such agreement prior to the date of this Amendment and hereby consents to the terms thereof.

(c)Such other matters as Lender may require.

11.Representations and Warranties. Each Borrower hereby represents and warrants to Lender as follows:

(a)Each Borrower has all requisite power and authority to execute this Amendment and any other agreements or instruments required hereunder and to perform all of its obligations hereunder and thereunder, and each of this Amendment and all such other agreements and instruments has been duly executed and delivered by each Borrower and constitutes the

{Z0024848/1 }    -4-

legally valid and binding agreement and obligation of such Person, enforceable against such Person in accordance with its respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

(b)The execution, delivery and performance by each Borrower of this Amendment and any other agreements or instruments required hereunder have been duly authorized by all necessary corporate action and do not and will not (i) violate any material provision of federal, state, or local law or regulation applicable to any Borrower, the Governing Documents of such Person, or any order, judgment, or decree of any court or other Governmental Authority binding on such Person, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any Material Contract of any Borrower except to the extent that any such conflict, breach or default could not individually or in the aggregate reasonably be expected to cause a Material Adverse Change, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any assets of any Borrower, other than Permitted Liens, or (iv) require any approval of any Borrower’s interest holders or any approval or consent of any Person under any Material Contract of any Borrower, other than consents or approvals that have been obtained and that are still in force and effect and except, in the case of Material Contracts, for consents or approvals, the failure to obtain could not individually or in the aggregate reasonably be expected to cause a Material Adverse Change.

(c)All of the representations and warranties contained in Exhibit D of the Credit Agreement are correct on and as of the date hereof as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date.

12.References; Affirmation. All references in the Credit Agreement to “this Agreement” shall be deemed to refer to the Credit Agreement as amended hereby; and any and all references in the Loan Documents to the Credit Agreement shall be deemed to refer to the Credit Agreement as amended hereby. The existing Loan Documents, except as amended by this Amendment or, as applicable, as amended (or amended and restated) by a separate agreement or instrument in connection herewith, shall remain in full force and effect, and each of them is hereby ratified and confirmed (and in the case of StarTek Health Services, Inc., also joined and agreed to be bound by as a “Borrower”) by each Borrower and Lender. Each Borrower and Lender intend that this Amendment shall not in any manner (a) constitute the refinancing, refunding, payment or extinguishment of the Obligations evidenced by the existing Loan Documents; (b) be deemed to evidence a novation of the outstanding balance of the Obligations; or (c) affect, replace, impair, or extinguish the creation, attachment, perfection or priority of the Liens on the Collateral granted pursuant to the Credit Agreement or any of the other Loan Documents evidencing, governing or creating a Lien on the Collateral. Each Borrower hereby ratifies and reaffirms any and all grants of the Liens to Lender on the Collateral as security for the Obligations, and acknowledges and confirms that the grants of the Liens to Lender on the Collateral: (i) represent continuing Liens on all of the Collateral, (ii) secure all of the Obligations, and (iii) represent valid first Liens on all of the Collateral, subject only to the Permitted Liens. The Credit Agreement, as amended by this Amendment, will be construed as one agreement.

{Z0024848/1 }    -5-

13.No Waiver. The execution of this Amendment and the acceptance of all other agreements and instruments related hereto shall not be deemed to be a waiver of any Default or Event of Defaultunder the Credit Agreement or a waiver of any breach, default or event of default under any Loan Document or other document held by Lender, whether or not known to Lender and whether or not existing on the date of this Amendment.

14.Release. Each Borrower, and each Subordinated Creditor by signing the Acknowledgment and Agreement of Subordinated Creditors set forth below,hereby absolutely and unconditionally releases and forever discharges Lender, and any and all participants, parent entities, subsidiary entities, affiliated entities, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents, attorneys and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which any Borrower or Subordinated Creditorhas had, now has or has made claim to have against any such Person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown.

15.Costs and Expenses. Each Borrower hereby reaffirms its joint and several agreement under the Credit Agreement to pay or reimburse Lender on demand for all costs and expenses incurred by Lender in connection with the Loan Documents, including without limitation all reasonable fees and disbursements of legal counsel. Without limiting the generality of the foregoing, each Borrower specifically agrees to pay all fees and disbursements of counsel to Lender for the services performed by such counsel in connection with the preparation of this Amendment and the documents and instruments incidental hereto. Each Borrower hereby agrees that Lender may, at any time or from time to time in its sole discretion and without further authorization by any Borrower, make a loan to any Borrower under the Credit Agreement, or apply the proceeds of any loan, for the purpose of paying any such fees, disbursements, costs and expenses.

16.Miscellaneous. This Amendment and the Acknowledgment and Agreement of Subordinated Creditors may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same agreement. Delivery of an executed counterpart of this Amendment by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Amendment but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.

17.Joint and Several Liability. Each Borrower agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Lender the prompt performance of, all Obligations under this Amendment.

{Z0024848/1 }    -6-

[Signatures on the next page]

{Z0024848/1 }    -7-

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

WELLS FARGO BANK, NATIONAL ASSOCIATION By: /s/Karen S. Kenney Name: Karen S. Kenney Title: Authorized Signatory STARTEK, INC. By: /s/Lisa Bullington-Weaver Name: Lisa Bullington-Weaver Title: Senior Vice President and Chief Financial Officer STARTEK USA, INC. By: /s/Lisa Bullington-Weaver Name: Lisa Bullington-Weaver Title: Senior Vice President and Chief Financial Officer STARTEK HEALTH SERVICES, INC. By: /s/Lisa Bullington-Weaver Name: Lisa Bullington-Weaver Title: Senior Vice President and Chief Financial Officer

{Z0024848/1 }    Signature Page to Fifth Amendment

to Credit and Security Agreement

ACKNOWLEDGMENT AND AGREEMENT OF SUBORDINATED CREDITORS

The undersigned, eacha subordinated creditor of StarTek, Inc. and StarTek USA, Inc. to Wells Fargo Bank, National Association ( “Lender”), pursuant to an Intercompany Subordination Agreement dated as of February 28, 2012 (the “Intercompany Subordination Agreement”), hereby (i) acknowledges receipt of the foregoing Amendment; (ii) consents to the terms (including without limitation the release set forth in Paragraph 10 of the Amendment) and execution thereof; (iii) reaffirms all obligations to Lender pursuant to the terms of the Intercompany Subordination Agreement; and (iv) acknowledges that on and after the effective date of the Amendment, all references in the Intercompany Subordination Agreement to “Borrower” shall be deemed to refer to any of StarTek, Inc., StarTek USA, Inc. and StarTek Health Services, Inc., and to “Borrowers” shall be deemed to refer to StarTek, Inc., StarTek USA, Inc. and StarTek Health Services, Inc., collectively, and (v) acknowledges that Lender may amend, restate, extend, renew or otherwise modify the Loan Documents (other than the Intercompany Subordination Agreement) and any indebtedness or agreement of any Borrower, or enter into any agreement or extend additional or other credit accommodations, without notifying or obtaining the consent of the undersigned and without impairing the obligations of the undersigned under theIntercompany Subordination Agreement.

STARTEK CANADA SERVICES, LTD. By: /s/Lisa Bullington-Weaver Name: Lisa Bullington-Weaver Title: Senior Vice President and Chief Financial Officer	STARTEK INTERNATIONAL LIMITED By: /s/Lisa Bullington-Weaver Name: Lisa Bullington-Weaver Title: Senior Vice President and Chief Financial Officer
STARTEK HONDURAS, SA de CV By: /s/Chad A. Carlson Name: Chad A. Carlson Title: President and Chief Executive Officer	STARTEK PHILIPPINES, INC. By: /s/Chad A. Carlson Name: Chad A. Carlson Title: President and Chief Executive Officer

{Z0024848/1 }    Acknowledgement and Agreement of

Subordinated Creditors to Fifth Amendment

to Credit and Security Agreement

EXHIBIT A

TO CREDIT AND SECURITY AGREEMENT

FORM OF COMPLIANCE CERTIFICATE

[on Borrower’s letterhead]

To:    Wells Fargo Bank, National Association

MAC 7300-210

1740 Broadway

Denver, CO 80274

Attn: Karen Kenney

Re:    Compliance Certificate dated , 20__

Ladies and Gentlemen:

Reference is made to that certain Credit and Security Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) dated as of February 28, 2012, by and among WELLS FARGO BANK, NATIONAL ASSOCIATION, (“Lender”), and STARTEK, INC., STARTEK USA, INC. and STARTEK HEALTH SERVICES, INC. (each a “Borrower” and collectively, the “Borrowers”). Capitalized terms used in this Compliance Certificate have the meanings set forth in the Credit Agreement unless specifically defined herein.

Pursuant to Schedule 6.1 of the Credit Agreement, the undersigned chief financial officer of each of StarTek, Inc., StarTek USA, Inc. and StarTek Health Services, Inc. hereby certifies that:

1.    The financial information of each Borrower and its Subsidiaries furnished to Lender pursuant to Section 6.1 of the Credit Agreement has been prepared in accordance with GAAP (except for year-end adjustments and the lack of footnotes), and fairly presents in all material respects the financial condition of each Borrower and its Subsidiaries.

2.    Such officer has reviewed the terms of the Credit Agreement and has made, or caused to be made under his/her supervision, a review in reasonable detail of the transactions and condition of each Borrower and its Subsidiaries during the accounting period covered by the financial statements delivered pursuant to Schedule 6.1 of the Credit Agreement.

3.    Such review has not disclosed the existence on and as of the date hereof, and the undersigned does not have knowledge of the existence as of the date hereof, of any event or condition that constitutes a Default or Event of Default.

{Z0024848/1 }    Exhibit A - 1

4.    The representations and warranties of each Borrower and its Subsidiaries set forth in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date hereof (except to the extent they relate to a specified date).

5.    Each Borrower and its Subsidiaries are in compliance with the applicable covenants contained in Section 8 of the Credit Agreement as demonstrated on Schedule 1 hereof.

6.    The Citibank Supplier Agreement has not been amended, supplemented, modified or terminated without Lender’s prior written consent.

IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned this _____ day of _______________, 201__.

STARTEK, INC.

By:     

Name:    
Title:    Chief Financial Officer

STARTEK USA, INC.

By:     

Name:    
Title:    Chief Financial Officer

STARTEK HEALTH SERVICES, INC.

By:     

Name:    
Title:    Chief Financial Officer

{Z0024848/1 }    Exhibit A - 2

{Z0024848/1 }    Exhibit A - 3

SCHEDULE 1 TO COMPLIANCE CERTIFICATE

1.    Minimum Adjusted EBITDA.

Borrowers’ and their Subsidiaries’ Adjusted EBITDA, measured on a month-end basis, for the [__] month period ending _________, 201__ is $___________, which [does/does not] satisfy the minimum Adjusted EBITDA requirement set forth in Section 8 of the Credit Agreement (and copied below) for the corresponding period.

Applicable Amount	Applicable Period
$5,500,000	For the 10-month period ending October 31, 2013
$6,000,000	For the 11-month period ending November 30, 2013
$7,000,000	For the 12-month period ending December 31, 2013
$7,000,000	For the 12-month period ending January 31, 2014
$7,000,000	For the 12-month period ending February 28, 2014
$7,000,000	For the 12-month period ending March 31, 2014

2.    Non-Financed Capital Expenditures.

Borrowers’ and their Subsidiaries Non-Financed Capital Expenditures, measured on a month-end basis, for the [__] month period ending _________, 201__ were $___________, which [is/is not] an amount less than or equal to the applicable amount set forth in Section 8 of the Credit Agreement (and copied below) for the corresponding period.

{Z0024848/1 }    Exhibit A – Schedule 1-1

Applicable Amount	Applicable Period
$9,000,000	For the 10-month period ending October 31, 2013
$11,000,000	For the 11-month period ending November 30, 2013
$11,000,000	For the 12-month period ending December 31, 2013
$11,000,000	For the 12-month period ending January 31, 2014
$11,000,000	For the 12-month period ending February 28, 2014
$11,000,000	For the 12-month period ending March 31, 2014

3.    Fixed Charge Coverage Ratio Calculation; Applicable Interest Rate Margin.

Borrowers’ and their Subsidiaries Fixed Charge Coverage Ratio, measured on a trailing twelve-month basis for the month ended [______________, 201_], was [___]:1.0, which means that as of the date of determination, the Interest Rate Margin is as set forth in Level [I/II] of the following table:

Level	Fixed Charge Coverage RatioCalculation	Interest Rate Margin
I	If the Fixed Charge Coverage Ratio is less 1.5:1.0	3%
II	If the Fixed Charge Coverage Ratio is equal to or greater than 1.5:1.0	2.50%

4.    Citibank Supplier Agreement.

The Citibank Supplier Agreement [has/has not] been amended, supplemented, modified or terminated without Lender’s prior written consent. [Any applicable amendments, supplements, modifications or terminations are described as follows:]

{Z0024848/1 }    Exhibit A – Schedule 1-2

EX-10.35

AMENDMENT TO

INVESTOR RIGHTS AGREEMENT

This Amendment to Investor Rights Agreement (this “Amendment”) is made as of February 1, 2014 between StarTek, Inc. (the “Company”), A. Emmet Stephenson, Jr. (“AES”), and Toni E. Stephenson (“TES”) to amend that certain Investor Rights Agreement among the Company, AES and TES dated as of February 3, 2004 (the “Investor Rights Agreements”). For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree to amend the Investor Rights Agreement as set forth below:

1.Section 1(b) of the Investor Rights Agreement shall be amended and restated in its entirety as follows:

“(b) Commencing with the Company’s 2014 annual meeting of the stockholders and until the Termination Date, AES will have the right to nominate: (i) the number of members of the Board equal to one fewer than a majority of the then current number of members of the Board if there is an odd number of members of the Board or two fewer than a majority of the then current members of the Board if there is an even number of members of the Board, in either case if AES and AES’s Affiliates (as defined below) hold, in the aggregate, 30 percent or more of the outstanding common stock of the Company; or (ii) one member of the Board if AES and AES’s Affiliates hold, in the aggregate, 10 percent or more but less than 30 percent of the outstanding common stock of the Company (the “AES Nominees”). For purposes of determining the number of AES Nominees, the stock ownership of AES and AES’s Affiliates will be measured on the record date for the relevant meeting of the stockholders or a vacancy on the Board exists, as applicable. This Agreement will be interpreted in such a manner that AES or the Company, as the case may be, will have the right to nominate a director to fill any vacancy on the Board whether created by the resignation, death, disability, or removal of any director, or by the increase or decrease in the number of directors on the Board so as to meet the numerical requirements of clauses (i) and (ii) above.

As used in this Agreement, the term “Affiliate” means, with respect to any person, any other person controlling, controlled by or under common control with such person, and “control” means the ownership, directly or indirectly, of voting securities representing the right generally to elect a majority of the directors (or similar officials) of a person or the possession, by contract or otherwise, of the authority to direct the management and policies of a person.”

2.Except as expressly set forth above, the Investor Rights Agreement shall remain in full force and effect in accordance with the terms thereof.

3.This Amendment is executed pursuant to Section 5(c) of the Investor Rights Agreement, which permits the amendment of the Investor Rights Agreement pursuant to a writing signed by the Company, AES and TES, each of the parties to the Investor Rights Agreement.

4.This Amendment shall be governed by the “Miscellaneous” provisions contained in Section 5 of the Investor Rights Agreement.

The parties have executed this Amendment as of the date first set forth above.

STARTEK, INC. By: /s/ Chad A. Carlson Name: Chad A. Carlson Title: President and Chief Executive Officer	By: /s/ A. Emmet Stephenson, Jr. Name: A. Emmet Stephenson, Jr.
	By: /s/ Toni E. Stephenson Name: Toni E. Stephenson

EX-10.36

STARTEK, INC.

2013 EXECUTIVE INCENTIVE PLAN

1.0 PURPOSE

1.1 The 2013 Executive Incentive Bonus Plan (“Plan”) is established to incent and reward eligible Participants (defined in Section 2.3) for performance towards achieving defined Business Targets and Individual Targets for the current fiscal year.

2.0 DEFINITIONS

2.1 “Company” means StarTek, Inc. and its wholly owned operating subsidiaries.

2.2 “Compensation Committee” means the compensation committee of the board of directors of StarTek, Inc.

2.3 “Participant” means the Senior Leadership Team consisting of the CEO and the direct reports to the CEO excluding Sales.

2.4 “Plan Year” means January 1, 2013 through December 31, 2013, inclusive.

2.5 “Business Targets” are the measurements of the Company’s performance established for the Plan Year by the Company’s executive management and Compensation Committee as described in Section 3.1(a) below.

2.6 “Incentive Eligibility” is a percentage that is determined by a Participant’s position level, as shown in Appendix B.

(a) “Business Targets Eligibility” is a percentage that is calculated by multiplying a Participant’s Bonus Eligibility by the applicable Business Target percentage listed in Appendix B.

2.7 “Business Targets Achievement” is the percentage by which Business Targets are achieved as determined by the applicable table in Appendix A.

2.8 “Base Salary Earnings” is the amount of gross base salary earned by a Participant during the Plan Year for which an incentive award is calculated.

3.0 MEASUREMENT CRITERION

3.1 Incentive earnings under the Plan are based on a Business Targets in accordance with position level as stated in Appendix B.

(a) The Business Targets are established for the Plan Year by the Company’s Compensation Committee. Payout for achieving Business Targets is scaled depending on the Company’s performance during the Plan Year versus the Business Targets per the matrix in Appendix A. Business Targets are based on revenue, free cash flow and EBITDA for the Company.

(b) Business Target Achievement must reach at least the minimum threshold per the payout matrix in Appendix A to earn any payout otherwise the payout is zero.

4.0 PAYMENT FROM THE PLAN

4.1 Incentive awards (if any) are earned after the 4^th quarter close of the Company’s financial books. Earned incentive awards are subject to approval by the Company’s Compensation Committee.

4.2 Incentives earned for the Plan Year are paid as soon as administratively possible after approval in the following calendar year.

4.3 The amount of a Participant’s Business Target incentive payout, if any, equals the product of the Participant’s Base Salary Earnings and the Participant’s Business Targets Achievement.

4.4 Incentive payout, if any, is made to a Participant as a lump sum, less required payroll taxes and withholdings.

4.5 In order to earn an incentive payment from the Plan, a Participant must also be in “active” status on the payroll of the Company or one of its wholly-owned operating subsidiaries at the time the incentive s payments are made unless otherwise provided in any written contract with the Participant. (See Partial-Year Participant Eligibility 5.2.b)

5.0 PARTIAL-YEAR PARTICIPANT ELIGIBILITY

5.1 An employee who becomes a Participant during the Plan Year may participate in the Plan on a pro rata basis. The amount of base salary earned by such employee during the Plan year after first becoming a Participant shall be the base salary earnings used to calculate any incentive payments.

5.2 If a Participant’s employment with the Company or any of its wholly-owned operating subsidiaries terminates during the Plan Year then (s)he ceases to be a Participant on the date employment is terminated. In this event, an incentive will neither be earned nor paid unless otherwise provided in any written contract with the Participant.

(a) If a Participant changes his or her position within the Company or any of its wholly-owned operating subsidiaries during the Plan Year such that (s)he is no longer a Participant, then (s)he ceases to be a Participant on the date of such change, in which case a prorated bonus would be earned through the date of such change, and be subject to Section 4.0.

(b) If a Participant is terminated from the Company or any of its wholly-owned operating subsidiaries before the end of the Plan Year or before earned incentive payments are made due to a Position Elimination as a result of a Change in Control of the Company, any earned incentive awards will be paid on a pro rata basis. Such payment will be paid in accordance with the same timeline as other Plan Participants are paid.

(c) Participants on approved paid disability leave of absence during the Plan Year are not eligible to earn incentive awards for the period of time to the nearest whole month of the disability leave of absence. Earned awards during the Plan Year will be prorated for the number of whole months of active employment and participation in the Plan.

6.0 PROMOTIONS WITHIN THE PLAN YEAR

6.1 Promotions during the Plan Year will be handled as follows:

(d) For the Business Targets and Individual Targets, bonus calculations will be prorated based on the period of time (rounded to the nearest whole month ) in each position level and the prorated salary for the same period of time for each position held.    

7.0 PLAN APPROVALS

7.1 This Plan is subject to approval by the Compensation Committee and is effective only for the Plan Year noted above. There is no assurance that this Plan will be renewed or any similar plan will be adopted in the future.

8.0 CHANGEABILITY

8.1 The Compensation Committee reserves the right to change, suspend or eliminate this Plan, in whole or in part, at any time, with or without notice to Participants.

FORFEITURE OF AWARDS:

Any Participant who may have earned an incentive under the Plan but whose overall performance does not meet or exceed performance expectations at the time of payment of the earned incentive awards is not eligible to receive payment under the Plan.

Any Participant who manipulates or attempts to manipulate the Plan or any components of performance measurements for personal benefit will forfeit any potentially earned awards and is subject to disciplinary action up to and including termination of employment.

Printed Name:__________________________________Date:___________________________

By my signature below, I understand and accept the terms of this 2013 Executive Incentive Plan:

______________________________________________________________________________

APPENDIX A:

BUSINESS TARGETS MATRIX

StarTek, Inc. Executive Incentive Plan

For Year Ended December 31, 2013

Appendix B

2013 STARTEK INC. EXECUTIVE INCENTIVE PLAN ELIGIBLITY MATRIX

		Business Targets
Position Level	Maximum % of Base Salary	FCF	EBITDA	Revenue
Vice President	30%	10%	60%	30%
Sr Vice President	40%	10%	60%	30%
SVP Global Human Resources	50%	10%	60%	30%
CFO & SVP Global Operations	60%	10%	60%	30%
CEO	100%	10%	60%	30%

EX-10.37

StarTek, Inc.

2013 SALES COMMISSION PLAN

2013 SALES COMMISSION PLAN

1.0 PURPOSE AND OBJECTIVE

1.1. The StarTek, Inc. (“StarTek”) 2013 Sales Commission Plan (the “Plan”) sets forth the eligibility and payment terms for Commissions for Plan participants (each a “Participant”). The Plan is designed to support the objective of generation of revenue from new and existing clients through the use of commission payments along with incentives for performance against certain StarTek strategic initiatives.

2.0 PLAN EFFECTIVE DATE

2.1. The Plan will be effective January 1, 2013 until amended, replaced or terminated by StarTek (the “Plan Period”) whichever is later. StarTek reserves the right, in its sole discretion, to terminate or amend the Plan at any time.

3.0 DEFINITIONS

3.1. A “Qualifying New SOW” means a statement of work (“SOW”) or contract that is (i) signed during the Plan Period by both StarTek and a Qualifying New Client, (ii) substantially the result of the Participant’s efforts (as determined in the sole discretion of StarTek), and (iii) a source of new or additional revenue for StarTek. Qualifying New SOWs shall not include letter agreements, memoranda of understanding, interim agreements, letters of intent and like documents and agreements, or any unwritten understanding, agreement or modification of any kind.

3.2. A “Qualifying New Client” means a company (or its predecessor by merger or otherwise) (i) from whom StarTek has not, either directly or indirectly, previously earned revenue, as determined by StarTek’s SVP of Sales in his sole discretion (a “New Client”), or (ii) which is an existing or past client of StarTek and has been identified as a potential source of significant additional revenue and designated in accordance with Section 4.3 below.

3.3. An “Existing Client” means any company other than a Qualifying New Client.

3.4. “Quota” means that annual contract value assigned to each participant in this 2013 Sales Commission Plan as the level of achievement required as set out in Appendix B.

3.5. “Assigned Sales Executive” is the sales executive designated by the SVP Sales in their sole discretion to receive commissions from a specific qualifying SOW.

1

StarTek, Inc.

2013 SALES COMMISSION PLAN

3.6. For purposes of this Plan, “Cause” means (i) Employee’s incompetence or failure or refusal to perform satisfactorily any duties reasonably required of the Employee by StarTek; (ii) Employee’s violation of any law, rule or regulation (other than traffic violations, misdemeanors or similar offense) or cease-and-desist order, court order, judgment, regulatory directive or agreement; (iii) the Commission or omission of or engaging in any act or practice which constitutes a material breach of the Employee’s fiduciary duty to StarTek, involves personal dishonesty on the part of the Employee or demonstrates a willful or continuing disregard for the best interests of StarTek; or (iv) the Employee’s engaging in dishonorable or disruptive behavior, practices or acts which would be reasonably expected to harm or bring disrepute to StarTek, its business or any of its customers, employees, or vendors.

4.0 ELIGIBLE NEW BUSINESS

4.1. With respect to all New Clients, thirty-six months after the signing of the first Qualifying SOW with such New Client, that client ceases to be a Qualifying New Client. Any SOW or contract signed after this thirty-six month period with that client is not a Qualifying New SOW unless expressly designated as such under Sections 4.2 or 4.3, and therefore, unless eligible for a Commission on Qualifying SOW’s, no Commissions shall be paid under Section 6.0 of this plan.

4.2. Notwithstanding the foregoing, a New Client may continue to be designated as a Qualifying New Client for more than twelve months if so designated by the SVP of Sales in his sole discretion.

4.3. A Participant may not receive a Commission with respect to an Existing Client unless such Participant has been designated a Client Relationship Manager in writing by SVP of Sales.

5.0 COMMISSION PAYMENTS FOR ELIGIBLE BUSINESS

5.1. The Participant must be the Assigned Sales Executive to receive commissions for an SOW.

5.2. In the event two or more Participants are otherwise eligible for a Commission under this Plan for a particular SOW, the Commission will be split among them in the manner determined by the SVP of Sales in his discretion, at the time the Qualifying New SOW is signed.

5.3. Commissions are earned and calculated during the Plan Period based on the actual revenue collected pursuant to an SOW. Commissions are earned and are payable monthly based upon the percentages indicated on Exhibit A and under the following conditions:

5.3.1. Commissions will be paid for collected revenue from each Qualifying New SOW during the two year period following first invoice of the program.

5.3.2. For ease of administration, commissions will be calculated and paid using the billed revenue from client invoices instead of actual collected revenue. Commissions are not considered earned until StarTek has received payment net of offsets or penalties from the Qualifying New Client for services rendered, in the form of revenue dollars, from which the Commission is calculated and advanced. Participant will return to StarTek any commission related to uncollected revenue.

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StarTek, Inc.

2013 SALES COMMISSION PLAN

StarTek may, at its sole discretion, reduce future commission payments to the Participant to account for a situation where invoiced revenue is not collected.

5.4. In addition, from time to time the SVP of Sales may further incentivize certain sales through the use of additional commission payments. These further incentives will be communicated to Participants through notification letters and such letters will be amendments to this Plan.

5.5. A Participant is eligible for a Commission under the Plan only if the Participant is actively employed by StarTek at the time of payment of the Commission. A Participant who resigns for any reason whatsoever or whose employment is terminated by StarTek for Cause is not eligible to earn any further Commissions.

6.0 ADDITIONAL PLAN INFORMATION

6.1. Commission compensation under this Plan is fully taxable as earned income and subject to normal withholding guidelines and applicable laws, taxes and practices.

6.2. Commission compensation under this Plan will be calculated by StarTek in accordance with established Plan criteria and forwarded for initial approval by the SVP of Sales. Once approved by the SVP of Sales, payments will be forwarded for final approval to either the Chief Financial Officer and/or the Chief Executive Officer. Either of these officers can designate any Senior Vice President who is not a Participant in this Plan to act as an approver in their absence.

6.3. If a dispute arises about who is responsible for a given SOW or contract, such responsibility will be determined by the SVP of Sales in his sole discretion. If it becomes necessary to split or share Commission or bonus payments; or if unique sales opportunities arise, then determination and authorization for Commissions or bonuses, if any, will be made by the SVP of Sales.

6.4. Participant is expected to maintain compliance with StarTek’s policies, procedures, reporting, requirements, and other tasks as assigned by the SVP of Sales. If participant is out of compliance, delayed or negligent in completing the aforementioned tasks, commission payments may be delayed until participant rectifies the situation and is wholly compliant with the Company’s requirements, as determined by the the SVP Sales and at his sole discretion.

6.5. The Participant does not have any right whatsoever to make any material commitment for or enter into any contract on behalf of StarTek.

6.6. StarTek reserves the right, in its sole discretion, to modify, suspend, or eliminate this Plan at any time, with or without notice.

6.7. StarTek reserves the right to decide, in its absolute discretion, at any time and from time-to-time, whether to enter, renew, amend extend or terminate any SOW, contract, proposed contract, and/or contract negotiation, with any client or prospective client, as well as the terms and conditions under which it will do so. In addition, if any invoiced item is deemed a “pass through”, meaning it is priced to have little or no margin for the company, it may be

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StarTek, Inc.

2013 SALES COMMISSION PLAN

ineligible for commissions. Any decisions related to “pass through” items will be at the sole discretion of the SVP of Sales.

6.8. Employment with StarTek is “at will” and may be terminated at any time by either the Participant or StarTek with or without notice and for any or no reason, unless the Participant has entered into a written employment agreement with StarTek modifying the “at will” employment relationship. This Plan is not intended to alter the “at will” employment relationship.

6.9. Neither this Plan nor participation in it shall:

a) Affect the “at will” nature of each Participant’s employment with StarTek.

b) Provide any assurance of continued employment with StarTek or participation in the Plan.

c) Provide any assurance that this Plan or another Commission or bonus plan will be offered in the future to any Participant.

6.10. In the event of a dispute between the SVP of Sales and the Participant, StarTek’s CEO shall have sole authority and discretion to interpret the Plan’s provisions and applicability and any finding, determination or decision made by the CEO shall be final and binding with no rights of dispute by the participant.

APPROVALS:

/s/Joseph S. Duryea

Joseph S. Duryea

Senior Vice President of Sales & Marketing        

/s/Lisa Bullington-Weaver

Lisa Bullington-Weaver

Chief Financial Officer

Participant     Date

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StarTek, Inc.

2013 SALES COMMISSION PLAN

APPENDIX A

2013 Commission Eligibility for Qualifying New SOW’s from Qualifying New Clients

Commission for all Qualifying New SOW’s from Qualifying New Clients will be equal to 3% of the actual collected revenue under a Qualifying SOW during the first twelve (12) months (beginning with the date of first invoice) and 2% for second twelve months (beginning with delivery of the 13^th invoice) of the program and, at the sole discretion of the SVP of Sales, a 1% bonus commission may be awarded for the third twelve months (beginning with the delivery of the 25^th invoice).

5

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF THE REGISTRANT

NAME OF SUBSIDIARIES	JURISDICTION OF INCORPORATION	SUBSIDIARIES DOING BUSINESS AS
StarTek USA, Inc.	Colorado	StarTek USA StarTek StarTek Services
StarTek Canada Services, Ltd.	Nova Scotia, Canada	StarTek Canada Services StarTek StarTek Services
StarTek Holdings, Inc.	Delaware	StarTek Holdings
StarTek International, Limited	Bermuda	StarTek International
StarTek Pacific, Ltd.	Colorado	StarTek Pacific
StarTek Honduras, SAdeCV	Honduras	StarTek Honduras
StarTek Health Services, Inc.	Colorado	StarTek Health

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 333-150635, 333-150634, 333-142780, 333-134903, 333-126989, 333-117451, 333-168463 and 333-183226) pertaining to the Employee Stock Purchase Plan, 2008 Equity Incentive Plan, Stock Option Plan and Directors’ Stock Option Plan of StarTek, Inc. of our report dated March 7, 2014, with respect to the consolidated financial statements of StarTek, Inc. included in this Annual Report (Form 10-K) of StarTek, Inc. for the year ended December 31, 2013.

/s/ Ernst & Young LLP

Denver, Colorado

March 7, 2014

EX-31.1

EXHIBIT 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Chad A. Carlson, certify that:

1. I have reviewed this annual report on Form 10-K of StarTek, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 7, 2014	/s/ CHAD A. CARLSON
	Chad A. Carlson
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Lisa A. Weaver, certify that:

1. I have reviewed this annual report on Form 10-K of StarTek, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 7, 2014	/s/ LISA A. WEAVER
	Lisa A. Weaver
	Senior Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATIONS

In connection with the Annual Report of StarTek, Inc. on Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned individuals, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Registrant.

Date: March 7, 2014	/s/ CHAD A. CARLSON
	Chad A. Carlson
	President and Chief Executive Officer
Date: March 7, 2014	/s/ LISA A. WEAVER
	Lisa A. Weaver
	Senior Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Corporation and will be retained by the Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Property, Plant & Equipment (Details)	12 Months Ended
	Dec. 31, 2013 segment
Property, Plant and Equipment [Line Items]
Number of segments	3
Building and Building Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	15 years
Building and Building Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	30 years
Telephone and Computer Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	3 years
Telephone and Computer Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	5 years
Software [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	3 years
Furniture, Fixtures and Miscellaneous Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	5 years
Furniture, Fixtures and Miscellaneous Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	7 years

XML

PROPERTY, PLANT & EQUIPMENT (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended														12 Months Ended		3 Months Ended	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013 Land [Member]	Dec. 31, 2012 Land [Member]	Dec. 31, 2013 Building and Building Improvements [Member]	Dec. 31, 2012 Building and Building Improvements [Member]	Dec. 31, 2013 Telephone and Computer Equipment [Member]	Dec. 31, 2012 Telephone and Computer Equipment [Member]	Dec. 31, 2013 Software [Member]	Dec. 31, 2012 Software [Member]	Dec. 31, 2013 Furniture, Fixtures and Miscellaneous Equipment [Member]	Dec. 31, 2012 Furniture, Fixtures and Miscellaneous Equipment [Member]	Dec. 31, 2013 Construction in Progress [Member]	Dec. 31, 2012 Construction in Progress [Member]	Dec. 31, 2013 Greeley North [Member]	Dec. 31, 2013 Greeley West [Member]	Dec. 31, 2013 Greeley, Colorado [Member]	Dec. 31, 2013 Kingston, Ontario [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 122,114	$ 131,228	$ 70	$ 272	$ 26,264	$ 25,824	$ 40,414	$ 42,917	$ 37,192	$ 39,948	$ 16,952	$ 19,664	$ 1,222	$ 2,603
Less accumulated depreciation	(99,904)	(104,918)
Total property, plant and equipment, net	22,210	26,310
Proceeds from sale of property held for sale and sale leaseback																	4,731
Fair market value of assets under capital lease	1,413	0													1,413
Loss on sale leaseback transaction	475														475
Lease term/amortizaton period															7 years			3 years
Loss on sale of asset held for sale																106
Proceeds from sale leaseback transactions, net of direct costs	1,337	3,884																3,884
Deferred gain from sale leaseback transaction																		$ 840

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PRINCIPAL CLIENTS (Major Customer) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012
AT&T Services, Inc. and AT&T Mobility, LLC, subsidiaries of AT&T Inc. [Member]
Revenue, Major Customer [Line Items]
Revenue	$ 58,395	[1]	$ 63,904	[1]
Revenue concentration, percentage	25.30%	[1]	32.30%	[1]
T-Mobile USA, Inc., a subsidiary of Deutsche Telekom [Member]
Revenue, Major Customer [Line Items]
Revenue	64,095	[2]	55,916	[2]
Revenue concentration, percentage	27.70%	[2]	28.20%	[2]
Comcast Cable Communications Management LLC, subsidiary of Comcast Corporation [Member]
Revenue, Major Customer [Line Items]
Revenue	$ 45,887	[2]
Revenue concentration, percentage	19.80%	[2]

[1] Revenue from this customer is generated through our Domestic and Asia Pacific segments.

[2] Revenue from this customer is generated through our Domestic, Asia Pacific and Latin America segments.

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COMMITMENTS AND CONTINGENCIES (Capital Lease) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Commitments and Contingencies Disclosure [Abstract]
2014	$ 371
2015	370
2016	377
2017	384
2018	392
Thereafter	808
Total minimum lease payments	2,702
Less amount representing interest	(1,280)
Present value of obligations under capital leases	1,422
Less current portion of obligations under capital leases	(113)
Obligations under capital leases, excluding current portion	$ 1,309

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DEBT (Details) (Revolving Credit Facility [Member], Wells Fargo Bank [Member], USD $)	12 Months Ended
	Dec. 31, 2013
Line of Credit Facility [Line Items]
Minimum borrowing capacity, upper limit	$ 10,000,000
Maximum borrowing capacity	20,000,000
Increments for additional borrowing	2,500,000
Letters of credit, maximum allowed	5,000,000
Borrrowing base, as percentage of eligible accounts receivable less reserves	85.00%
Borrowings outstanding under revolving credit facility	1,000,000
Remaining borrowing capacity	13,920,000
Amount outstanding for undrawn letters of credit issued under revolving credit facility	$ 80,000
Description of variable rate basis	three-month LIBOR
Line of credit facility, interest rate	3.25%
Line of credit facility, letters of credit fee percentage	3.00%
Monthly unused fee, rate per annum	0.30%
Minimum [Member]
Line of Credit Facility [Line Items]
Basis spread on variable rate	2.50%
Maximum [Member]
Line of Credit Facility [Line Items]
Basis spread on variable rate	3.00%

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IMPAIRMENT LOSSES AND RESTRUCTURING CHARGES Notes Receivable (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Note receivable, interest rate	4.40%
Notes Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Note receivable	$ 645
Note receivable, unearned income	$ 18

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SHARE-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS (Tables)

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Stock Options Activity

A summary of stock option activity under the Plan as of December 31, 2013, and changes during the year ended December 31, 2013 are presented below: 

	Shares		Weighted Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)
Outstanding as of January 1, 2013	1,789,127		$	4.00
Granted	762,763		4.82
Exercised	(38,577	)	3.64
Forfeited	(208,230	)	4.64
Expired	(6,000	)	25.95
Outstanding as of December 31, 2013	2,299,083		$	4.16	8.01
Vested and exercisable as of December 31, 2013	1,167,772		$	4.45	7.36
Vested and expected to vest as of December 31, 2013	2,089,628		$	4.17	8.05

Schedule of Stock Options, Valuation Assumptions

The assumptions used to determine the value of our stock-based awards under the Black-Scholes method are summarized below:

	2013	2012
Risk-free interest rate	0.36% - 2.7%	0.37% - 1.6%
Dividend yield	—%	—%
Expected volatility	56.5% - 67.6%	56.8% - 77.9%
Average expected life in years	7.0	5.0

Schedule of Restricted Stock and Restricted Stock Units Award Activity

A summary of restricted stock awards and deferred stock units activity under the Plan as of December 31, 2013, and changes during the year then ended are presented below: 

	Number of Restricted Shares and Units		Weighted-Average Grant Date Fair Value
Nonvested balance as of January 1, 2013	13,656		$	4.08
Vested	(9,255	)	4.41
Forfeited	(1,067	)	6.58
Nonvested balance as of December 31, 2013	3,334		$	2.35

Schedule of Employee Stock Purchase Plan, Valuation Assumptions

The assumptions used to value the shares under the ESPP using the Black-Scholes method were as follows:

	2013	2012
Risk-free interest rate	0.02% - 0.07%	0.02% - 0.10%
Dividend yield	—%	—%
Expected volatility	24.2% - 64.7%	48.9% - 93.1%
Expected life in years	3 months	3 months

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SEGMENT INFORMATION (Geographical Data) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 231,257	$ 198,092
Total property, plant and equipment, net	22,210	26,310
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	95,333	69,403
Total property, plant and equipment, net	12,875	13,549
Canada [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	25,595	30,424
Total property, plant and equipment, net	96	420
Philippines [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	81,082	79,683
Total property, plant and equipment, net	7,050	9,921
Latin America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	29,247	18,582
Total property, plant and equipment, net	$ 2,189	$ 2,420

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SHARE-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS (Stock Options Activity) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013
Options Outstanding [Roll Forward]
Outstanding as of January 1, 2013	1,789,127
Granted	762,763
Exercised	(38,577)
Forfeited	(208,230)
Expired	(6,000)
Outstanding as of December 31, 2013	2,299,083
Options Outstanding, Weighted Average Exercise Price [Roll Forward]
Oustanding (in usd per share)	$ 4.00
Granted (in usd per share)	$ 4.82
Exercised (in usd per share)	$ 3.64
Forfeited (in usd per share)	$ 4.64
Expired (in usd per share)	$ 25.95
Outstanding (in usd per share)	$ 4.16
Options, Additional Disclosures
Vested and exercisable	1,167,772
Vested and exercisable (in usd per share)	$ 4.45
Outstanding, Weighted-Average Remaining Contractual Term	8 years 4 days
Vested and exercisable, Weighted-Average Remaining Contractual Term	7 years 4 months 10 days
Options, Vested and Expected to Vest
Vested and expected to vest	2,089,628
Vested and expected to vest (in usd per share)	$ 4.17
Vested and expected to vest, Weighted-Average Remaining Contactual Term	8 years 18 days

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SEGMENT INFORMATION (Textual) (Details)	12 Months Ended
	Dec. 31, 2013 facility
U.S. [Member]
Segment Reporting Information [Line Items]
Number of operating segments	7
Canada [Member]
Segment Reporting Information [Line Items]
Number of operating segments	1
Philippines [Member]
Segment Reporting Information [Line Items]
Number of operating segments	3
Costa Rica [Member]
Segment Reporting Information [Line Items]
Number of operating segments	1
Honduras [Member]
Segment Reporting Information [Line Items]
Number of operating segments	1

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Summary of Estimated Useful Lives

Depreciation and amortization is computed using the straight-line method based on their estimated useful lives, as follows:

	Estimated Useful Life
Buildings and building improvements	15-30 years
Telephone and computer equipment	3-5 years
Software	3 years
Furniture, fixtures, and miscellaneous equipment	5-7 years

Our property, plant and equipment as of December 31, 2013 and 2012, consisted of the following, by asset class:

	2013			2012
Land	$	70		$	272
Buildings and improvements	26,264			25,824
Telephone and computer equipment	40,414			42,917
Software	37,192			39,948
Furniture, fixtures, and miscellaneous equipment	16,952			19,664
Construction in progress	1,222			2,603
	122,114			131,228
Less accumulated depreciation	(99,904		)	(104,918		)
Total property, plant and equipment, net	$	22,210		$	26,310

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination

We amortize all acquisition-related intangible assets that are subject to amortization based using the straight-line method over the estimated useful life based on economic benefit as follows:

	Estimated Useful Life
Developed technology	8 years
Customer base and customer relationships	3 years
Trade name	6 years
Noncompete agreement	2 years

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DERIVATIVE INSTRUMENTS (Textual) (Details) (Foreign Exchange Contract [Member]) In Thousands, unless otherwise specified	12 Months Ended					12 Months Ended			12 Months Ended
	Dec. 31, 2013 CAD	Dec. 31, 2013 PHP	Dec. 31, 2013 Canada [Member] CAD	Dec. 31, 2012 Canada [Member] CAD	Dec. 31, 2013 Canada [Member] USD ($)	Dec. 31, 2013 Philippines [Member] PHP	Dec. 31, 2012 Philippines [Member] PHP	Dec. 31, 2013 Philippines [Member] USD ($)	Dec. 31, 2013 Minimum [Member]	Dec. 31, 2013 Maximum [Member]
Derivative [Line Items]
Contract period									3 months	9 months
Contracts acquired, notional amount			10,860	18,640		2,515,110	3,013,540
Derivative, notional amount	10,860	1,511,910			$ 10,448			$ 35,948
Reclassification period of unrealized gains and losses from AOCI to earnings	12 months	12 months

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ACQUISITIONS (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended	0 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended
	Dec. 31, 2013	Mar. 18, 2013 Ideal Dialogue Company [Member]	Jul. 24, 2013 RN's On Call [Member]	Dec. 31, 2013 Developed technology	Mar. 18, 2013 Developed technology Ideal Dialogue Company [Member]	Dec. 31, 2013 Customer base and customer relationships	Mar. 18, 2013 Customer base and customer relationships Ideal Dialogue Company [Member]	Dec. 31, 2013 Customer base and customer relationships RN's On Call [Member]	Jul. 24, 2013 Customer base and customer relationships RN's On Call [Member]	Dec. 31, 2013 Trade name	Mar. 18, 2013 Trade name Ideal Dialogue Company [Member]	Dec. 31, 2013 Noncompete agreement	Mar. 18, 2013 Noncompete agreement Ideal Dialogue Company [Member]
Business Acquisition [Line Items]
Property, plant and equipment		$ 13
Finite-lived intangible assets					390		130		750		70		10
Goodwill		887	750
Payments to Acquire Businesses, Gross	597
Business acquisition, purchase price		$ 1,500	$ 1,500
Customer relationships, estimated useful life				8 years		3 years		3 years		6 years		2 years

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases

As of December 31, 2013, approximate minimum annual rentals under operating leases and approximate minimum payments to be received under annual non-cancelable subleases and leases were as follows. 

	Minimum Lease Payments		Minimum Sublease/Lease Receivable
2014	$	10,103	$	306
2015	7,392		—
2016	5,818		—
2017	5,794		—
2018	4,370		—
Thereafter	1,052		—
Total minimum lease payments	$	34,529	$	306

Schedule of Future Minimum Lease Payments for Capital Leases

As of December 31, 2013, approximate minimum annual rentals under capital leases were as follows.

	Minimum Lease Payments
2014	$	371
2015	370
2016	377
2017	384
2018	392
Thereafter	808
Total minimum lease payments	$	2,702
Less amount representing interest	(1,280		)
Present value of obligations under capital leases	1,422
Less current portion of obligations under capital leases	(113		)
Obligations under capital leases, excluding current portion	$	1,309

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FAIR VALUE MEASUREMENTS (Recurring and Nonrecurring) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Assets and Liabilities at Fair Value Measured on Recurring Basis
Liabilities, Foreign exchange contracts	$ 2,160	$ 253
Recurring [Member]
Assets and Liabilities at Fair Value Measured on Recurring Basis
Assets, Foreign exchange contracts		733
Total fair value of assets measured on a recurring basis		733
Liabilities, Foreign exchange contracts	2,160	253
Total fair value of liabilities measured on a recurring basis	2,160	253
Nonrecurring [Member]
Assets and Liabilities at Fair Value on a Nonrecurring Basis
Property, plant and equipment, net	531
Total fair value of assets measured on a non-recurring basis	531	4,969
Assets held for sale		4,969
Accrued restructuring costs	16	957
Total fair value of liabilities measured on a non-recurring basis	16	957
Level 1 [Member] | Recurring [Member]
Assets and Liabilities at Fair Value Measured on Recurring Basis
Assets, Foreign exchange contracts		0
Total fair value of assets measured on a recurring basis		0
Liabilities, Foreign exchange contracts	0	0
Total fair value of liabilities measured on a recurring basis	0	0
Level 1 [Member] | Nonrecurring [Member]
Assets and Liabilities at Fair Value on a Nonrecurring Basis
Property, plant and equipment, net	0
Total fair value of assets measured on a non-recurring basis	0	0
Assets held for sale		0
Accrued restructuring costs	0	0
Total fair value of liabilities measured on a non-recurring basis	0	0
Level 2 [Member] | Recurring [Member]
Assets and Liabilities at Fair Value Measured on Recurring Basis
Assets, Foreign exchange contracts		733
Total fair value of assets measured on a recurring basis		733
Liabilities, Foreign exchange contracts	2,160	253
Total fair value of liabilities measured on a recurring basis	2,160	253
Level 2 [Member] | Nonrecurring [Member]
Assets and Liabilities at Fair Value on a Nonrecurring Basis
Property, plant and equipment, net	0
Total fair value of assets measured on a non-recurring basis	0	0
Assets held for sale		0
Accrued restructuring costs	0	0
Total fair value of liabilities measured on a non-recurring basis	0	0
Level 3 [Member] | Recurring [Member]
Assets and Liabilities at Fair Value Measured on Recurring Basis
Assets, Foreign exchange contracts		0
Total fair value of assets measured on a recurring basis		0
Liabilities, Foreign exchange contracts	0	0
Total fair value of liabilities measured on a recurring basis	0	0
Level 3 [Member] | Nonrecurring [Member]
Assets and Liabilities at Fair Value on a Nonrecurring Basis
Property, plant and equipment, net	531
Total fair value of assets measured on a non-recurring basis	531	4,969
Assets held for sale		4,969
Accrued restructuring costs	16	957
Total fair value of liabilities measured on a non-recurring basis	$ 16	$ 957

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INCOME TAXES (Textuals) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Unremitted earnings of foreign subsidiaries	$ 1,300	$ 244
Deferred tax liability not recognized on undistributed earnings of foreign subsidiaries	455
Aggregate reduction in income tax expense	2,620	2,383
Impact of reduction in income tax expense on earnings per share (in usd per share)	$ 0.17	$ 0.16
Federal [Member]
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Net operating loss carryforwards	34,560
State [Member]
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Net operating loss carryforwards	$ 60,435
Philippines [Member] | Foreign [Member]
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Income tax rate	5.00%
Costa Rica [Member] | Through 2018 [Member] | Foreign [Member]
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Tax exemption rate	100.00%
Costa Rica [Member] | Four Years Thereafter [Member] | Foreign [Member]
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Tax exemption rate	50.00%

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INTEREST AND OTHER INCOME (EXPENSE), NET (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Other Income and Expenses [Abstract]
Interest income	$ 88	$ 86
Interest (expense)	(114)	(78)
Gain (loss) on disposal of assets	(1,549)	45
Other income (expense)	(4)	289
Interest and other income (expense), net	$ (1,579)	$ 342

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NET LOSS PER SHARE (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Earnings Per Share [Abstract]
Anti-dilutive securities excluded from computation of earnings per share (in shares)	2,302,417	1,803,199

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GOODWILL AND INTANGIBLE ASSETS (Notes)

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

GOODWILL AND INTANGIBLE ASSETS

Goodwill

The goodwill of $1,637 recognized from our acquisitions during 2013 was assigned to our Domestic segment.

Intangible Assets

The following table presents our intangible assets as of December 31, 2013:

	Gross Intangibles		Accumulated Amortization		Net Intangibles		Weighted Average Amortization Period (years)
Developed technology	$	390	$	37	$	353	4.14
Customer base and customer relationships	880		137		744		1.67
Trade name	70		9		61		3.14
Noncompete agreement	10		4		6		1.20
	$	1,350	$	186	$	1,164	3.52

We estimated future amortization expense for the succeeding years relating to the intangible assets resulting from acquisitions as follows:

Year Ending December 31,	Amount
2014	$	359
2015	355
2016	217
2017	60
2018	60
Thereafter	113

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INCOME TAXES (Income Before Income Taxes) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
U.S.	$ (15,452)	$ (21,244)
Foreign	9,276	10,872
Loss before income taxes	$ (6,176)	$ (10,372)

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GOODWILL AND INTANGIBLE ASSETS (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Acquired Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 1,637	$ 0
Gross Intangibles		1,350
Accumulated Amortization	186
Net Intangibles	1,164	0
Weighted Average Amortization Period (years)	3 years 6 months 7 days
2014	359
2015	355
2016	217
2017	60
2018	60
Thereafter	113
Developed technology
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Intangibles		390
Accumulated Amortization	37
Net Intangibles	353
Weighted Average Amortization Period (years)	4 years 1 month 21 days
Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Intangibles		880
Accumulated Amortization	137
Net Intangibles	744
Weighted Average Amortization Period (years)	1 year 8 months 1 day
Trade name
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Intangibles		70
Accumulated Amortization	9
Net Intangibles	61
Weighted Average Amortization Period (years)	3 years 1 month 21 days
Noncompete agreement
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Intangibles		10
Accumulated Amortization	4
Net Intangibles	$ 6
Weighted Average Amortization Period (years)	1 year 2 months 12 days

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PRINCIPAL CLIENTS (Tables)

12 Months Ended

Dec. 31, 2013

Risks and Uncertainties [Abstract]

Schedule of Revenue by Major Client

The following table represents revenue concentration of our principal clients:

	Year Ended December 31,
	2013			2012
	Revenue		Percentage	Revenue		Percentage
AT&T Services, Inc. and AT&T Mobility, LLC, subsidiaries of AT&T, Inc. (1)	$	58,395	25.3%	$	63,904	32.3%
T-Mobile USA, Inc., a subsidiary of Deutsche Telekom (2)	$	64,095	27.7%	$	55,916	28.2%
Comcast Cable Communications Management, LLC, subsidiary of Comcast Corporation (2)	$	45,887	19.8%	*		*

* less than 10%

(1) Revenue from this customer is generated through our Domestic and Asia Pacific segments.

(2) Revenue from this customer is generated through our Domestic, Asia Pacific and Latin America segments.

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IMPAIRMENT LOSSES AND RESTRUCTURING CHARGES (Tables)

12 Months Ended

Dec. 31, 2013

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Related Costs

A summary of the activity under the restructuring plans as of December 31, 2013, and changes during the years ended December 31, 2013 and 2012 are presented below:

	Facility-Related Costs
	Victoria			Laramie			Grand Junction			Decatur			Regina			Total
Balance as of January 1, 2012	$	483		$	63		$	252		$	—		$	852		$	1,650
Expense (reversal)	—			(20		)	(138		)	464			671			977
Payments, net of receipts for sublease	54			(43		)	(114		)	(378		)	(1,197		)	(1,678		)
Foreign currency translation adjustment	—			—			—			—			8			8
Balance as of December 31, 2012	$	537		$	—		$	—		$	86		$	334		$	957
Expense (reversal)	(443		)	—			—			(56		)	—			(499		)
Payments, net of receipts for sublease	(78		)	—			—			(30		)	(328		)	(436		)
Foreign currency translation adjustment	—			—			—			—			(6		)	(6		)
Balance as of December 31, 2013	$	16		$	—		$	—		$	—		$	—		$	16

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SHARE-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS (Textuals (Details) (USD $)	12 Months Ended			12 Months Ended				0 Months Ended	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	May 05, 2008	Dec. 31, 2013 Restricted Stock and Restricted Stock Units (RSUs) [Member]	Dec. 31, 2012 Restricted Stock and Restricted Stock Units (RSUs) [Member]	Dec. 31, 2013 Stock Options [Member]	Dec. 31, 2013 Restricted Stock [Member]	May 07, 2012 Employee Stock Purchase Plan [Member]	Dec. 31, 2013 Employee Stock Purchase Plan [Member]	Dec. 31, 2012 Employee Stock Purchase Plan [Member]	Dec. 31, 2013 Selling, General and Administrative Expenses [Member]	Dec. 31, 2012 Selling, General and Administrative Expenses [Member]	Dec. 31, 2013 Maximum [Member]	Dec. 31, 2013 Minimum [Member]	Dec. 31, 2013 First 3% [Member]	Dec. 31, 2013 Next 2% [Member]	Dec. 31, 2013 Director [Member]
Stock Awards Activity [Line Items]
Maximum number of shares reserved for issuance under stock plans			900,000						400,000
Shares available for future grants	129,961		274,298						107,475
Term of options													10 years
Award vesting period for an award not subject to performance measures														3 years
Performance period for an award subject to performance measures														1 year
Fair value equivalent of stock options																	$ 22,500
Grant date fair value of common stock																	22,500
Fair value of deferred stock units																	22,500
Weighted-average grant date fair value of options granted	$ 3.44	$ 1.24
Total fair value of stock options vested	965,000	1,153,000
Total fair value of restricted stock awards				41,000	251,000
Total compensation cost									26,000	35,000	1,607,000	1,275,000
Total unrecognized compensation cost						1,940,000
Weighted-average period that cost is expected to be recognized						2 years 1 month 6 days	9 months 18 days
Total unrecognized compensation cost							5,000
Maximum percentage of base pay that a participating employee may elect									10.00%
Purchase price as percentage of lower of closing price on first or last trading day of offering period									85.00%
Number of additional shares authorized								100,000
Shares purchased under the ESPP									24,404	50,317
Weighted average purchase price (in usd per share)									$ 3.97	$ 2.05
Weighted average grant date fair value (in usd per share)				$ 2.35	$ 4.08				$ 1.07	$ 0.70
Required service period for participants to receive a matching contribution	1 year
Portion of employee contribution matched, percent															100.00%	50.00%
Employer matching contribution, percent															3.00%	2.00%
Company matching contributions to the 401(k)	$ 288,000	$ 320,000

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IMPAIRMENT LOSSES AND RESTRUCTURING CHARGES (Textuals) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended							3 Months Ended	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013 Domestic [Member]	Dec. 31, 2013 Laramie, Wyoming [Member]	Dec. 31, 2013 Enid, Oklahoma [Member]	Dec. 31, 2013 Grand Junction [Member]	Dec. 31, 2012 Operating Segments [Member] Domestic [Member] facility	Dec. 31, 2013 Property, Plant and Equipment, Other Types [Member] Domestic [Member]	Dec. 31, 2012 Property, Plant and Equipment, Other Types [Member] Domestic [Member]
Restructuring Cost and Reserve [Line Items]
Impairment of long-lived assets	$ 531	$ 3,086						$ 531	$ 3,086
Number of facilities impaired							2
Number of facilities, secured with new business							1
Loss on disposal of IT assets	966
Accelerated depreciation on IT assets	637
Depreciation expense on reclassified assets				151	271
Accrual adjustment of restructuring reserve				20		138
Facility related costs paid			$ 9,870

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DERIVATIVE INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Outstanding Derivative Positions

The following table shows the notional principal of our derivative instruments as of December 31, 2013:

	Currency	Notional Principal
Instruments qualifying as accounting hedges:
Foreign exchange contracts	Canadian dollar	10,860
Foreign exchange contracts	Philippine peso	1,511,910

Schedule of Derivative Instruments in the Consolidated Balance Sheets, Fair Value

The following table shows our derivative instruments measured at gross fair value as reflected in the consolidated balance sheets in derivative asset/liability as of December 31, 2013 and 2012:

	As of December 31, 2013				As of December 31, 2012
	Assets		Liabilities		Assets		Liabilities
Foreign exchange contracts	$	—	$	2,160	$	733	$	253

Schedule of Derivative Instruments, Gain (Loss) in the Consolidated Statement of Operations

The following table shows the effect of our derivative instruments designated as cash flow hedges for the years ended December 31, 2013 and 2012:

	Gain (Loss) Recognized in AOCI, net of tax Years Ended December 31,					Gain (Loss) Reclassified from AOCI into Income Years Ended December 31,
	2013			2012		2013			2012
Cash flow hedges:
Foreign exchange contracts	$	(4,590	)	$	1,749	$	(1,950	)	$	758

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FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements, Recurring and Nonrecurring

The following tables set forth our assets and liabilities measured at fair value on a recurring basis and a non-recurring basis by level within the fair value hierarchy.  Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2013
	Level 1		Level 2		Level 3		Total
Liabilities:
Foreign exchange contracts	$	—	$	2,160	$	—	$	2,160
Total fair value of liabilities measured on a recurring basis	$	—	$	2,160	$	—	$	2,160

	Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2012
	Level 1		Level 2		Level 3		Total
Assets:
Foreign exchange contracts	$	—	$	733	$	—	$	733
Total fair value of assets measured on a recurring basis	$	—	$	733	$	—	$	733
Liabilities:
Foreign exchange contracts	$	—	$	253	$	—	$	253
Total fair value of liabilities measured on a recurring basis	$	—	$	253	$	—	$	253

	Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis During the Year ended December 31, 2013
	Level 1		Level 2		Level 3		Total
Assets:
Property, plant and equipment, net	$	—	$	—	$	531	$	531
Total fair value of assets measured on a non-recurring basis	$	—	$	—	$	531	$	531
Liabilities:
Accrued restructuring costs	$	—	$	—	$	16	$	16
Total fair value of liabilities measured on a non-recurring basis	$	—	$	—	$	16	$	16

	Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis During the Year ended December 31, 2012
	Level 1		Level 2		Level 3		Total
Assets:
Assets held for sale	$	—	$	—	$	4,969	$	4,969
Total fair value of assets measured on a non-recurring basis	$	—	$	—	$	4,969	$	4,969
Liabilities:
Accrued restructuring costs	$	—	$	—	$	957	$	957
Total fair value of liabilities measured on a non-recurring basis	$	—	$	—	$	957	$	957

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ACQUISITIONS ACQUISITIONS

12 Months Ended

Dec. 31, 2013

Business Combinations [Abstract]

ACQUISITIONS

ACQUISITIONS

Ideal Dialogue Company, LLC

On March 18, 2013, we acquired Ideal Dialogue Company, LLC (“IDC”) for approximately $1,500 in cash. IDC uses analysis and unique methodologies based on more than 50 years of research in the science of human communication to optimize agent-customer interactions. IDC provides solutions that improve hiring, training, leadership development, quality monitoring and executive insight to enable customer management organizations to consistently create engaging conversations with customers.

We paid minimal acquisition-related expenses as part of the IDC purchase, which are recorded in selling, general and administrative expenses. Financial results of IDC from the date of acquisition are included in the results of operations within our Domestic segment.

We finalized our purchase price allocation during the three months ended December 31, 2013. The following summarizes the final purchase price allocation of the fair values of the assets acquired as of the acquisition date:

	Acquisition Date Fair Value
Property, plant and equipment	$	13
Developed technology	390
Customer base	130
Trade name	70
Noncompete agreement	10
Goodwill	887
Total purchase price	$	1,500

The goodwill recognized was attributable primarily to the assembled and trained workforce that developed the technology, expected synergies and other factors.

RN's On Call

On July 24, 2013, we acquired RN's On Call, a business process outsourcing provider in the health care industry, for approximately $1,500. The company provides health care related services to patients on behalf of the professional medical community.

As of December 31, 2013, we paid $597 of the purchase price with the remaining balance to be paid by January 2015, which is included in other accrued liabilities and other liabilities in the consolidated balance sheet. Minimal acquisition-related expenses were paid, which are recorded in selling, general and administrative expenses. Financial results from the date of acquisition are included in the results of operations within our Domestic segment.

The following summarizes the preliminary estimated fair values of the identifiable assets acquired as of the acquisition date. There were no other assets or liabilities acquired. The estimates of fair value of identifiable assets acquired are preliminary, pending completion of a valuation, thus are subject to revisions that may result in adjustments to the values presented below:

	Preliminary Estimate of Acquisition Date Fair Value
Customer relationships	$	750
Goodwill	750
Total purchase price	$	1,500

The customer relationships have a preliminary estimated useful life of three years. The goodwill recognized was attributable primarily to the acquired workforce and our ability to expand into the health care industry.

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PROPERTY, PLANT & EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment

Depreciation and amortization is computed using the straight-line method based on their estimated useful lives, as follows:

	Estimated Useful Life
Buildings and building improvements	15-30 years
Telephone and computer equipment	3-5 years
Software	3 years
Furniture, fixtures, and miscellaneous equipment	5-7 years

Our property, plant and equipment as of December 31, 2013 and 2012, consisted of the following, by asset class:

	2013			2012
Land	$	70		$	272
Buildings and improvements	26,264			25,824
Telephone and computer equipment	40,414			42,917
Software	37,192			39,948
Furniture, fixtures, and miscellaneous equipment	16,952			19,664
Construction in progress	1,222			2,603
	122,114			131,228
Less accumulated depreciation	(99,904		)	(104,918		)
Total property, plant and equipment, net	$	22,210		$	26,310

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Intangibles (Details)	12 Months Ended
	Dec. 31, 2013
Developed technology
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life	8 years
Customer base and customer relationships
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life	3 years
Trade name
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life	6 years
Noncompete agreement
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life	2 years

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FAIR VALUE MEASUREMENTS (Textuals) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Laramie, Wyoming and Greeley, Colorado [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets held for sale	$ 4,102
Enid, Oklahoma [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets held for sale	$ 867

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SEGMENT INFORMATION (Segment Reporting) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Segment Reporting Information [Line Items]
Revenue	$ 231,257	$ 198,092
Gross profit	24,325	22,997
Depreciation	12,527	12,957
Capital expenditures	8,843	7,305
Total assets	89,717	93,132
Domestic [Member] | Reportable Geographical Components [Member]
Segment Reporting Information [Line Items]
Revenue	120,928	99,827
Gross profit	13,291	7,396
Depreciation	7,340	7,450
Capital expenditures	5,555	4,757
Total assets	76,224	77,032
Asia Pacific [Member] | Reportable Geographical Components [Member]
Segment Reporting Information [Line Items]
Revenue	81,082	79,683
Gross profit	9,974	16,476
Depreciation	4,193	4,659
Capital expenditures	1,254	1,728
Total assets	10,520	12,779
Latin America [Member] | Reportable Geographical Components [Member]
Segment Reporting Information [Line Items]
Revenue	29,247	18,582
Gross profit	1,060	(875)
Depreciation	994	848
Capital expenditures	2,034	820
Total assets	$ 2,973	$ 3,321

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Revenue	$ 231,257	$ 198,092
Cost of services	206,932	175,095
Gross profit	24,325	22,997
Selling, general and administrative expenses	28,828	29,645
Impairment losses and restructuring charges, net	94	4,066
Operating loss	(4,597)	(10,714)
Interest and other income (expense), net	(1,579)	342
Loss before income taxes	(6,176)	(10,372)
Income tax expense	230	116
Net loss	(6,406)	(10,488)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(898)	413
Change in fair value of derivative instruments	(2,640)	614
Comprehensive loss	$ (9,944)	$ (9,461)
Net loss per common share - basic and diluted (in usd per share)	$ (0.42)	$ (0.69)
Weighted average common shares outstanding - basic and diluted (in shares)	15,339	15,241

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IMPAIRMENT LOSSES AND RESTRUCTURING CHARGES Summary of Activity, Restructuring Plans (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Laramie [Member]
Restructuring Reserve [Roll Forward]
Reclassification of liability	$ 20
Grand Junction [Member]
Restructuring Reserve [Roll Forward]
Reclassification of liability	138
Facility Related Costs [Member] | Victoria [Member]
Restructuring Reserve [Roll Forward]
Balance	537	483
Expense (reversal)	(443)	0
Payments for restructuring, net of expected sublease rentals	(78)	54
Balance	16	537
Facility Related Costs [Member] | Laramie [Member]
Restructuring Reserve [Roll Forward]
Balance	0	63
Expense (reversal)	0	(20)
Payments for restructuring, net of expected sublease rentals	0	(43)
Balance	0	0
Facility Related Costs [Member] | Grand Junction [Member]
Restructuring Reserve [Roll Forward]
Balance	0	252
Expense (reversal)	0	(138)
Payments for restructuring, net of expected sublease rentals	0	(114)
Balance	0	0
Facility Related Costs [Member] | Decatur [Member]
Restructuring Reserve [Roll Forward]
Balance	86	0
Expense (reversal)	(56)	464
Payments for restructuring, net of expected sublease rentals	(30)	(378)
Balance	0	86
Facility Related Costs [Member] | Regina [Member]
Restructuring Reserve [Roll Forward]
Balance	334	852
Expense (reversal)	0	671
Payments for restructuring, net of expected sublease rentals	(328)	(1,197)
Foreign currency translation adjustment	(6)	8
Balance	0	334
Facility Related Costs [Member] | Domestic [Member]
Restructuring Reserve [Roll Forward]
Balance	957	1,650
Expense (reversal)	(499)	977
Payments for restructuring, net of expected sublease rentals	(436)	(1,678)
Foreign currency translation adjustment	(6)	8
Balance	$ 16	$ 957

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive (Loss) Income	Retained Earnings (Accumulated Deficit)
Balance at Dec. 31, 2011	$ 74,362	$ 152	$ 71,058	$ 1,502	$ 1,650
Balance (in shares) at Dec. 31, 2011		15,249,829
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted shares granted	0	0	0
Restricted shares granted (in shares)		38,126
Restricted shares forfeited	0	0	0
Restricted shares forfeited (in shares)		(38,302)
Shares withheld for taxes on restricted stock vested	0	0	0
Shares withheld for taxes on restricted stock vested (in shares)		(1,023)
Issuance of common stock pursuant to Employee Stock Purchase Plan	103	1	102
Issuance of common stock pursuant to Employee Stock Purchase Plan (in shares)		50,317
Share-based compensation expense	1,275		1,275
Net loss	(10,488)				(10,488)
Change in accumulated other comprehensive income	1,027			1,027
Balance at Dec. 31, 2012	66,279	153	72,435	2,529	(8,838)
Balance (in shares) at Dec. 31, 2012	15,298,947	15,298,947
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock options exercised	141	1	140
Stock options exercised (in shares)	38,577	38,577
Stock issued for services	45	0	45
Stock issued for services (in shares)		8,318
Restricted shares forfeited	(3)	0	(3)
Restricted shares forfeited (in shares)		(1,067)
Shares withheld for taxes on restricted stock vested	(6)	0	(6)
Shares withheld for taxes on restricted stock vested (in shares)		(823)
Issuance of common stock pursuant to Employee Stock Purchase Plan	97	0	97
Issuance of common stock pursuant to Employee Stock Purchase Plan (in shares)		24,404
Share-based compensation expense	1,565		1,565
Net loss	(6,406)				(6,406)
Change in accumulated other comprehensive income	(3,538)			(3,538)
Balance at Dec. 31, 2013	$ 58,174	$ 154	$ 74,273	$ (1,009)	$ (15,244)
Balance (in shares) at Dec. 31, 2013	15,368,356	15,368,356

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SHARE-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS (Options, Valuation Assumptions) (Details) (Stock Options [Member])	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Valuation Assumptions [Line Items]
Dividend yield	0.00%	0.00%
Average expected life in years	7 years	5 years
Minimum [Member]
Valuation Assumptions [Line Items]
Risk-free interest rate	0.36%	0.37%
Expected volatility	56.50%	56.80%
Maximum [Member]
Valuation Assumptions [Line Items]
Risk-free interest rate	2.70%	1.60%
Expected volatility	67.60%	77.90%

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Schedule of Income before Income Taxes

The domestic and foreign source component of income (loss) from continuing operations before income taxes was:

	Year Ended December 31,
	2013			2012
U.S.	$	(15,452	)	$	(21,244	)
Foreign	9,276			10,872
Total	$	(6,176	)	$	(10,372	)

Schedule of Components of Income Tax Expense (Benefit)

Significant components of the provision for income taxes from continuing operations were:

	Year Ended December 31,
	2013			2012
Current:
Federal	$	—		$	(548	)
State	—			(77		)
Foreign	(29		)	499
Total current (benefit)	$	(29	)	$	(126	)
Deferred:
Federal	$	25		$	(10	)
State	2			(1		)
Foreign	232			253
Total deferred expense	$	259		$	242
Income tax expense	$	230		$	116

Schedule of Deferred Tax Assets and Liabilities

Significant components of deferred tax assets and deferred tax liabilities included in the accompanying consolidated balance sheets as of December 31, 2013 and 2012 were:

	Year Ended December 31,
	2013			2012
Current deferred tax assets (liabilities):
Accrued restructuring costs	$	(41	)	$	218
Other accrued liabilities	15			90
Derivative instruments	816			(176		)
Prepaid expenses	(209		)	(480		)
Cumulative translation adjustment	(1,397		)	(1,760		)
Other	373			438
Total current net deferred tax liabilities	$	(443	)	$	(1,670	)
Long-term deferred tax assets (liabilities):
Fixed assets	$	2,969		$	3,385
Accrued stock compensation	3,085			2,556
Accrued restructuring costs	47			89
Foreign tax credit carryforward	—			525
Work opportunity credit carryforward	4,988			4,988
Operating loss carryforward	10,653			8,443
Intangibles and goodwill	22			—
Other	221			114
Total long-term net deferred tax assets	$	21,985		$	20,100
Subtotal	$	21,542		$	18,430
Valuation allowance	(20,000		)	(16,602		)
Total net deferred tax asset	$	1,542		$	1,828

Schedule of Effective Income Tax Rate Reconciliation

Differences between U.S. federal statutory income tax rates and our effective tax rates for the years ended December 31, 2013 and 2012 for continuing operations were: 

	Year Ended December 31,
	2013		2012
U.S. statutory tax rate	35.0	%	35.0	%
Effect of state taxes (net of federal benefit)	-1.0	%	5.8	%
Effect of change in Canadian tax rate	1.5	%	-0.3	%
Other permanent differences (including meals and entertainment)	1.8	%	-0.4	%
Stock based compensation	-0.9	%	-0.8	%
Rate differential on foreign earnings	48.5	%	29.5	%
Foreign income taxed in the U.S.	-95.0	%	-43.2	%
Uncertain tax positions	19.5	%	-45.4	%
Unremitted foreign earnings of subsidiary	27.7	%	-16.5	%
Tax expense allocation to other comprehensive income	—	%	6.1	%
Valuation allowance	-33.5	%	28.0	%
Expiration of foreign tax credit carryforward	-8.5	%	—	%
Other, net	1.1	%	1.1	%
Total	-3.8	%	-1.1	%

Schedule of Unrecognized Tax Benefits Roll Forward

The following table indicates the changes to our unrecognized tax benefits for the years ended December 31, 2013 and 2012. The term “unrecognized tax benefits” in the accounting standards for income taxes refers to the differences between a tax position taken or expected to be taken in a tax return and the benefit measured and recognized in the financial statements. If recognized, all of these benefits would impact our income tax expense, before consideration of any related valuation allowance.

	Year Ended December 31,
	2013			2012
Unrecognized, January 1,	$	4,705		$	—
Additions based on tax positions taken in current year	1,090			4,705
Reductions based on tax positions taken in prior year	(2,293		)	—
Unrecognized, December 31,	$	3,502		$	4,705

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INCOME TAXES (Reconciliation of Tax Rates) (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Effective Income Tax Rate Reconciliation [Line Items]
U.S. statutory tax rate	35.00%	35.00%
Effect of state taxes (net of federal benefit)	(1.00%)	5.80%
Effect of change in Canadian tax rate	1.50%	(0.30%)
Other permanent differences (including meals and entertainment)	1.80%	(0.40%)
Stock based compensation	(0.90%)	(0.80%)
Rate differential on foreign earnings	48.50%	29.50%
Foreign income taxed in the U.S.	(95.00%)	(43.20%)
Uncertain tax positions	19.50%	(45.40%)
Unremitted foreign earnings of subsidiary	27.70%	(16.50%)
Tax expense allocation to other comprehensive income	0.00%	6.10%
Valuation allowance	(33.50%)	28.00%
Expiration of foreign tax credit carryforward	(8.50%)	0.00%
Other, net	1.10%	1.10%
Total	(3.80%)	(1.10%)

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SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

We operate our business within three reportable segments, based on the geographic regions in which our services are rendered: Domestic, Asia Pacific and Latin America. As of December 31, 2013, our Domestic segment included the operations of seven facilities in the U.S. and one facility in Canada. Our Asia Pacific segment included the operations of three facilities in the Philippines and our Latin America segment included one facility in Costa Rica and one facility in Honduras.

We primarily evaluate segment operating performance in each reporting segment based on net sales, gross profit and working capital. Certain operating expenses are not allocated to each reporting segment; therefore, we do not present income statement information by reporting segment below the gross profit level.

Information about our reportable segments, which correspond to the geographic areas in which we operate, for the years ended December 31, 2013 and 2012 is as follows:

	Year Ended December 31,
	2013		2012
Revenue:
Domestic	$	120,928	$	99,827
Asia Pacific	81,082		79,683
Latin America	29,247		18,582
Total	$	231,257	$	198,092
Gross profit:
Domestic	$	13,291	$	7,396
Asia Pacific	9,974		16,476
Latin America	1,060		(875		)
Total	$	24,325	$	22,997
Depreciation:
Domestic	$	7,340	$	7,450
Asia Pacific	4,193		4,659
Latin America	994		848
Total	$	12,527	$	12,957
Capital expenditures:
Domestic	$	5,555	$	4,757
Asia Pacific	1,254		1,728
Latin America	2,034		820
Total	$	8,843	$	7,305

	As of December 31,
	2013		2012
Total assets:
Domestic	$	76,224	$	77,032
Asia Pacific	10,520		12,779
Latin America	2,973		3,321
Total	$	89,717	$	93,132

The following tables present certain financial data based upon the geographic location where the services are provided:

	As of December 31,
	2013		2012
Revenue:
United States	$	95,333	$	69,403
Canada	25,595		30,424
Philippines	81,082		79,683
Latin America	29,247		18,582
Total	$	231,257	$	198,092

	As of December 31,
	2013		2012
Total property, plant and equipment, net:
United States	$	12,875	$	13,549
Canada	96		420
Philippines	7,050		9,921
Latin America	2,189		2,420
Total	$	22,210	$	26,310

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

12 Months Ended

Dec. 31, 2013

Stockholders' Equity Note [Abstract]

Schedule of Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) consisted of the following items:

	Foreign Currency Translation Adjustment			Derivatives Accounted for as Cash Flow Hedges			Total
Balance at January 1, 2012	$	2,385		$	(883	)	$	1,502
Foreign currency translation	670			—			670
Reclassification to operations	—			(758		)	(758		)
Unrealized gains (losses)	—			1,749			1,749
Tax (benefit)	(257		)	(377		)	(634		)
Balance at December 31, 2012	$	2,798		$	(269	)	$	2,529
Foreign currency translation	(898		)	—			(898		)
Reclassification to operations	—			1,950			1,950
Unrealized gains (losses)	—			(4,590		)	(4,590		)
Balance at December 31, 2013	$	1,900		$	(2,909	)	$	(1,009	)

Reclassification out of Accumulated Other Comprehensive Income

Reclassifications out of accumulated other comprehensive income for the years ended December 31, 2013 and 2012 were as follows:

Details About Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income					Affected Line Item in the Statement Where Net Income is Presented
	Year Ended December 31,
	2013		2012
(Gains) losses on cash flow hedges
Foreign exchange contracts	$	1,828	$	(758	)	Cost of services
Foreign exchange contracts	122		—			Selling, general and administrative expenses
	$	1,950	$	(758	)

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Consolidation

Consolidation

Our consolidated financial statements include the accounts of all wholly-owned subsidiaries after elimination of significant intercompany balances and transactions.

Use of Estimates

Use of Estimates

The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes.  Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period they are determined to be necessary.

Concentration of Credit Risk

Concentration of Credit Risk

We are exposed to credit risk in the normal course of business, primarily related to accounts receivable and derivative instruments.  Historically, the losses related to credit risk have been immaterial.  We regularly monitor credit risk to mitigate the possibility of current and future exposures resulting in a loss.  We evaluate the creditworthiness of clients prior to entering into an agreement to provide services and on an on-going basis as part of the processes of revenue recognition and accounts receivable.  We do not believe we are exposed to more than a nominal amount of credit risk in our derivative hedging activities, as the counter parties are established, well-capitalized financial institutions.

Foreign Currency Translation

Foreign Currency Translation

The assets and liabilities of our foreign operations that are recorded in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Revenues and expenses are translated at the weighted-average exchange rate during the reporting period. Resulting translation adjustments, net of applicable deferred income taxes, are recorded in accumulated other comprehensive income.  Foreign currency transaction gains and losses are included in the accompanying consolidated statements of operations and comprehensive loss. Such gains and losses were not material for any period presented.

Revenue Recognition

Revenue Recognition

Business Process Outsourcing Services —We invoice our clients monthly in arrears and recognize revenues for such services when completed. Substantially all of our contractual arrangements are based either on a production rate, meaning that we recognize revenue based on the billable hours or minutes of each call center agent, or on a rate per transaction basis.  These rates could be based on the number of paid hours the agent works, the number of minutes the agent is available to answer calls, or the number of minutes the agent is actually handling calls for the client, depending on the client contract.  Production rates vary by client contract and can fluctuate based on our performance against certain pre-determined criteria related to quality and performance. Additionally, some clients are contractually entitled to penalties when we are out of compliance with certain quality and/or performance obligations defined in the client contract. Such penalties are recorded as a reduction to revenue as incurred based on a measurement of the appropriate penalty under the terms of the client contract.  Likewise, some client contracts stipulate that we are entitled to bonuses should we meet or exceed these predetermined quality and/or performance obligations.  These bonuses are recognized as incremental revenue in the period in which they are earned.

As a general rule, our contracts do not include multiple elements.  We provide initial training to customer service representatives upon commencement of new contracts and recognize revenues for such training as the services are provided based upon the production rate (i.e., billable hours and rates related to the training services as stipulated in our contractual arrangements). Accordingly, the corresponding training costs, consisting primarily of labor and related expenses, are recognized as incurred.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

An allowance for doubtful accounts is provided for known and estimated potential losses arising from sales to customers based on a periodic review of these accounts.  There was no allowance for doubtful accounts as of December 31, 2013 or 2012.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying value of our cash and cash equivalents, accounts receivable, notes receivable, accounts payable and line of credit approximate fair value because of their short-term nature.

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.

Accounting guidance for the measurement of fair value establishes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The levels of the fair value hierarchy are described below:

Level 1 Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3Valuation is generated from model-based techniques that use significant assumptions not observable in the market.  These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability.  Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Refer to Note 8, “Fair Value Measurements,” for additional information on how we determine fair value for our assets and liabilities.

Cash and Cash Equivalents

Cash and Cash Equivalents

We consider cash equivalents to be short-term, highly liquid investments readily convertible to known amounts of cash and so near their maturity at purchase that they present insignificant risk of changes in value because of changes in interest rates.

Restricted Cash

Restricted cash of $456 included in other current assets at December 31, 2013 represents escrowed funds related to the sales leaseback of our Greeley North property.

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

Our derivative instruments consist of foreign currency forward contracts and are recorded as either an asset or liability measured at its fair value, with changes in the fair value of qualifying hedges recorded in other comprehensive income.  Changes in a derivative’s fair value are recognized currently in the statements of operations unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative’s gains and losses to offset the related results of the hedged item and requires that we must formally document, designate and assess the effectiveness of transactions that receive hedge accounting treatment.

We generally are able to apply cash flow hedge accounting which associates the results of the hedges with forecasted future expenses.  The current mark-to-market gain or loss is recorded in accumulated other comprehensive income and will be re-classified to operations as the forecasted expenses are incurred, typically within one year.  During 2013 and 2012, our cash flow hedges were highly effective and hedge ineffectiveness was not material. While we expect that our derivative instruments that have been designated as hedges will continue to meet the conditions for hedge accounting, if hedges do not qualify as highly effective or if we do not believe that forecasted transactions will occur, the changes in the fair value of the derivatives used as hedges will be reflected in earnings.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant, and equipment are stated at depreciated cost. Additions and improvement activities are capitalized. Maintenance and repairs are expensed as incurred. Depreciation and amortization is computed using the straight-line method based on their estimated useful lives, as follows:

	Estimated Useful Life
Buildings and building improvements	15-30 years
Telephone and computer equipment	3-5 years
Software	3 years
Furniture, fixtures, and miscellaneous equipment	5-7 years

We depreciate leasehold improvements associated with operating leases over the shorter of the expected useful life or remaining life of the lease.  Depreciation for assets obtained under a capital lease is included in depreciation expense.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

We periodically, on at least an annual basis, evaluate potential impairments of our long-lived assets.  In our annual evaluation or when we determine that the carrying value of a long-lived asset may not be recoverable, based upon the existence of one or more indicators of impairment, we evaluate the projected undiscounted cash flows related to the assets. If these cash flows are less than the carrying values of the assets, we measure the impairment based on the excess of the carrying value of the long-lived asset over the long-lived asset’s fair value.  Our projections contain assumptions pertaining to anticipated levels of utilization and revenue that may or may not be under contract but are based on our experience and/or projections received from our customers.

Goodwill and Intangible Assets, Goodwill, Policy

Goodwill

Goodwill is recorded at fair value and not amortized, but is reviewed for impairment at least annually or more frequently if impairment indicators arise. Our goodwill is allocated by reporting unit and is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, that the fair value of the reporting unit may be more likely than not less than carrying amount, or if significant changes to macro-economic factors related to the reporting unit have occurred that could materially impact fair value, a quantitative goodwill impairment test would be required. Additionally, we can elect to forgo the qualitative assessment and perform the quantitative test.

The first step of the quantitative test is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to have a potential impairment and the second step of the quantitative impairment test is not necessary. However, if the carrying amount of a reporting unit exceeds its fair value, the second step is performed to determine if goodwill is impaired and to measure the amount of impairment loss to recognize, if any. The second step compares the implied fair value of goodwill with the carrying amount of goodwill. If the implied fair value of goodwill exceeds the carrying amount, then goodwill is not considered impaired. However, if the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination (i.e., the fair value of the reporting unit is allocated to all the assets and liabilities, including any unrecognized intangible assets, as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was determined as the exit price a market participant would pay for the same business). We have elected to perform the annual impairment assessment for goodwill in the fourth quarter.

We completed the acquisitions of two companies during 2013 for which one has finalized purchase price accounting. No events or changes in circumstances have occurred since the closing of these acquisitions to indicate any impairment at December 31, 2013 to the carrying amount of the newly acquired goodwill; therefore, based on our qualitative assessment, it is not more likely than not an impairment has occurred.

Intangible Assets, Finite-Lived, Policy

Intangible Assets

We amortize all acquisition-related intangible assets that are subject to amortization based using the straight-line method over the estimated useful life based on economic benefit as follows:

	Estimated Useful Life
Developed technology	8 years
Customer base and customer relationships	3 years
Trade name	6 years
Noncompete agreement	2 years

We perform a review of intangible assets to determine if facts and circumstances indicate that the useful life is shorter than we had originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, we assess recoverability by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful life is shorter than originally estimated, we accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life.

For further discussion of identified intangible assets, refer to Note 3, "Goodwill and Intangible Assets."

Assets Held for Sale

Assets Held for Sale

We classify an asset as held for sale when the facts and circumstances meet the criteria for such classification, including the following (a) we have committed to a plan to sell the asset, (b) the asset is available for immediate sale, (c) we have initiated actions to complete the sale, (d) the sale is expected to be completed within one year, (e) the asset is being actively marketed at a price that is reasonable relative to its fair value and (f) the plan to sell is unlikely to be subject to significant changes or termination.  Assets held for sale are reported at the lower of cost or fair value less costs to sell.

Restructuring Charges

Restructuring Charges

On an ongoing basis, management assesses the profitability and utilization of our facilities and in some cases management has chosen to close facilities.  Severance payments that occur from reductions in workforce are in accordance with our postemployment policy and/or statutory requirements that are communicated to all employees upon hire date; therefore, severance liabilities are recognized when they are determined to be probable and estimable. Other liabilities for costs associated with an exit or disposal activity are recognized when the liability is incurred, instead of upon commitment to an exit plan. A significant assumption used in determining the amount of the estimated liability for closing a facility is the estimated liability for future lease payments on vacant facilities.  We determine our estimate of sublease payments based on our ability to successfully negotiate early termination agreements with landlords, a third-party broker or management’s assessment of our ability to sublease the facility based upon the market conditions in which the facility is located. If the assumptions regarding early termination and the timing and amounts of sublease payments prove to be inaccurate, we may be required to record additional losses, or conversely, a future gain.

Leases

Leases

Rent holidays, landlord/tenant incentives and escalations are included in some instances in the base price of our rent payments over the term of our operating leases. We recognize rent holidays and rent escalations on a straight-line basis over the lease term. The landlord/tenant incentives are recorded as deferred rent and amortized on a straight line basis over the lease term.

Assets held under capital leases are included in property, plant and equipment, net in our consolidated balance sheets and depreciated over the term of the lease. Rent payments under the leases are recognized as a reduction of the capital lease obligation and interest expense.

Deferred Gains on Sale and Leaseback Transactions

We amortize deferred gains on the sale and leaseback of properties under operating leases over the life of the lease. The amortization of these gains is recorded as a reduction to rent expense. The deferred gain is recorded in our consolidated balance sheet in current and other current liabilities.

Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability method.  Deferred income taxes reflect net effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. We are subject to foreign income taxes on our foreign operations. We are required to estimate our income taxes in each jurisdiction in which we operate. This process involves estimating our actual current tax exposure, together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes. The tax effects of these temporary differences are recorded as deferred tax assets or deferred tax liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period during which such rates are enacted.  We record a valuation allowance when it is more likely than not that we will not realize the net deferred tax assets in a certain jurisdiction.

We record tax benefits when they are more likely than not to be realized.  Our policy is to reflect penalties and interest as part of income tax expense as they become applicable. 

Stock-Based Compensation

Stock-Based Compensation

We recognize expense related to all share-based payments to employees, including grants of employee stock options, based on the grant-date fair values amortized straight-line over the period during which the employees are required to provide services in exchange for the equity instruments.  We include an estimate of forfeitures when calculating compensation expense.  We use the Black-Scholes method for valuing stock-based awards.  See Note 11, “Share-Based Compensation and Employee Benefit Plans,” for further information regarding the assumptions used to calculate share-based payment expense.

Recently Adopted and Issued Accounting Standards

Recently Adopted Accounting Standards

In July 2012, the FASB issued Accounting Standard Update 2012-02, Intangibles-Goodwill and Other: Testing Indefinite-Lived Intangible Assets for Impairment ("ASU 2012-02"). The intent of ASU 2012-02 is to simplify how registrants test indefinite-lived intangible asset for impairment and to improve consistency in impairment testing guidance among long-lived asset categories. ASU 2012-02 permits registrants to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with U.S. GAAP. An entity will have an option not to calculate annually the fair value of an indefinite-lived intangible asset if the entity determines that it is not more likely than not that the asset is impaired. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. We adopted this new guidance during 2013 and the adoption of the new guidance did not impact our financial position, results of operations, comprehensive income or cash flows, other than related disclosures.

Recently Issued Accounting Standards

In July 2013, the FASB issued ASU 2013-11, Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, an amendment to FASB Accounting Standards Codification (“ASC”) Topic 740, Income Taxes (“FASB ASC Topic 740”). This update clarifies that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction or the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This ASU is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this ASU is not expected to have a material impact on our financial statements.

In March 2013, the FASB issued ASU 2013-05 Topic 830 - Foreign Currency Matters (“ASU 2013-05”). ASU 2013-05 resolves the diversity in practice about whether Subtopic 810-10, Consolidation-Overall, or Subtopic 830-30, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity. In addition, the amendments in this ASU resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. ASU 2013-05 is effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The adoption of this ASU is not expected to have a material impact on our financial statements.

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Foreign Currency Translation Adjustment - Beginning balance	$ 2,798	$ 2,385
Unrealized Gain (Loss) on Cash Flow Hedging Instruments - Beginning balance	(269)	(883)
Total - Beginning balance	2,529	1,502
Foreign currency translation	(898)	670
Reclassification to operations	1,950	(758)
Unrealized gains (losses)	(4,590)	1,749
Foreign Currency Translation Adjustment - Tax (provision) benefit		(257)
Unrealized Gain (Loss) on Cash Flow Hedging Instruments - Tax (provision) benefit		(377)
Total - Tax (provision) benefit		(634)
Foreign Currency Translation Adjustment - Ending balance	1,900	2,798
Unrealized Gain (Loss) on Cash Flow Hedging Instruments - Ending balance	(2,909)	(269)
Total - Ending balance	(1,009)	2,529
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Cost of services	206,932	175,095
Selling, general and administrative expenses	28,828	29,645
Foreign Exchange Contract [Member] | Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Cost of services	1,828	(758)
Selling, general and administrative expenses	$ 122	$ 0

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

StarTek, Inc. ("STARTEK") is a comprehensive contact center and business process outsourcing service company. For over 25 years, we have partnered with our clients to effectively handle their customers throughout the customer life cycle. We have provided customer experience management solutions that solve strategic business challenges so that businesses can effectively manage customer relationships across all contact points. Headquartered in Greenwood Village, Colorado, we operate facilities in the U.S., Canada, the Philippines, Costa Rica and Honduras.  We operate within three business segments:  Domestic, Asia Pacific and Latin America.  Refer to Note 16, "Segment Information," for further information.

We are considered a "smaller reporting company" under the applicable disclosure rules of the Securities and Exchange Commission and accordingly, have elected to provide our audited statements of operations and comprehensive loss, cash flows and changes in stockholders' equity for two, rather than three, years.

Consolidation

Our consolidated financial statements include the accounts of all wholly-owned subsidiaries after elimination of significant intercompany balances and transactions.

Use of Estimates

The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes.  Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period they are determined to be necessary.

Concentration of Credit Risk

We are exposed to credit risk in the normal course of business, primarily related to accounts receivable and derivative instruments.  Historically, the losses related to credit risk have been immaterial.  We regularly monitor credit risk to mitigate the possibility of current and future exposures resulting in a loss.  We evaluate the creditworthiness of clients prior to entering into an agreement to provide services and on an on-going basis as part of the processes of revenue recognition and accounts receivable.  We do not believe we are exposed to more than a nominal amount of credit risk in our derivative hedging activities, as the counter parties are established, well-capitalized financial institutions.

Foreign Currency Translation

The assets and liabilities of our foreign operations that are recorded in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Revenues and expenses are translated at the weighted-average exchange rate during the reporting period. Resulting translation adjustments, net of applicable deferred income taxes, are recorded in accumulated other comprehensive income.  Foreign currency transaction gains and losses are included in the accompanying consolidated statements of operations and comprehensive loss. Such gains and losses were not material for any period presented.

Revenue Recognition

Business Process Outsourcing Services —We invoice our clients monthly in arrears and recognize revenues for such services when completed. Substantially all of our contractual arrangements are based either on a production rate, meaning that we recognize revenue based on the billable hours or minutes of each call center agent, or on a rate per transaction basis.  These rates could be based on the number of paid hours the agent works, the number of minutes the agent is available to answer calls, or the number of minutes the agent is actually handling calls for the client, depending on the client contract.  Production rates vary by client contract and can fluctuate based on our performance against certain pre-determined criteria related to quality and performance. Additionally, some clients are contractually entitled to penalties when we are out of compliance with certain quality and/or performance obligations defined in the client contract. Such penalties are recorded as a reduction to revenue as incurred based on a measurement of the appropriate penalty under the terms of the client contract.  Likewise, some client contracts stipulate that we are entitled to bonuses should we meet or exceed these predetermined quality and/or performance obligations.  These bonuses are recognized as incremental revenue in the period in which they are earned.

As a general rule, our contracts do not include multiple elements.  We provide initial training to customer service representatives upon commencement of new contracts and recognize revenues for such training as the services are provided based upon the production rate (i.e., billable hours and rates related to the training services as stipulated in our contractual arrangements). Accordingly, the corresponding training costs, consisting primarily of labor and related expenses, are recognized as incurred.

Allowance for Doubtful Accounts

An allowance for doubtful accounts is provided for known and estimated potential losses arising from sales to customers based on a periodic review of these accounts.  There was no allowance for doubtful accounts as of December 31, 2013 or 2012.

Fair Value of Financial Instruments

The carrying value of our cash and cash equivalents, accounts receivable, notes receivable, accounts payable and line of credit approximate fair value because of their short-term nature.

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.

Accounting guidance for the measurement of fair value establishes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The levels of the fair value hierarchy are described below:

Level 1 Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3Valuation is generated from model-based techniques that use significant assumptions not observable in the market.  These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability.  Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Refer to Note 8, “Fair Value Measurements,” for additional information on how we determine fair value for our assets and liabilities.

Cash and Cash Equivalents

We consider cash equivalents to be short-term, highly liquid investments readily convertible to known amounts of cash and so near their maturity at purchase that they present insignificant risk of changes in value because of changes in interest rates.

Restricted cash of $456 included in other current assets at December 31, 2013 represents escrowed funds related to the sales leaseback of our Greeley North property.

Derivative Instruments and Hedging Activities

Our derivative instruments consist of foreign currency forward contracts and are recorded as either an asset or liability measured at its fair value, with changes in the fair value of qualifying hedges recorded in other comprehensive income.  Changes in a derivative’s fair value are recognized currently in the statements of operations unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative’s gains and losses to offset the related results of the hedged item and requires that we must formally document, designate and assess the effectiveness of transactions that receive hedge accounting treatment.

We generally are able to apply cash flow hedge accounting which associates the results of the hedges with forecasted future expenses.  The current mark-to-market gain or loss is recorded in accumulated other comprehensive income and will be re-classified to operations as the forecasted expenses are incurred, typically within one year.  During 2013 and 2012, our cash flow hedges were highly effective and hedge ineffectiveness was not material. While we expect that our derivative instruments that have been designated as hedges will continue to meet the conditions for hedge accounting, if hedges do not qualify as highly effective or if we do not believe that forecasted transactions will occur, the changes in the fair value of the derivatives used as hedges will be reflected in earnings.

Property, Plant and Equipment

Property, plant, and equipment are stated at depreciated cost. Additions and improvement activities are capitalized. Maintenance and repairs are expensed as incurred. Depreciation and amortization is computed using the straight-line method based on their estimated useful lives, as follows:

	Estimated Useful Life
Buildings and building improvements	15-30 years
Telephone and computer equipment	3-5 years
Software	3 years
Furniture, fixtures, and miscellaneous equipment	5-7 years

We depreciate leasehold improvements associated with operating leases over the shorter of the expected useful life or remaining life of the lease.  Depreciation for assets obtained under a capital lease is included in depreciation expense.

Impairment of Long-Lived Assets

We periodically, on at least an annual basis, evaluate potential impairments of our long-lived assets.  In our annual evaluation or when we determine that the carrying value of a long-lived asset may not be recoverable, based upon the existence of one or more indicators of impairment, we evaluate the projected undiscounted cash flows related to the assets. If these cash flows are less than the carrying values of the assets, we measure the impairment based on the excess of the carrying value of the long-lived asset over the long-lived asset’s fair value.  Our projections contain assumptions pertaining to anticipated levels of utilization and revenue that may or may not be under contract but are based on our experience and/or projections received from our customers.

Goodwill

Goodwill is recorded at fair value and not amortized, but is reviewed for impairment at least annually or more frequently if impairment indicators arise. Our goodwill is allocated by reporting unit and is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, that the fair value of the reporting unit may be more likely than not less than carrying amount, or if significant changes to macro-economic factors related to the reporting unit have occurred that could materially impact fair value, a quantitative goodwill impairment test would be required. Additionally, we can elect to forgo the qualitative assessment and perform the quantitative test.

The first step of the quantitative test is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to have a potential impairment and the second step of the quantitative impairment test is not necessary. However, if the carrying amount of a reporting unit exceeds its fair value, the second step is performed to determine if goodwill is impaired and to measure the amount of impairment loss to recognize, if any. The second step compares the implied fair value of goodwill with the carrying amount of goodwill. If the implied fair value of goodwill exceeds the carrying amount, then goodwill is not considered impaired. However, if the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination (i.e., the fair value of the reporting unit is allocated to all the assets and liabilities, including any unrecognized intangible assets, as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was determined as the exit price a market participant would pay for the same business). We have elected to perform the annual impairment assessment for goodwill in the fourth quarter.

We completed the acquisitions of two companies during 2013 for which one has finalized purchase price accounting. No events or changes in circumstances have occurred since the closing of these acquisitions to indicate any impairment at December 31, 2013 to the carrying amount of the newly acquired goodwill; therefore, based on our qualitative assessment, it is not more likely than not an impairment has occurred.

Intangible Assets

We amortize all acquisition-related intangible assets that are subject to amortization based using the straight-line method over the estimated useful life based on economic benefit as follows:

	Estimated Useful Life
Developed technology	8 years
Customer base and customer relationships	3 years
Trade name	6 years
Noncompete agreement	2 years

We perform a review of intangible assets to determine if facts and circumstances indicate that the useful life is shorter than we had originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, we assess recoverability by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful life is shorter than originally estimated, we accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life.

For further discussion of identified intangible assets, refer to Note 3, "Goodwill and Intangible Assets."

Assets Held for Sale

We classify an asset as held for sale when the facts and circumstances meet the criteria for such classification, including the following (a) we have committed to a plan to sell the asset, (b) the asset is available for immediate sale, (c) we have initiated actions to complete the sale, (d) the sale is expected to be completed within one year, (e) the asset is being actively marketed at a price that is reasonable relative to its fair value and (f) the plan to sell is unlikely to be subject to significant changes or termination.  Assets held for sale are reported at the lower of cost or fair value less costs to sell.

Restructuring Charges

On an ongoing basis, management assesses the profitability and utilization of our facilities and in some cases management has chosen to close facilities.  Severance payments that occur from reductions in workforce are in accordance with our postemployment policy and/or statutory requirements that are communicated to all employees upon hire date; therefore, severance liabilities are recognized when they are determined to be probable and estimable. Other liabilities for costs associated with an exit or disposal activity are recognized when the liability is incurred, instead of upon commitment to an exit plan. A significant assumption used in determining the amount of the estimated liability for closing a facility is the estimated liability for future lease payments on vacant facilities.  We determine our estimate of sublease payments based on our ability to successfully negotiate early termination agreements with landlords, a third-party broker or management’s assessment of our ability to sublease the facility based upon the market conditions in which the facility is located. If the assumptions regarding early termination and the timing and amounts of sublease payments prove to be inaccurate, we may be required to record additional losses, or conversely, a future gain.

Leases

Rent holidays, landlord/tenant incentives and escalations are included in some instances in the base price of our rent payments over the term of our operating leases. We recognize rent holidays and rent escalations on a straight-line basis over the lease term. The landlord/tenant incentives are recorded as deferred rent and amortized on a straight line basis over the lease term.

Assets held under capital leases are included in property, plant and equipment, net in our consolidated balance sheets and depreciated over the term of the lease. Rent payments under the leases are recognized as a reduction of the capital lease obligation and interest expense.

Deferred Gains on Sale and Leaseback Transactions

We amortize deferred gains on the sale and leaseback of properties under operating leases over the life of the lease. The amortization of these gains is recorded as a reduction to rent expense. The deferred gain is recorded in our consolidated balance sheet in current and other current liabilities.

Income Taxes

Income taxes are accounted for under the asset and liability method.  Deferred income taxes reflect net effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. We are subject to foreign income taxes on our foreign operations. We are required to estimate our income taxes in each jurisdiction in which we operate. This process involves estimating our actual current tax exposure, together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes. The tax effects of these temporary differences are recorded as deferred tax assets or deferred tax liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period during which such rates are enacted.  We record a valuation allowance when it is more likely than not that we will not realize the net deferred tax assets in a certain jurisdiction.

We record tax benefits when they are more likely than not to be realized.  Our policy is to reflect penalties and interest as part of income tax expense as they become applicable. 

Stock-Based Compensation

We recognize expense related to all share-based payments to employees, including grants of employee stock options, based on the grant-date fair values amortized straight-line over the period during which the employees are required to provide services in exchange for the equity instruments.  We include an estimate of forfeitures when calculating compensation expense.  We use the Black-Scholes method for valuing stock-based awards.  See Note 11, “Share-Based Compensation and Employee Benefit Plans,” for further information regarding the assumptions used to calculate share-based payment expense.

Recently Adopted Accounting Standards

In July 2012, the FASB issued Accounting Standard Update 2012-02, Intangibles-Goodwill and Other: Testing Indefinite-Lived Intangible Assets for Impairment ("ASU 2012-02"). The intent of ASU 2012-02 is to simplify how registrants test indefinite-lived intangible asset for impairment and to improve consistency in impairment testing guidance among long-lived asset categories. ASU 2012-02 permits registrants to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with U.S. GAAP. An entity will have an option not to calculate annually the fair value of an indefinite-lived intangible asset if the entity determines that it is not more likely than not that the asset is impaired. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. We adopted this new guidance during 2013 and the adoption of the new guidance did not impact our financial position, results of operations, comprehensive income or cash flows, other than related disclosures.

Recently Issued Accounting Standards

In July 2013, the FASB issued ASU 2013-11, Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, an amendment to FASB Accounting Standards Codification (“ASC”) Topic 740, Income Taxes (“FASB ASC Topic 740”). This update clarifies that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction or the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This ASU is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this ASU is not expected to have a material impact on our financial statements.

In March 2013, the FASB issued ASU 2013-05 Topic 830 - Foreign Currency Matters (“ASU 2013-05”). ASU 2013-05 resolves the diversity in practice about whether Subtopic 810-10, Consolidation-Overall, or Subtopic 830-30, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity. In addition, the amendments in this ASU resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. ASU 2013-05 is effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The adoption of this ASU is not expected to have a material impact on our financial statements.

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 10,989	$ 9,183
Trade accounts receivable, net	43,708	41,070
Deferred income tax assets	157	288
Derivative asset	0	733
Prepaid expenses	2,939	2,045
Assets held for sale	0	4,969
Current portion of note receivable	645	660
Other current assets	1,626	1,332
Total current assets	60,064	60,280
Property, plant and equipment, net	22,210	26,310
Long-term deferred income tax assets	2,151	3,930
Long-term note receivable, net of current portion	0	602
Intangible assets, net	1,164	0
Goodwill	1,637	0
Other long-term assets	2,491	2,010
Total assets	89,717	93,132
Current liabilities:
Accounts payable	8,477	7,174
Accrued liabilities:
Accrued payroll	9,196	7,035
Accrued compensated absences	2,469	2,591
Other accrued liabilities	1,901	2,150
Line of credit	1,000	0
Derivative liability	2,160	253
Deferred revenue	486	638
Deferred income tax liabilities	766	2,390
Other current liabilities	2,043	1,648
Total current liabilities	28,498	23,879
Deferred rent	1,445	2,202
Other liabilities	1,600	772
Total liabilities	31,543	26,853
Commitments and contingencies
Stockholders' equity:
Common stock, 32,000,000 non-convertible shares, $0.01 par value, authorized; 15,368,356 and 15,298,947 shares issued and outstanding at December 31, 2013 and 2012, respectively	154	153
Additional paid-in capital	74,273	72,435
Accumulated other comprehensive (loss) income	(1,009)	2,529
Accumulated deficit	(15,244)	(8,838)
Total stockholders' equity	58,174	66,279
Total liabilities and stockholders' equity	$ 89,717	$ 93,132

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SHARE-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

SHARE-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS

SHARE-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS

We have a 2008 Equity Incentive Plan (the “Plan”), which reserves 900,000 shares of common stock for issuance pursuant to the terms of the Plan plus 274,298 shares that remained available for future issuance under prior plans on the effective date of the Plan, which was May 5, 2008. As of December 31, 2013, there were 129,961 shares available for future grant under the Plan. Our plan is administered by the Compensation Committee (the "Committee") of the Board of Directors. The types of awards that may be granted under the Plan include stock options, stock appreciation rights, restricted stock, restricted stock units, performance units or other stock-based awards.  The terms of the awards granted under the Plan will expire no later than ten years from the grant date.  The Committee determines the vesting conditions of awards; however, subject to certain exceptions, an award that is not subject to the satisfaction of performance measures may not fully vest or become fully exercisable earlier than three years from the grant date, and the performance period for an award subject to performance measures may not be shorter than one year.

At the beginning of each quarter, members of the board of directors, at their option, may elect to receive as compensation 1) stock options to purchase shares of common stock with a fair value equivalent of $22,500 (calculated using the Black-Scholes pricing model), 2) shares of common stock with a grant date fair value of $22,500, 3) deferred stock units with a fair value equivalent of $22,500 (calculated using the Black-Scholes pricing model), with ownership of the common stock vesting immediately or over a period determined by the Committee and stated in the award or 4) any combination of options and common stock. Upon the date of grant, the members of the board of directors are immediately vested in the stock options or common stock.

Stock Options

A summary of stock option activity under the Plan as of December 31, 2013, and changes during the year ended December 31, 2013 are presented below: 

	Shares		Weighted Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)
Outstanding as of January 1, 2013	1,789,127		$	4.00
Granted	762,763		4.82
Exercised	(38,577	)	3.64
Forfeited	(208,230	)	4.64
Expired	(6,000	)	25.95
Outstanding as of December 31, 2013	2,299,083		$	4.16	8.01
Vested and exercisable as of December 31, 2013	1,167,772		$	4.45	7.36
Vested and expected to vest as of December 31, 2013	2,089,628		$	4.17	8.05

The weighted-average grant date fair value of options granted during the years ended December 31, 2013 and 2012 was $3.44 and $1.24, respectively.  The total fair value of shares vested during the years ended December 31, 2013 and 2012 was $965 and $1,153, respectively.

The assumptions used to determine the value of our stock-based awards under the Black-Scholes method are summarized below:

	2013	2012
Risk-free interest rate	0.36% - 2.7%	0.37% - 1.6%
Dividend yield	—%	—%
Expected volatility	56.5% - 67.6%	56.8% - 77.9%
Average expected life in years	7.0	5.0

The risk-free interest rate is based on the U.S. Treasury strip yield in effect at the time of grant with a term equal to the expected term of the stock option granted.  Average expected life and volatilities are based on historical experience, which we believe will be indicative of future experience.

Restricted Stock Awards and Deferred Stock Units

A summary of restricted stock awards and deferred stock units activity under the Plan as of December 31, 2013, and changes during the year then ended are presented below: 

	Number of Restricted Shares and Units		Weighted-Average Grant Date Fair Value
Nonvested balance as of January 1, 2013	13,656		$	4.08
Vested	(9,255	)	4.41
Forfeited	(1,067	)	6.58
Nonvested balance as of December 31, 2013	3,334		$	2.35

The total fair value of restricted stock awards and deferred stock units vested during the years ended December 31, 2013 and 2012 was $41 and $251, respectively.

Share-based Compensation Expense

The compensation expense that has been charged against income for stock option awards, restricted stock and deferred stock units for December 31, 2013 and 2012 was $1,607, and $1,275, respectively, and is included in selling, general and administrative expense.  As of December 31, 2013, there was $1,940 of total unrecognized compensation expense related to nonvested stock options, which is expected to be recognized over a weighted-average period of 2.1 years.  As of December 31, 2013, there was $5 of total unrecognized compensation expense related to nonvested restricted stock awards, which is expected to be recognized over a weighted-average period of 0.8 years.

Employee Stock Purchase Plan

Under the terms of our employee stock purchase plan ("ESPP"), eligible employees may authorize payroll deductions up to 10% of their base pay to purchase shares of our common stock at a price equal to 85% of the lower of the closing price at the beginning or end of each quarterly stock purchase period.  On May 7, 2012, an additional 100,000 shares were authorized for issuance under the ESPP; therefore, a total of 400,000 shares were authorized under the ESPP and 107,475 shares were available for issuance as of December 31, 2013.

During 2013 and 2012, 24,404 and 50,317 shares were purchased under this plan at an average price of $3.97 and $2.05, respectively.  Total expense recognized related to the ESPP during the years ended December 31, 2013 and 2012 was $26 and $35, respectively.  The assumptions used to value the shares under the ESPP using the Black-Scholes method were as follows:

	2013	2012
Risk-free interest rate	0.02% - 0.07%	0.02% - 0.10%
Dividend yield	—%	—%
Expected volatility	24.2% - 64.7%	48.9% - 93.1%
Expected life in years	3 months	3 months

The weighted average grant date fair value of these shares was $1.07, and $0.70 per share during the years ended December 31, 2013 and 2012, respectively.

401(k) Plan

We have a safe harbor 401(k) plan that allows participation by all eligible employees as of the first day of the quarter following their hire date.  Eligible employees may contribute up to the maximum limit determined by the Internal Revenue Code. Participants receive a matching contribution after completing one year of service and the minimum number of hours required under the plan. We match 100% of the participant’s contribution for the first 3% and 50% of the participant’s contribution for the next 2%.  Company matching contributions to the 401(k) plan totaled $288 and $320 for the years ended December 31, 2013 and 2012, respectively.

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DOCUMENT AND ENTITY INFORMATION (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Mar. 03, 2014	Jun. 30, 2013
Document and Entity Information Abstract
Entity Registrant Name	StarTek, Inc.
Entity Central Index Key	0001031029
Document Type	10-K
Document Period End Date	Dec. 31, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 57.5
Entity Common Stock, Shares Outstanding		15,376,611
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY

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INTEREST AND OTHER INCOME (EXPENSE), NET

12 Months Ended

Dec. 31, 2013

Other Income and Expenses [Abstract]

INTEREST AND OTHER (INCOME) EXPENSE, NET

INTEREST AND OTHER INCOME (EXPENSE), NET

Interest and other income (expense), net for the years ended December 31, 2013 and 2012 were composed of the following:

	Year Ended December 31,
	2013			2012
Interest income	$	88		$	86
Interest (expense)	(114		)	(78		)
Gain (loss) on disposal of assets	(1,549		)	45
Other income (expense)	(4		)	289
Interest and other income (expense), net	$	(1,579	)	$	342

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CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $)	Dec. 31, 2013	Dec. 31, 2012
Statement of Financial Position [Abstract]
Common stock, par value (in usd per share)	$ 0.01	$ 0.01
Common stock, non-convertible shares authorized	32,000,000	32,000,000
Common stock, shares issued	15,368,356	15,298,947
Common stock, shares outstanding	15,368,356	15,298,947

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PRINCIPAL CLIENTS

12 Months Ended

Dec. 31, 2013

Risks and Uncertainties [Abstract]

PRINCIPAL CLIENTS

PRINCIPAL CLIENTS

The following table represents revenue concentration of our principal clients:

	Year Ended December 31,
	2013			2012
	Revenue		Percentage	Revenue		Percentage
AT&T Services, Inc. and AT&T Mobility, LLC, subsidiaries of AT&T, Inc. (1)	$	58,395	25.3%	$	63,904	32.3%
T-Mobile USA, Inc., a subsidiary of Deutsche Telekom (2)	$	64,095	27.7%	$	55,916	28.2%
Comcast Cable Communications Management, LLC, subsidiary of Comcast Corporation (2)	$	45,887	19.8%	*		*

* less than 10%

(1) Revenue from this customer is generated through our Domestic and Asia Pacific segments.

(2) Revenue from this customer is generated through our Domestic, Asia Pacific and Latin America segments.

Our work for AT&T is covered by several contracts for a variety of different lines of AT&T business.  These contracts expire between 2014 and 2015.  Our initial master services agreement covering all AT&T work had been extended through January 31, 2013.   On January 25, 2013, we entered into a new master services agreement with AT&T Services, Inc., which expires December 31, 2015 and may be extended upon mutual agreement, but may be terminated by AT&T with written notice.

On July 28, 2011, we entered into a new master services agreement with T-Mobile effective July 1, 2011, which covers all services that we provide to T-Mobile. The new master services agreement with T-Mobile replaces the previous master services agreement dated October 1, 2007, has an initial term of five years and will automatically renew for additional one-year periods thereafter, but may be terminated by T-Mobile upon 90 days written notice.

On January 4, 2014, we signed a new master services agreement with Comcast, effective June 22, 2013, which provides for the same services as the original master services agreement that was signed in 2011 and would have expired in 2014. The new master services agreement covers all services that we provide to Comcast, has an initial term of one year and will automatically renew for additional one-year periods unless either party gives notice of cancellation. Comcast may terminate the agreement upon 90 days written notice.

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NET LOSS PER SHARE

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

NET LOSS PER SHARE

NET LOSS PER SHARE

Basic net loss per common share is computed on the basis of our weighted average number of common shares outstanding.  Diluted earnings per share is computed on the basis of our weighted average number of common shares outstanding plus the effect of dilutive stock options and non-vested restricted stock using the treasury stock method.  Securities totaling 2,302,417 and 1,803,199 for the years ended December 31, 2013 and 2012, respectively, have been excluded from loss per share because their effect would have been anti-dilutive.

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2013

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

In February 2014, we announced the closure of our Jonesboro, Arkansas site. Operations will cease in the second quarter of 2014 when the business transitions to another facility. The lease will terminate in June 2015.

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INCOME TAXES

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The domestic and foreign source component of income (loss) from continuing operations before income taxes was:

	Year Ended December 31,
	2013			2012
U.S.	$	(15,452	)	$	(21,244	)
Foreign	9,276			10,872
Total	$	(6,176	)	$	(10,372	)

Significant components of the provision for income taxes from continuing operations were:

	Year Ended December 31,
	2013			2012
Current:
Federal	$	—		$	(548	)
State	—			(77		)
Foreign	(29		)	499
Total current (benefit)	$	(29	)	$	(126	)
Deferred:
Federal	$	25		$	(10	)
State	2			(1		)
Foreign	232			253
Total deferred expense	$	259		$	242
Income tax expense	$	230		$	116

GAAP requires all items be considered, including items recorded in other comprehensive income, in determining the amount of tax benefit that results from a loss from continuing operations that should be allocated to continuing operations.

Significant components of deferred tax assets and deferred tax liabilities included in the accompanying consolidated balance sheets as of December 31, 2013 and 2012 were:

	Year Ended December 31,
	2013			2012
Current deferred tax assets (liabilities):
Accrued restructuring costs	$	(41	)	$	218
Other accrued liabilities	15			90
Derivative instruments	816			(176		)
Prepaid expenses	(209		)	(480		)
Cumulative translation adjustment	(1,397		)	(1,760		)
Other	373			438
Total current net deferred tax liabilities	$	(443	)	$	(1,670	)
Long-term deferred tax assets (liabilities):
Fixed assets	$	2,969		$	3,385
Accrued stock compensation	3,085			2,556
Accrued restructuring costs	47			89
Foreign tax credit carryforward	—			525
Work opportunity credit carryforward	4,988			4,988
Operating loss carryforward	10,653			8,443
Intangibles and goodwill	22			—
Other	221			114
Total long-term net deferred tax assets	$	21,985		$	20,100
Subtotal	$	21,542		$	18,430
Valuation allowance	(20,000		)	(16,602		)
Total net deferred tax asset	$	1,542		$	1,828

We consider all available evidence to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become realizable.  Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), and projected taxable income in assessing the realizability of deferred tax assets.  In making such judgments, significant weight is given to evidence that can be objectively verified.  In order to fully realize the U.S. deferred tax assets, we will need to generate sufficient taxable income in future periods before the expiration of the deferred tax assets governed by the tax code. 

We do not provide for deferred taxes on the excess of the financial reporting basis over the tax basis in our investments in foreign subsidiaries that are essentially permanent in duration. In general, it is our practice and intention to reinvest the earnings of our foreign subsidiaries in those operations. Generally, the earnings of our foreign subsidiaries become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. Exceptions may be made on a year-by-year basis to repatriate current year earnings of certain foreign subsidiaries based on cash needs in the U.S. As of December 31, 2013, we have not provided for U.S. income taxes on undistributed earnings of our foreign subsidiaries, since such earnings are considered indefinitely reinvested.

At December 31, 2013 and 2012, U.S. income and foreign withholding taxes have not been provided for on approximately $1,300 and $244, respectively, of unremitted earnings of subsidiaries operating outside of the U.S. These earnings are estimated to represent the excess of the financial reporting over the tax basis in our investments in those subsidiaries and would become subject to U.S. income tax if they were remitted to the U.S. If we had not intended to utilize the undistributed earnings in our foreign operations for an indefinite period of time, the deferred tax liability as of December 31, 2013 would have been approximately $455.

Differences between U.S. federal statutory income tax rates and our effective tax rates for the years ended December 31, 2013 and 2012 for continuing operations were: 

	Year Ended December 31,
	2013		2012
U.S. statutory tax rate	35.0	%	35.0	%
Effect of state taxes (net of federal benefit)	-1.0	%	5.8	%
Effect of change in Canadian tax rate	1.5	%	-0.3	%
Other permanent differences (including meals and entertainment)	1.8	%	-0.4	%
Stock based compensation	-0.9	%	-0.8	%
Rate differential on foreign earnings	48.5	%	29.5	%
Foreign income taxed in the U.S.	-95.0	%	-43.2	%
Uncertain tax positions	19.5	%	-45.4	%
Unremitted foreign earnings of subsidiary	27.7	%	-16.5	%
Tax expense allocation to other comprehensive income	—	%	6.1	%
Valuation allowance	-33.5	%	28.0	%
Expiration of foreign tax credit carryforward	-8.5	%	—	%
Other, net	1.1	%	1.1	%
Total	-3.8	%	-1.1	%

As of December 31, 2013, we had gross federal net operating loss carry forwards of approximately $34,560 expiring beginning in 2030 and gross state net operating loss carry forwards of approximately $60,435 expiring beginning in 2014.

We have been granted “Tax Holidays” as an incentive to attract foreign investment by the governments of the Philippines, Costa Rica and Honduras. Generally, a Tax Holiday is an agreement between us and a foreign government under which we receive certain tax benefits in that country, such as exemption from taxation on profits derived from export-related activities. In the Philippines, we had been granted approval for a Tax Holiday, whereby we had an exemption from income tax until late 2012 after which time the tax rate will be 5%; however, we have applied for an extension and are awaiting approval.  In Costa Rica, we have been granted approval for an exemption equal to 100% of income tax through 2018, and for 50% of income tax for the four years thereafter.  In Honduras, we have been granted approval for an indefinite exemption from income taxes.  The exemption could be lifted at any time if the Honduran government approves legislation to appeal the exemption.  The aggregate reduction in income tax expense for the years ended December 31, 2013 and 2012 was $2,620 and $2,383, respectively, which had a favorable impact on net loss of $0.17 per share and $0.16 per share, respectively.

Under accounting standards for uncertainty in income taxes (ASC 740-10), a company recognizes a tax benefit in the financial statements for an uncertain tax position only if management’s assessment is that the position is “more likely than not” (i.e., a likelihood greater than 50 percent) to be allowed by the tax jurisdiction based solely on the technical merits of the position. The term “tax position” in the accounting standards for income taxes refers to a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods.

The following table indicates the changes to our unrecognized tax benefits for the years ended December 31, 2013 and 2012. The term “unrecognized tax benefits” in the accounting standards for income taxes refers to the differences between a tax position taken or expected to be taken in a tax return and the benefit measured and recognized in the financial statements. If recognized, all of these benefits would impact our income tax expense, before consideration of any related valuation allowance.

	Year Ended December 31,
	2013			2012
Unrecognized, January 1,	$	4,705		$	—
Additions based on tax positions taken in current year	1,090			4,705
Reductions based on tax positions taken in prior year	(2,293		)	—
Unrecognized, December 31,	$	3,502		$	4,705

We file numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and in many state jurisdictions, as well as in Canada, the Philippines, Costa Rica and Honduras.  Our U.S. federal returns and most state returns for tax years 2008 and forward are subject to examination.  Canadian returns for tax years 2007 and forward are subject to examination.  Our returns since our commencement of operations in the Philippines in 2008, Costa Rica in 2010 and Honduras in 2011 are subject to examination.

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PROPERTY, PLANT & EQUIPMENT

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT & EQUIPMENT

PROPERTY, PLANT & EQUIPMENT

 Our property, plant and equipment as of December 31, 2013 and 2012, consisted of the following, by asset class:

	2013			2012
Land	$	70		$	272
Buildings and improvements	26,264			25,824
Telephone and computer equipment	40,414			42,917
Software	37,192			39,948
Furniture, fixtures, and miscellaneous equipment	16,952			19,664
Construction in progress	1,222			2,603
	122,114			131,228
Less accumulated depreciation	(99,904		)	(104,918		)
Total property, plant and equipment, net	$	22,210		$	26,310

In December 2013, we completed a sale and sale leaseback transaction involving land, building and related building improvements at our Greeley, Colorado properties. Sales proceeds, net of direct costs of the transaction, totaled approximately $4,731. Our Greeley North property was sold in a sale leaseback transaction and is currently used for operating a call center and our Greeley West property was sold, which had been held for sale since 2011.

The Greeley North property transaction qualified for sale-leaseback accounting treatment under the provisions of ASC Topic 840-40, Sale-Leaseback Transactions. We evaluated the lease at inception and accounted for it as a capital lease by recording the revalued assets to building and capital lease obligation equal to the fair market value of approximately $1,413. We also recognized a loss of approximately $475 on the sold property, which was measured as the difference between the net sales proceeds, as allocated based on the relative fair values, and the net book value of the sold assets. The loss is recorded in our consolidated statement of operations and comprehensive loss in interest and other income (expense), net. The lease term is seven years with an option to extend.

The sale of the Greeley West property resulted in a loss of approximately $106, which is recorded in our consolidated statement of operations and comprehensive loss in interest and (income) expense, net.

In October 2012, we completed a sale leaseback transaction involving land, building and related building improvements at our Kingston, Ontario property. Sales proceeds, net of direct costs of the transaction, totaled approximately $3,884.

The transaction qualified for sale-leaseback accounting treatment under the provisions of ASC Topic 840-40, Sale-Leaseback Transactions, and met the criteria for operating lease classification. As a result, the sold property was removed from our consolidated balance sheet and the gain was measured as the difference between the net sales proceeds, as allocated based on the relative fair values, and the net book value of the sold assets. The resulting gain of approximately $840 is recorded in our consolidated balance sheet in other current liabilities and other liabilities and will be amortized to rent expense over the lease term, which is three years.

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SHARE-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS (ESPP, Valuation Assumptions) (Details) (Employee Stock Purchase Plan [Member])	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Valuation Assumptions [Line Items]
Dividend yield	0.00%	0.00%
Expected life in years	3 months	3 months
Minimum [Member]
Valuation Assumptions [Line Items]
Risk-free interest rate	0.02%	0.02%
Expected volatility	24.20%	48.90%
Maximum [Member]
Valuation Assumptions [Line Items]
Risk-free interest rate	0.07%	0.10%
Expected volatility	64.70%	93.10%

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DERIVATIVE INSTRUMENTS

12 Months Ended

Dec. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

We use derivatives to partially offset our business exposure to foreign currency exchange risk. We enter into foreign currency exchange contracts to hedge our anticipated operating commitments that are denominated in foreign currencies.  The contracts cover periods commensurate with expected exposure, generally three to nine months, and are principally unsecured foreign exchange contracts.  The market risk exposure is essentially limited to risk related to currency rate movements.  We operate in Canada, the Philippines, Costa Rica and Honduras.  The functional currencies in Canada and the Philippines are the Canadian dollar and the Philippine peso, respectively, which are used to pay labor and other operating costs in those countries. However, our client contracts generate revenues that are paid to us in U.S. dollars.  In Costa Rica and Honduras, our functional currency is the U.S. dollar and the majority of our costs are denominated in U.S. dollars.

During the years ended December 31, 2013 and 2012, we entered into Canadian dollar forward contracts for a notional amount of 10,860 and 18,640 Canadian dollars, respectively, to hedge our foreign currency risk with respect to labor costs in Canada.  During the years ended December 31, 2013 and 2012, we entered into Philippine peso non-deliverable forward contracts for a notional amount of 2,515,110 and 3,013,540 Philippine pesos, respectively, to hedge our foreign currency risk with respect to labor costs in the Philippines.  As of December 31, 2013, we have not entered into any arrangements to hedge our exposure to fluctuations in the Costa Rican colon or the Honduran lempira relative to the U.S. dollar.

The following table shows the notional principal of our derivative instruments as of December 31, 2013:

	Currency	Notional Principal
Instruments qualifying as accounting hedges:
Foreign exchange contracts	Canadian dollar	10,860
Foreign exchange contracts	Philippine peso	1,511,910

The above Canadian dollar and Philippine peso foreign exchange contracts are to be delivered periodically through December 2014 at a purchase price of approximately $10,448 and $35,948, respectively, and as such we expect unrealized gains and losses reported in accumulated other comprehensive income will be reclassified to earnings during the next twelve months.  Refer to Note 8, “Fair Value Measurements,” for additional information on the fair value measurements for all assets and liabilities, including derivative assets and derivative liabilities.

The following table shows our derivative instruments measured at gross fair value as reflected in the consolidated balance sheets in derivative asset/liability as of December 31, 2013 and 2012:

	As of December 31, 2013				As of December 31, 2012
	Assets		Liabilities		Assets		Liabilities
Foreign exchange contracts	$	—	$	2,160	$	733	$	253

The following table shows the effect of our derivative instruments designated as cash flow hedges for the years ended December 31, 2013 and 2012:

	Gain (Loss) Recognized in AOCI, net of tax Years Ended December 31,					Gain (Loss) Reclassified from AOCI into Income Years Ended December 31,
	2013			2012		2013			2012
Cash flow hedges:
Foreign exchange contracts	$	(4,590	)	$	1,749	$	(1,950	)	$	758

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FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

The values of our derivative instruments are derived from pricing models using inputs based upon market information, including contractual terms, market prices and yield curves.  The inputs to the valuation pricing models are observable in the market, and as such are generally classified as Level 2 in the fair value hierarchy.

Restructuring Charges

Accrued restructuring costs were valued using a discounted cash flow model.  Significant assumptions used in determining the amount of the estimated liability for closing a facility are the estimated liability for future lease payments on vacant facilities and the discount rate utilized to determine the present value of the future expected cash flows. If the assumptions regarding early termination and the timing and amounts of sublease payments prove to be inaccurate, we may be required to record additional losses, or conversely, a future gain, in the consolidated statements of operations and comprehensive income (loss).

In the future, if we sublease for periods that differ from our assumption or if an actual buy-out of a lease differs from our estimate, we may be required to record a gain or loss.  Future cash flows also include estimated property taxes through the remainder of the lease term, which are valued based upon historical tax payments.  Given that the restructuring charges were valued using our internal estimates using a discounted cash flow model, we have classified the accrued restructuring costs as Level 3 in the fair value hierarchy.

Long-Lived Assets

We periodically, on at least an annual basis, evaluate potential impairments of our long-lived assets.  In our annual evaluation or when we determine that the carrying value of a long-lived asset may not be recoverable, based upon the existence of one or more indicators of impairment, we evaluate the projected undiscounted cash flows related to the assets. If these cash flows are less than the carrying values of the assets, we measure the impairment based on the excess of the carrying value of the long-lived asset over the long-lived asset’s fair value.  Where appropriate, we use a probability-weighted approach to determine our future cash flows, based upon our estimate of the likelihood of certain scenarios, primarily whether we expect to sell new business within a current location.  These estimates are consistent with our internal projections and external communications and public disclosures.  There were no long-lived assets impaired during 2013 or 2012.

In 2010, we committed to a plan to sell the buildings and land at our closed facilities in Laramie, Wyoming and Greeley, Colorado.  We received estimates of the selling prices of this real estate, and have reduced the value of the buildings and land to fair value, less costs to sell, or approximately $4,102 at December 31, 2012. The measurement of the fair value of the buildings was based upon our third-party real estate broker’s non-binding estimate of fair value using the observable market information regarding sale prices of comparable assets.  During 2012, we committed to sell our Enid, Oklahoma facility, which had a carrying value of $867.  As these inputs to the determination of fair value are based upon non-identical assets and use significant unobservable inputs, we have classified the assets as Level 3 in the fair value hierarchy as of December 31, 2012.

During 2013, we reclassified our Laramie, Wyoming facility to held and used, sold the Greeley, Colorado facility (refer to Note 9, "Property, Plant & Equipment," for additional information) and reopened our Enid, Oklahoma facility; therefore, we had no assets held for sale at December 31, 2013.

Fair Value Hierarchy

The following tables set forth our assets and liabilities measured at fair value on a recurring basis and a non-recurring basis by level within the fair value hierarchy.  Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2013
	Level 1		Level 2		Level 3		Total
Liabilities:
Foreign exchange contracts	$	—	$	2,160	$	—	$	2,160
Total fair value of liabilities measured on a recurring basis	$	—	$	2,160	$	—	$	2,160

	Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2012
	Level 1		Level 2		Level 3		Total
Assets:
Foreign exchange contracts	$	—	$	733	$	—	$	733
Total fair value of assets measured on a recurring basis	$	—	$	733	$	—	$	733
Liabilities:
Foreign exchange contracts	$	—	$	253	$	—	$	253
Total fair value of liabilities measured on a recurring basis	$	—	$	253	$	—	$	253

	Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis During the Year ended December 31, 2013
	Level 1		Level 2		Level 3		Total
Assets:
Property, plant and equipment, net	$	—	$	—	$	531	$	531
Total fair value of assets measured on a non-recurring basis	$	—	$	—	$	531	$	531
Liabilities:
Accrued restructuring costs	$	—	$	—	$	16	$	16
Total fair value of liabilities measured on a non-recurring basis	$	—	$	—	$	16	$	16

	Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis During the Year ended December 31, 2012
	Level 1		Level 2		Level 3		Total
Assets:
Assets held for sale	$	—	$	—	$	4,969	$	4,969
Total fair value of assets measured on a non-recurring basis	$	—	$	—	$	4,969	$	4,969
Liabilities:
Accrued restructuring costs	$	—	$	—	$	957	$	957
Total fair value of liabilities measured on a non-recurring basis	$	—	$	—	$	957	$	957

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DEBT

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

DEBT

DEBT

Effective February 28, 2012, we entered into a secured revolving credit facility ("Credit Agreement") with Wells Fargo Bank, which replaced the prior credit facility with UMB Bank. The Credit Agreement has a maturity date of February 28, 2016.  The amount we may borrow under the Credit Agreement is the lesser of the borrowing base calculation and $10,000, and, so long as no default has occurred, we may increase the maximum availability to $20,000 in $2,500 increments.  We may request letters of credit under the Credit Agreement in an aggregate amount equal to the lesser of the borrowing base calculation (minus outstanding advances) and $5,000. The borrowing base is generally defined as 85% of our eligible accounts receivable less reserves for foreign exchange forward contracts and other reserves as defined in the Credit Agreement. As of December 31, 2013, we had $1,000 outstanding borrowings on our credit facility and available capacity was $13,920, net of $80 of letters of credit backed by the facility.

Borrowings under the Credit Agreement bear interest at the daily three-month LIBOR index plus 2.50% to 3.00% depending on the calculation of the fixed charge coverage ratio, as defined in the Credit Agreement (3.25% at December 31, 2013).  We will pay letter of credit fees on the average daily aggregate available amount of all letters of credit outstanding monthly at a rate per annum of 3.00% and a monthly unused fee at a rate per annum of 0.30% on the aggregate unused commitment under the Credit Agreement. Indebtedness under the Credit Agreement is guaranteed by certain of our present and future domestic subsidiaries. We granted Wells Fargo a security interest in all of our assets, including all cash and cash equivalents, accounts receivable, general intangibles, owned real property, equipment and fixtures.  Under the Credit Agreement, we are subject to certain standard affirmative and negative covenants, including the following financial covenants: 1) maintaining a minimum adjusted EBITDA, as defined in the Credit Agreement, of no less than the cumulative month-end minimum amounts set forth in an amendment to the Credit Agreement and 2) limiting non-financed capital expenditures to no more than the cumulative month-end maximum amounts set forth in an amendment to the Credit Agreement. We were in compliance with all such covenants as of December 31, 2013.

On February 25, 2013, the Company and Wells Fargo agreed on the financial covenants for 2013 and the first quarter of 2014, constituting the Third Amendment to the Credit Agreement. This amendment also clarified certain definitions and extended the term of the Credit Agreement one year to February 28, 2016. The Company and Wells Fargo are required to agree on financial covenants for the remaining term of the Credit Agreement beyond March 2014, and failure to do so would constitute an event of default. Subsequent amendments to the Credit Agreement further revised certain definitions.

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INCOME TAXES (Deferred Tax Assets and Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Current deferred tax assets (liabilities):
Accrued restructuring costs	$ (41)	$ 218
Other accrued liabilities	15	90
Derivative instruments	816	(176)
Prepaid expenses	(209)	(480)
Cumulative translation adjustment	(1,397)	(1,760)
Other	373	438
Total current net deferred tax liabilities	(443)	(1,670)
Long-term deferred tax assets (liabilities):
Fixed assets	2,969	3,385
Accrued stock compensation	3,085	2,556
Accrued restructuring costs	47	89
Foreign tax credit carryforward	0	525
Work opportunity credit carryforward	4,988	4,988
Operating loss carryforward	10,653	8,443
Intangibles and goodwill	22	0
Other	221	114
Total long-term net deferred tax assets	21,985	20,100
Subtotal	21,542	18,430
Valuation allowance	(20,000)	(16,602)
Total net deferred tax asset	$ 1,542	$ 1,828

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INCOME TAXES (Uncertain Income Tax Positions) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Unrecognized Tax Benefits [Roll Forward]
Unrecognized, January 1,	$ 4,705	$ 0
Additions based on tax positions taken in current year	1,090	4,705
Reductions based on tax positions taken in prior year	(2,293)	0
Unrecognized, December 31,	$ 3,502	$ 4,705

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INCOME TAXES (Components of Income Tax Expense (Benefit)) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Current:
Federal	$ 0	$ (548)
State	0	(77)
Foreign	(29)	499
Total current (benefit)	(29)	(126)
Deferred:
Federal	25	(10)
State	2	(1)
Foreign	232	253
Total deferred expense	259	242
Income tax expense	$ 230	$ 116

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INTEREST AND OTHER INCOME (EXPENSE), NET (Tables)

12 Months Ended

Dec. 31, 2013

Other Income and Expenses [Abstract]

Schedule of Net Interest and Other Income

Interest and other income (expense), net for the years ended December 31, 2013 and 2012 were composed of the following:

	Year Ended December 31,
	2013			2012
Interest income	$	88		$	86
Interest (expense)	(114		)	(78		)
Gain (loss) on disposal of assets	(1,549		)	45
Other income (expense)	(4		)	289
Interest and other income (expense), net	$	(1,579	)	$	342

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DERIVATIVE INSTRUMENTS (Fair Value of Derivative Instruments and Effect in AOCI) (Details) (Foreign Exchange Contract [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Foreign Exchange Contract [Member]
Derivatives, Fair Value [Line Items]
Derivative assets	$ 0	$ 733
Derivative liabilities	2,160	253
Gain (Loss) Recognized in AOCI, net of tax	(4,590)	1,749
Gain (Loss) Reclassified from AOCI into Income	$ (1,950)	$ 758

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Operating Leases

We lease facilities and equipment under various non-cancelable operating leases.  Some of these leases have renewal clauses that vary both in length and fee, based on our negotiations with the lessors. Rent expense, including equipment rentals, for 2013 and 2012 was $9,691, and $9,153, respectively.  As of December 31, 2013, approximate minimum annual rentals under operating leases and approximate minimum payments to be received under annual non-cancelable subleases and leases were as follows. 

	Minimum Lease Payments		Minimum Sublease/Lease Receivable
2014	$	10,103	$	306
2015	7,392		—
2016	5,818		—
2017	5,794		—
2018	4,370		—
Thereafter	1,052		—
Total minimum lease payments	$	34,529	$	306

Capital Leases

We lease equipment and a facility under various non-cancelable capital leases.  As of December 31, 2013, approximate minimum annual rentals under capital leases were as follows.

	Minimum Lease Payments
2014	$	371
2015	370
2016	377
2017	384
2018	392
Thereafter	808
Total minimum lease payments	$	2,702
Less amount representing interest	(1,280		)
Present value of obligations under capital leases	1,422
Less current portion of obligations under capital leases	(113		)
Obligations under capital leases, excluding current portion	$	1,309

Legal Proceedings

We have been involved from time to time in litigation arising in the normal course of business, none of which is expected by management to have a material adverse effect on our business, consolidated financial condition, results of operations or cash flows.

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ACQUISITIONS (Tables)

12 Months Ended

Dec. 31, 2013

Ideal Dialogue Company [Member]

Business Acquisition [Line Items]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following summarizes the final purchase price allocation of the fair values of the assets acquired as of the acquisition date:

	Acquisition Date Fair Value
Property, plant and equipment	$	13
Developed technology	390
Customer base	130
Trade name	70
Noncompete agreement	10
Goodwill	887
Total purchase price	$	1,500

RN's On Call [Member]

Business Acquisition [Line Items]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The estimates of fair value of identifiable assets acquired are preliminary, pending completion of a valuation, thus are subject to revisions that may result in adjustments to the values presented below:

	Preliminary Estimate of Acquisition Date Fair Value
Customer relationships	$	750
Goodwill	750
Total purchase price	$	1,500

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PRINCIPAL CLIENTS (Textual) (Details)	12 Months Ended	6 Months Ended
	Dec. 31, 2013 T Mobile Usa Inc Subsidiary Of Deutsche Telekom [Member]	Dec. 31, 2013 Comcast Cable Communications Management LLC, subsidiary of Comcast Corporation [Member]
Revenue, Major Customer [Line Items]
Initial term of the Master Service Agreement	5 years	1 year
Master Services Agreement renewal term	1 year	1 year
Notice of termination option of the initial term	90 days	90 days

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents (Details) (USD $)	Dec. 31, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Restricted cash	$ 456

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Operating Activities
Net loss	$ (6,406)	$ (10,488)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	12,527	12,957
Impairment losses	531	3,086
Losses (gains) on disposal of assets	1,074	(45)
Loss on sale leaseback transaction	475
Share-based compensation expense	1,607	1,275
Amortization of deferred gain on sale leaseback transaction	(273)	(47)
Deferred income taxes	166	410
Other, net	0	249
Changes in operating assets and liabilities:
Trade accounts receivable, net	(2,711)	(3,287)
Prepaid expenses and other assets	(2,264)	1,113
Accounts payable	435	(121)
Income taxes, net	(348)	334
Accrued and other liabilities	1,429	(2,525)
Net cash provided by operating activities	6,242	2,911
Investing Activities
Proceeds from note receivable	658	660
Proceeds from sale of assets	3,394	0
Proceeds from sale leaseback transactions	1,337	3,884
Purchases of property, plant and equipment	(8,843)	(7,305)
Cash paid for acquisitions of businesses	(2,097)	0
Net cash used in continuing investing activities	(5,551)	(2,761)
Financing Activities
Proceeds from stock option exercises	141	0
Proceeds from line of credit	41,390	28,641
Principal payments on line of credit	(40,390)	(28,641)
Payment of payroll taxes relating to vesting of restricted stock	(6)	0
Net proceeds from the issuance of common stock	97	103
Principal payments on capital lease obligations	(19)	(96)
Net cash provided by financing activities	1,213	7
Effect of exchange rate changes on cash	(98)	(693)
Net increase (decrease) in cash and cash equivalents	1,806	(536)
Cash and cash equivalents at beginning of period	9,183	9,719
Cash and cash equivalents at end of period	10,989	9,183
Supplemental Disclosure of Cash Flow Information
Cash paid for interest	54	78
Cash paid for income taxes	533	5
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract]
Assets acquired through capital lease	$ 1,413	$ 0

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IMPAIRMENT LOSSES AND RESTRUCTURING CHARGES

12 Months Ended

Dec. 31, 2013

Restructuring and Related Activities [Abstract]

IMPAIRMENT LOSSES AND RESTRUCTURING CHARGES

IMPAIRMENT LOSSES AND RESTRUCTURING CHARGES

Impairment Losses

We recognized impairment losses of $531 in the fourth quarter of 2013 in our Latin America segment associated with the furniture, fixtures and leasehold improvements at our site in Costa Rica after an impairment analysis indicated estimated future cash flows were insufficient to support the carrying values.  We continue to own and use the impaired assets at our site in Costa Rica. During the year ended December 31, 2012, we incurred $3,086 of impairment losses in our Domestic segment associated with two facilities where we received customer notification of a ramp-down in business. We were able to secure new business for one of the facilities and the other facility was closed in January 2013 when the lease expired.

Disposal of Long-Lived Assets

During 2013, we implemented a plan to outsource a significant portion of our IT platform.  As a result, we transferred certain IT assets to the provider, resulting in a loss on disposal of $966, which is included in interest and other income (expense), net. The useful life of the remaining impacted assets has been shortened to the transition period, resulting in accelerated depreciation charges of $637 in cost of services.

Assets Held for Sale

During 2013, we reclassified our Laramie, Wyoming facility, previously held for sale to assets held and used, as the held for sale criteria were no longer met due to the duration of the held for sale classification. We also reclassified our Enid, Oklahoma facility, previously held for sale, to assets held and used, as the held for sale criteria were no longer met due to the reopening of this site. The assets were measured at the carrying value of the assets before being classified as held for sale, adjusted for any depreciation expense that would have been recognized had the assets been continuously held and used. As a result of this measurement, we recognized $151 and $271 of depreciation expense for the Laramie and Enid facilities, respectively, which is included in cost of services.

During the fourth quarter of 2013, we sold our Greeley, Colorado facility, previously held for sale. Refer to Note 9, "Property, Plant & Equipment," for additional information.

Restructuring Charges

A summary of the activity under the restructuring plans as of December 31, 2013, and changes during the years ended December 31, 2013 and 2012 are presented below:

	Facility-Related Costs
	Victoria			Laramie			Grand Junction			Decatur			Regina			Total
Balance as of January 1, 2012	$	483		$	63		$	252		$	—		$	852		$	1,650
Expense (reversal)	—			(20		)	(138		)	464			671			977
Payments, net of receipts for sublease	54			(43		)	(114		)	(378		)	(1,197		)	(1,678		)
Foreign currency translation adjustment	—			—			—			—			8			8
Balance as of December 31, 2012	$	537		$	—		$	—		$	86		$	334		$	957
Expense (reversal)	(443		)	—			—			(56		)	—			(499		)
Payments, net of receipts for sublease	(78		)	—			—			(30		)	(328		)	(436		)
Foreign currency translation adjustment	—			—			—			—			(6		)	(6		)
Balance as of December 31, 2013	$	16		$	—		$	—		$	—		$	—		$	16

The reserves listed above are net of expected sublease rental income. We previously entered into a sublease agreement for our Victoria, Texas facility through the remainder of its respective lease term in 2014. We have recorded an accrual for certain property taxes we still owe in Victoria, which we expect to pay through 2014. During 2013, we reversed $443 of the restructuring reserve based on an updated analysis of pass-through expenses. During 2012, we reversed the balance of $138 associated with our Grand Junction facility as we re-opened the facility due to new business and a ramp-up of activities with existing customers. The restructuring plan for our Laramie, Wyoming facility was completed in 2012, at which time we reversed the remaining balance of $20. During 2012, we increased our reserve for Regina, Saskatchewan by $671 based on updated forecasts of expected sublease income and we established a reserve of $464 for our Decatur, Illinois facility, which was closed in January 2013.

The Regina, Saskatchewan and Decatur, Illinois restructuring plans were completed in the first quarter of 2013 and we do not expect to incur any additional restructuring liabilities in future periods for either of these locations.

We expect to pay $16 in our Domestic segment over the remaining term of the restructuring plans, including lease payments offset by sublease receipts, personal and real property taxes and other miscellaneous facility related costs.  The cumulative amount paid as of December 31, 2013 related to the closures was $9,870 in our Domestic segment in facility-related costs and termination benefits.

Note Receivable

In connection with the sublease of our Victoria, Texas facility, the sublessee is making payments to us for certain furniture, fixtures, equipment and leasehold improvements in the facility.  The payments will be made over the remainder of the lease term, or December 1, 2014, after which time the sublessee will own the assets.  As of December 31, 2013, we have recorded the remaining balance due in 2014 on the note receivable of $645, net of unearned interest income of approximately $18.  The note receivable bears interest at a rate of 4.4% per annum.

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SHARE-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS (Restricted Stock Awards and Deferred Stock Units Activity) (Details) (Restricted Stock and Restricted Stock Units (RSUs) [Member], USD $)	12 Months Ended
	Dec. 31, 2013
Restricted Stock and Restricted Stock Units (RSUs) [Member]
Restricted Stock Awards Outstanding [Roll Forward]
Nonvested balance as of January 1, 2013	13,656
Vested	(9,255)
Forfeited	(1,067)
Nonvested balance as of December 31, 2013	3,334
Restricted Stock Awards, Weighted-Average Grant Date Fair Value [Roll Forward]
Nonvested (in usd per share)	$ 4.08
Vested (in usd per share)	$ 4.41
Forfeited (in usd per share)	$ 6.58
Nonvested (in usd per share)	$ 2.35

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COMMITMENTS AND CONTINGENCIES (Operating Lease) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
Rental expense, including equipment rentals	$ 9,691	$ 9,153
Minimum Lease Payments
2014	10,103
2015	7,392
2016	5,818
2017	5,794
2018	4,370
Thereafter	1,052
Total minimum lease payments	34,529
Minimum Sublease/Lease Receivable
2014	306
2015	0
2016	0
2017	0
2018	0
Thereafter	0
Total minimum lease payments	$ 306

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GOODWILL AND INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

The following table presents our intangible assets as of December 31, 2013:

	Gross Intangibles		Accumulated Amortization		Net Intangibles		Weighted Average Amortization Period (years)
Developed technology	$	390	$	37	$	353	4.14
Customer base and customer relationships	880		137		744		1.67
Trade name	70		9		61		3.14
Noncompete agreement	10		4		6		1.20
	$	1,350	$	186	$	1,164	3.52

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

We estimated future amortization expense for the succeeding years relating to the intangible assets resulting from acquisitions as follows:

Year Ending December 31,	Amount
2014	$	359
2015	355
2016	217
2017	60
2018	60
Thereafter	113

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SEGMENT INFORMATION (Tables)

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

Information about our reportable segments, which correspond to the geographic areas in which we operate, for the years ended December 31, 2013 and 2012 is as follows:

	Year Ended December 31,
	2013		2012
Revenue:
Domestic	$	120,928	$	99,827
Asia Pacific	81,082		79,683
Latin America	29,247		18,582
Total	$	231,257	$	198,092
Gross profit:
Domestic	$	13,291	$	7,396
Asia Pacific	9,974		16,476
Latin America	1,060		(875		)
Total	$	24,325	$	22,997
Depreciation:
Domestic	$	7,340	$	7,450
Asia Pacific	4,193		4,659
Latin America	994		848
Total	$	12,527	$	12,957
Capital expenditures:
Domestic	$	5,555	$	4,757
Asia Pacific	1,254		1,728
Latin America	2,034		820
Total	$	8,843	$	7,305

	As of December 31,
	2013		2012
Total assets:
Domestic	$	76,224	$	77,032
Asia Pacific	10,520		12,779
Latin America	2,973		3,321
Total	$	89,717	$	93,132

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas

The following tables present certain financial data based upon the geographic location where the services are provided:

	As of December 31,
	2013		2012
Revenue:
United States	$	95,333	$	69,403
Canada	25,595		30,424
Philippines	81,082		79,683
Latin America	29,247		18,582
Total	$	231,257	$	198,092

	As of December 31,
	2013		2012
Total property, plant and equipment, net:
United States	$	12,875	$	13,549
Canada	96		420
Philippines	7,050		9,921
Latin America	2,189		2,420
Total	$	22,210	$	26,310

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

12 Months Ended

Dec. 31, 2013

Stockholders' Equity Note [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) consisted of the following items:

	Foreign Currency Translation Adjustment			Derivatives Accounted for as Cash Flow Hedges			Total
Balance at January 1, 2012	$	2,385		$	(883	)	$	1,502
Foreign currency translation	670			—			670
Reclassification to operations	—			(758		)	(758		)
Unrealized gains (losses)	—			1,749			1,749
Tax (benefit)	(257		)	(377		)	(634		)
Balance at December 31, 2012	$	2,798		$	(269	)	$	2,529
Foreign currency translation	(898		)	—			(898		)
Reclassification to operations	—			1,950			1,950
Unrealized gains (losses)	—			(4,590		)	(4,590		)
Balance at December 31, 2013	$	1,900		$	(2,909	)	$	(1,009	)

Reclassifications out of accumulated other comprehensive income for the years ended December 31, 2013 and 2012 were as follows:

Details About Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income					Affected Line Item in the Statement Where Net Income is Presented
	Year Ended December 31,
	2013		2012
(Gains) losses on cash flow hedges
Foreign exchange contracts	$	1,828	$	(758	)	Cost of services
Foreign exchange contracts	122		—			Selling, general and administrative expenses
	$	1,950	$	(758	)