8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 1, 2008

STARTEK, INC.
(Exact name of registrant as specified in its charter)

DELAWARE	1-12793	84-1370538
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

44 Cook Street, 4th Floor, Denver, Colorado	80206
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (303) 262-4500

(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On May 1, 2008, StarTek, Inc. (the “Company”) issued a press release reporting its earnings for its first quarter ended March 31, 2008. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K. This press release shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit
Number	Description
99.1	Press Release dated May 1, 2008

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

STARTEK, INC.

Date: May 1, 2008

By: /s/ David G. Durham                            
David G. Durham
Chief Financial Officer, Executive Vice
President, and Treasurer

EXHIBIT INDEX

Exhibit
Number	Description
99.1	Press Release dated May 1, 2008

EX-99.1

EXHIBIT 99.1

FOR RELEASE on Thursday, May 1, 2008
8:00 a.m. ET, 6:00 a.m. MT

MEDIA/INDUSTRY ANALYST CONTACT:	INVESTOR RELATIONS CONTACT:
Matt Brekke	Julie Pierce
Director of Marketing, StarTek, Inc.	Director of SEC Reporting, StarTek, Inc.
303-262-4548	303-262-4587
mbrekke@startek.com	julie.pierce@startek.com

StarTek, Inc. Reports First Quarter 2008 Results
Revenue Increases 12%, Successful Site Expansion, New Business Won

DENVER — May 1, 2008 - StarTek, Inc. (NYSE:SRT) today announced results for the first quarter ended March 31, 2008. StarTek reported its second consecutive double digit quarterly revenue increase, growing 12.3% to $64.7 million, compared to $57.6 million in the first quarter of 2007. The Company reported a net loss of $0.3 million, or $0.02 per share compared to a $0.01 per share loss in the same quarter in 2007, due to the continued negative impact of FX, new site launches and the expected loss of a client. The Company also reported that it has made progress on several strategic fronts, closing a new client contract with a firm that provides broadband connectivity to airlines, the successful launch of two new sites with plans to open a third, and progress toward opening a Philippines operation in the fourth quarter of this year.

Summary of Quarterly Financial Results

StarTek reported a revenue increase of 12.3% to $64.7 million, compared to $57.6 million in the first quarter of 2007. The revenue increase reflects the continued benefit of improved contract terms as well as growth in available capacity associated with new sites. Compared to the fourth quarter of 2007, revenue declined $0.9 million from $65.6 million to $64.7 million, a decrease of 1.4%. While revenue increased as a result of the Company’s new site ramp in Victoria, Texas, it was offset by a revenue decline associated with the loss of a client.

Gross profit increased $0.7 million, though as a percentage of revenue it declined in the first quarter of 2008 to 14.8%, compared to 15.5% in the first quarter of 2007. The decrease was due to the weakening of the U.S. dollar against the Canadian dollar, which negatively affected gross profit by $2.9 million. Absent the negative impact of foreign exchange rates, gross margins would have improved to 19.4%. Gross profit also fell from $11.4 million in the fourth quarter of 2007 to $9.6 million in the first quarter of 2008. Gross margin declined from 17.4% in the fourth quarter of 2007 to 14.8% in the current quarter. The decline, most of it anticipated, was due to the utilization impact of the ramping up of new sites in Victoria, Texas and Mansfield, Ohio, the weaker U.S. to Canadian dollar exchange rate, and the client loss.

SG&A expenses increased $0.7 million over the prior year as the Company made investments throughout 2007 in corporate personnel additions and in human resource programs intended to lower attrition, both in support of the Company’s growth strategy. SG&A expenses decreased by $0.8 million compared to the fourth quarter of 2007, due to lower consulting fees and lower legal expense.

As a result, the Company reported an operating loss and a net loss that were slightly higher than in the first quarter of 2007, and on a per share basis, lost $0.02 in the first quarter of 2008, compared to a $0.01 loss in the same quarter in 2007. This compared to income of $0.03 per share in the prior quarter.

Ongoing Growth Initiatives

StarTek continues to focus on new, renewed and expanded contractual agreements with U.S. and Canadian-based communications companies. The Company closed a new client contract with a provider of broadband connectivity to airline passengers. The Company also closed two new add-on lines of business with existing clients. All of these new programs are expected to contribute to the Company’s performance in the second half of 2008.

Since the beginning of the year, the Company successfully launched two new sites in Victoria, Texas and Mansfield, Ohio. The Company also announced plans to open a third site in Jonesboro, Arkansas early in the third quarter of this year. Additionally, the off-shore expansion to the Philippines, which was announced last quarter, is progressing. These North American and off-shore site expansions are in response to client demand and part of a series of business initiatives designed to grow the Company.

“While we encountered expected short-term headwinds that negatively impacted gross margins in the current quarter, we continued to make good progress implementing our plans for launching new sites and expanding off-shore,” said Larry Jones, President and CEO. “All of these initiatives are designed to address the strong demand in our core business and to meet our growth objectives,” concluded Jones.

CONFERENCE CALL

The call will begin today at 9:00 a.m. Mountain Time (11:00 a.m. Eastern Time) and can be accessed on our website at www.startek.com, or as follows:

USA:	866.362.4829
International:	617.597.5346
Passcode:	47484699
Conference Host:	Larry Jones

A dial-in replay will be available from May 1, 2008, at 11:00 a.m. Mountain Time through May 8, 2008, and can be accessed as follows:

USA:	888.286.8010
International:	617.801.6888
Passcode:	25995596

A web-based replay will be available by May 2, 2008, and accessible from the Company’s website at www.startek.com.

ABOUT STARTEK, INC.

StarTek, Inc. (NYSE: SRT) is a leading provider of high value business process outsourcing services to the communications industry. Since 1987 StarTek has partnered with its clients to solve strategic business challenges so that fast-moving businesses can improve customer retention, increase revenue and reduce costs through an improved customer experience. These robust solutions leverage industry knowledge, best business practices, highly skilled agents, proven operational excellence and flexible technology. The StarTek comprehensive service suite includes customer care, sales support, complex order processing, accounts receivable management, technical support and other industry-specific processes. Headquartered in Denver, Colorado, StarTek provides these services from 20 operational facilities in the US and Canada. For more information visit the Company’s website at www.StarTek.com or contact us at 800-541-1130.

FORWARD-LOOKING STATEMENTS

The matters regarding the future discussed in this news release include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements are subject to a number of risks and uncertainties.

The following are important risks and uncertainties relating to StarTek’s business that could cause StarTek’s actual results to differ materially from those expressed or implied by any such forward-looking statements. These factors include, but are not limited to, risks relating to our revenue from our principal clients, concentration of our client base in the communications industry, consolidation in the communications industry, trend of communications companies to out-source non-core services, management turnover, dependence on and requirement to recruit qualified employees, labor costs, need to retain key management personnel and to add specialized sales personnel, considerable pricing pressure, capacity utilization of our facilities, collection of note receivable from sale of Supply Chain Management Services platform, inability to utilize current capital loss carry-forwards, defense and outcome of pending class action lawsuit, lack of success of our clients’ products or services, risks related to our contracts, decreases in numbers of vendors used by clients or potential clients, inability to effectively manage growth, risks associated with advanced technologies, highly competitive markets, foreign exchange risks and other risks relating to conducting business in Canada, lack of a significant international presence, potentially significant influence on corporate actions by our largest stockholder, volatility of our stock price, geopolitical military conditions, interruption to our business, increasing costs of or interruptions in telephone and data services, compliance with SEC rules, risks in renewing or replacing capital funding, fluctuations in the value of our investment securities portfolio, and variability of quarterly operating results. Readers are encouraged to review Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Factors and all other disclosures appearing in the Company’s Form 10-K for the year ended December 31, 2007, and subsequent filings with the Securities and Exchange Commission.

STARTEK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(unaudited)

	Three Months Ended
	March 31,
	2008			2007
Revenue	$	64,745		$	57,647
Cost of services		55,162			48,737
Gross profit		9,583			8,910
Selling, general and administrative expenses		10,090			9,392
Restructuring charges		108			—
Operating loss		(615	)		(482	)
Net interest and other income		310			188
Loss before income taxes		(305	)		(294	)
Income tax expense (benefit)		26			(105	)
Net loss	$	(331	)	$	(189	)
Net loss per share:
Basic	$	(0.02	)	$	(0.01	)
Diluted	$	(0.02	)	$	(0.01	)
Weighted average shares outstanding
Basic		14,705			14,695
Diluted		14,705			14,695

STARTEK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)

	As of
	March 31, 2008		December 31, 2007
ASSETS
Current assets:
Cash, cash equivalents and investments	$	32,016	$	39,375
Trade accounts receivable		56,497		48,887
Other current assets		3,468		4,910
Total current assets		91,981		93,172
Property, plant and equipment, net		56,999		57,532
Other assets		4,831		4,754
Total assets	$	153,811	$	155,458
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,472	$	5,908
Accrued liabilities		14,773		14,468
Amount outstanding on line of credit		1,672		—
Current portion of long-term debt		3,586		3,975
Other current liabilities		1,352		2,632
Total current liabilities		25,855		26,983
Long-term debt, less current portion		6,660		7,380
Other liabilities		3,746		2,881
Total liabilities		36,261		37,244
Stockholders’ equity		117,550		118,214
Total liabilities and stockholders’ equity	$	153,811	$	155,458

STARTEK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)

	Three Months Ended March 31,
	2008			2007
Operating Activities
Net loss	$	(331	)	$	(189	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		4,400			4,227
Non-cash compensation cost		373			189
Deferred income taxes		(453	)		(127	)
Realized gain on investments		—			1
Loss on sale of assets		16			—
Changes in operating assets and liabilities, net		(6,989	)		(3,976	)
Net cash (used in) provided by operating activities		(2,984	)		125
Investing Activities
Purchases of investments available for sale		(5,624	)		(11,250	)
Proceeds from disposition of investments available for sale		4,954			1,090
Purchases of property, plant and equipment		(3,946	)		(2,567	)
Net cash used in investing activities		(4,616	)		(12,727	)
Financing Activities
Principal payments on borrowings		(1,308	)		(1,381	)
Principal payments on line of credit		(9,290	)		(10,193	)
Proceeds from line of credit		10,962			10,193
Principal payments on capital lease obligations		(11	)		—
Net cash provided by (used in) financing activities		353			(1,381	)
Effect of exchange rate changes on cash		(430	)		(77	)
Net decrease in cash and cash equivalents		(7,677	)		(14,060	)
Cash and cash equivalents at beginning of period		23,026			33,437
Cash and cash equivalents at end of period	$	15,349		$	19,377
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	161		$	215
Income taxes paid	$	503		$	548
Unrealized loss on investments available for sale, net of tax	$	(220	)	$	(14	)
Property, plant and equipment acquired or refinanced under long-term debt	$	385		$	—

STARTEK, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(Dollars in thousands)
(unaudited)

Non-GAAP Financial Measures

The information presented in this press release reports gross margin excluding the effects of foreign currency exchange, which is a non-GAAP measure. The following table provides a reconciliation of (i) adjusted gross profit, from which adjusted margin is calculated, to gross margin calculated in accordance with GAAP and (ii) adjusted operating income (loss) to operating income (loss) calculated in accordance with GAAP. This non-GAAP information should not construed as an alternative to the reported results determined in accordance with generally accepted accounting principles in the United States (GAAP). It is provided solely to assist in an investor’s understanding of the impact of the variance in foreign currency exchange rates on the comparability of the Company’s operations. A reconciliation of the GAAP amounts to the non-GAAP amounts is shown below.

										Three Months
										Ended March 31,
	Three Months Ended March 31, 2008									2007			Variance
	GAAP			FX Adj. (a)			Non- GAAP			GAAP
Revenue	$	64,745		$	(472	)	$	64,273		$	57,647		$	6,626
Cost of services		55,162			(3,333	)		51,829			48,737			3,092
Gross profit		9,583			2,861			12,444			8,910			3,534
Gross margin		14.8	%					19.4	%		15.5	%
Selling, general and administrative		10,090			(202	)		9,888			9,392			496
Restructuring charges		108			—			108			—			108
Operating loss (income)		(615	)		3,063			2,448			(482	)		2,930

(a) Adjustment to reflect foreign currency gains and losses using the first quarter 2007 exchange rate, net of hedge gains/losses.