UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

Form 10-K

 

(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002.
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE TRANSITION PERIOD FROM               TO              .
Commission File Number 1-12793

 

 

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 checkmark 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 ý   No o

 

Indicate by checkmark 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.  o

 

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).   Yes ý   No o

 

As of March 10, 2003, 14,206,101 shares of common stock were outstanding and held by approximately 3,133 holders.  The aggregate market value of common stock held by non-affiliates of the registrant on June 30, 2002 was approximately $137 million, based upon the closing price of the Company’s common stock as quoted on the New York Stock Exchange composite tape on such date.  Shares of common stock held by each executive officer and director and by each person who owned 5% or more of the outstanding common stock as of such date have been excluded in that such persons may be deemed to be affiliates.  This determination of affiliate status is not necessarily a conclusive determination for other purposes.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

Part III incorporates certain information by reference from the registrant’s proxy statement to be delivered in connection with its 2003 annual meeting of stockholders.  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.

 

 

Forward-Looking Statements

 

All statements contained in this Form 10-K that are not statements of historical facts are forward-looking statements that involve substantial risks and uncertainties.  Forward-looking statements are preceded by terms such as “may”, “will”, “should”, “anticipates”, “expects”, “believes”, “plans”, “future”, “estimate”, “continue”, and similar expressions.  The following are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.  These factors include, but are not limited to, inflation and general economic conditions in the Company’s and its clients’ markets, risks associated with the Company’s reliance on principal clients, loss or delayed implementation of a large project or service offering for a principal client, which could cause substantial quarterly variation in the Company’s revenues and earnings, difficulties in managing rapid growth, risks associated with rapidly changing technology, dependence on labor force, risks associated with international operations and expansion, risks from offshore competition, control by principal stockholders, dependence on key personnel, dependence on key industries and trends toward outsourcing, risks associated with the Company’s contracts, highly competitive domestic and international markets, risks of business interruptions, volatility of the Company’s stock price, risks related to the Company’s Internet web site operations, risks related to the Company’s portfolio of Internet domain names, and risks related to changes in valuation of the Company’s investments.  These factors include risks and uncertainties beyond the Company’s ability to control; and, in many cases, the Company and its management cannot predict the risks and uncertainties that could cause actual results to differ materially from those indicated by use of forward-looking statements. Similarly, it is impossible for management to foresee or identify all such factors. As such, investors should not consider the foregoing list to be an exhaustive statement of all risks, uncertainties, or potentially inaccurate assumptions.  All forward-looking statements herein are made as of the date hereof, and the Company undertakes no obligation to update any such forward-looking statements.  All forward-looking statements herein are qualified in their entirety by information set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”—”Risk Factors” appearing elsewhere in this Form 10-K.

 

PART I

 

ITEM 1.  BUSINESS

 

General

 

StarTek, Inc. (the “Company” or “StarTek”) has an established position as a global provider of process management services and owns and operates branded vertical market Internet web sites.  The Company’s process management service platforms include a comprehensive offering of supply chain management services, high-end inbound technical support and customer care teleservices, and provisioning management for complex telecommunications systems.  As an outsourcer of process management services as its core business, StarTek allows its clients to focus on their primary business, reduce overhead, replace fixed costs with variable costs, and reduce working capital needs.  The Company has continuously expanded its process management business and facilities to offer additional outsourcing services in response to the growing needs of its clients and to capitalize on market opportunities, both domestically and internationally.  StarTek has a strategic partnership philosophy through which it assesses each of its client’s needs, and together with its clients develops and implements customized outsourcing solutions.  Management believes StarTek’s entrepreneurial culture, long-term relationships with clients and suppliers, efficient operations, dedication to quality, and use of technology and management techniques provide StarTek a competitive advantage in attracting clients to outsource non-core operations.  StarTek’s largest client, based on 2002 revenues, has utilized StarTek’s outsourced services since 1996. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”— “Risk Factors” set forth herein for a further discussion of the Company’s “Reliance on Principal Client Relationship” and “Risks Associated with the Company’s Contracts”.

 

StarTek’s existing clients are primarily in computer software, Internet, E-commerce, computer hardware, technology, consumer products, and telecommunications industries, which are characterized by rapid growth, complex and evolving product offerings, and large customer bases, which require frequent, often sophisticated customer interaction.   Management believes there are substantial opportunities to cross-sell StarTek’s wide spectrum of outsourced process management services to its existing and future client base.  The Company intends to capitalize on the increasing trend toward outsourcing by focusing on potential clients in additional industries that could benefit from the Company’s expertise in developing and delivering integrated, cost-effective, outsourced services.

 

StarTek currently has six operating facilities in Colorado, and one facility each in Wyoming, Tennessee, Texas, and Oklahoma.  The Company’s European operations are performed from its two facilities in Hartlepool, England.  The Company’s Canadian operations are performed from two facilities in Kingston, Ontario and one facility in Cornwall, Ontario.  In February 2003, the Company announced the planned opening of two new facilities in Regina, Saskatchewan, Canada and Decatur, Illinois to meet the increasing demands of its clients.

 

StarTek owns a portfolio of branded vertical market Internet web sites and operates certain sites, including airlines.com and wedding.com.

 

2

 

The Company’s business was founded in 1987 and, through its wholly-owned subsidiaries, has provided outsourced process management services since inception.  On December 30, 1996, StarTek, Inc. was incorporated in Delaware, and in June 1997 StarTek completed an initial public offering of its common stock.  Prior to December 30, 1996, StarTek USA, Inc. and StarTek Europe, Ltd., two of the Company’s operating subsidiaries, conducted business as affiliates under common control.  In 1998, the Company formed StarTek Pacific, Ltd., a Colorado corporation and Domain.com, Inc., a Delaware corporation, both of which are wholly-owned subsidiaries of the Company.  In 2001, the Company formed StarTek Canada Services, Ltd. a Nova Scotia, Canada corporation, which is a wholly owned subsidiary of the Company.  StarTek, Inc. is a holding company for the businesses conducted by its wholly-owned subsidiaries.  StarTek’s principal executive offices are located at 100 Garfield Street, Denver, Colorado 80206 and its telephone number is (303) 361-6000.  StarTek’s home page on the Internet is located at www.startek.com.

 

Process Management Service Platforms

 

The Company offers a wide spectrum of process management service platforms designed to provide cost-effective and efficient management services for non-core operations of its clients.  The Company works closely with its clients to develop, refine, and implement efficient and productive integrated outsourced solutions that link StarTek with its clients and their customers.  The processes that create such solutions generally include development of product manufacturing specifications, packaging, and distribution requirements, as well as product-related software programs for telephone, facsimile, E-mail, and Internet interactions involving product order processing, fulfillment, and technical support.  Substantially all of the Company’s process-related teleservices activities are inbound telephone calls rather than outbound calls.  Process management service platforms StarTek provides include, but are not limited to:

 

Supply Chain Management.  StarTek personnel are responsible for maintaining and managing multiple supplier relationships.  When the Company is selected by a client to provide product assembly and packaging services, the Company qualifies, selects, certifies, and manages sourcing and manufacturing of various products and related components.  Such products and related components are then assembled and packaged at certain of the Company’s facilities.  The Company monitors supplier quality by visiting manufacturing facilities, and utilizes just-in-time production to minimize inventory in the Company’s warehouses.  Management believes the Company’s strong, long-term relationships with multiple suppliers allow StarTek to be flexible and responsive to its clients, while minimizing cost and dependency on any single supplier.

 

The Company assembles and packages products in the United States and the United Kingdom. The Company’s assembly lines have been designed with significant flexibility, enabling the Company to assemble and package various types of products and rapidly change the type of product assembled.

 

StarTek’s inventory management systems enable the Company to ship and track products to distribution centers, individual stores, and its clients’ customers directly.  Product orders are received by the Company via file transfer protocol (FTP), the Internet, electronic data interchange (EDI), facsimile, as well as through the Company’s product order teleservices and E-commerce support services described elsewhere.

 

High-End Technical Support and Customer Care Teleservices.  StarTek service representatives provide high-end technical support services by telephone, E-mail, facsimile, and the Internet, 24 hours per day, seven days per week.  Technical support inquiries are generally driven by a customer’s purchase of a product or service, or by a customer’s need for ongoing technical assistance.  Customers of StarTek’s clients dial a technical support number listed in their product or service manuals and, based on touch-tone responses, are automatically connected to an appropriate StarTek service representative specially trained in the use of computerized knowledge databases for the applicable product.  Each StarTek service representative acts as a transparent extension of the client when resolving complaints, diagnosing and resolving product or service problems, or answering technical questions.

 

Provisioning Management.  StarTek personnel are responsible for managing installation and providing on-going support services for large-scale telecommunications networks for client customers.  Service representatives manage relationships between the StarTek client and its customers on a transparent basis.  StarTek’s installation management and on-going network support services, on an outsourced basis, enable a client to provide telecommunications services to their customers more efficiently and cost effectively.

 

E-commerce Support and Product Order Fulfillment.  StarTek develops, operates, and maintains Internet web sites and the Company’s personnel process, pack, and ship product orders received by telephone, E-mail, facsimile, and the Internet, 24 hours per day, seven days per week.  The Company provides same-day shipping of customer orders if the product is available.

 

International Operations

 

StarTek provides process management services on an international basis from the United Kingdom and Canada, and through January 2002, in Singapore.  The Company’s facilities in the United Kingdom provide most of the Company’s process management service platforms for clients internationally, including supply chain management, inbound technical support services in several languages, and product order fulfillment.  The Company’s facilities in Canada provide technical support services for clients in North America.  The facility in Singapore closed on January 31, 2002, which management believes will not have a material adverse effect on

 

3

 

the Company’s future financial results as less than 1% of the Company’s operating profit in 2001 was derived from these operations.  International operations, in the aggregate, generated 19.3% of the Company’s revenues during 2002 and 21.5% during 2001.  See Note 15 to the consolidated financial statements set forth herein for a further description of revenues, operating profit, and identifiable assets classified by the major geographic areas in which the Company operates.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”— “Risk Factors” set forth herein for a discussion of “Risks Associated with International Operations and Expansion”.

 

Domain.com Operations

 

StarTek, through its wholly-owned subsidiary Domain.com, Inc., owns a portfolio of branded vertical market Internet web sites and currently operates certain sites, including airlines.com and wedding.com as internet portals.

 

Business Strategy

 

StarTek’s strategic objectives are to increase revenues and earnings by maintaining and enhancing its established position as a global provider of process management services; and to enhance shareholder value, revenues, and earnings by developing revenue streams from, or ownership interests in, Internet web site businesses arising from a portfolio of Internet domain names.  To reach these objectives, the Company intends to:

 

Provide Integrated, Outsourced Process Management Services.  StarTek seeks to provide integrated, outsourced process management services which enable its clients to provide their customers with high-quality services at lower cost than through a client’s own in-house operations.  The Company believes its ability to tailor operations, materials, and employee resources objectively, and provide process management services on a cost-effective basis will allow the Company to become an integral part of its clients’ businesses.

 

Develop Strategic Partnerships and Long-Term Relationships.  StarTek seeks to develop long-term client relationships, primarily with Fortune 1000 companies.  The Company invests significant resources to establish strategic partnership relationships and to understand each client’s processes, culture, decision parameters, and goals so as to develop and implement customized solutions.  The Company believes this solution-oriented, value-added, integrated approach to addressing its clients’ needs distinguishes StarTek from its competitors and plays a key role in the Company’s ability to attract and retain clients on a long-term basis.

 

Maintain Low-Cost Position through the StarTek Advantage System.  StarTek strives to establish a competitive advantage by frequently redefining its operational processes to reduce cost and improve quality through its StarTek Advantage System group.  The Company believes its continuous improvement philosophy and modern process management techniques result in reduced waste and increased efficiency by: (i) controlling overproduction; (ii) minimizing waiting time due to inefficient work sequences; (iii) reducing nonessential handling of materials; (iv) eliminating nonessential movement and processing; (v) implementing fail-safe processes; (vi) improving inventory management; and (vii) preventing defects.

 

Emphasize Quality.  StarTek strives to achieve the highest quality standards in the industry.  To this end, the Company, through its wholly-owned subsidiary in the United Kingdom, has received ISO 9001:2000 certification, and through certain of its wholly-owned subsidiaries in the US, has received ISO 9002 certification for its facilities engaged in supply chain management.  Both ISO 9001:2000 and ISO 9002 are an international standard for quality assurance and consistency in operating procedure.  Certain of the Company’s existing clients require evidence of ISO certification prior to selecting an outsourcing provider.

 

Capitalize on Technology.  Management believes it has established a competitive advantage by capitalizing on technology and proprietary software, including automatic call distributors, inventory management software, order management software, transportation management software, knowledge databases, call tracking systems, resource scheduling software, and computer telephony integration software.  The Company further believes these capabilities enable StarTek to improve efficiency, serve as a transparent extension of its clients, receive telephone calls and data directly from its clients’ systems, and report detailed information concerning the status and results of the Company’s services and interaction with clients on a daily basis.

 

Develop Internet Web Site Portfolio.  Management believes the Company can continue to develop revenue and profit streams from certain of its Internet sites, or establish ownership interests in Internet web site businesses arising from a portfolio of Internet domain names.  Management believes shareholder value can be enhanced in a variety of ways, which include, among others, joint ventures with third parties to develop web site businesses based upon its Internet domain names.  These opportunities are being pursued at this time.

 

4

 

Clients

 

StarTek’s current client base consists of companies engaged primarily in computer software, Internet, E-commerce, computer hardware, technology, consumer products, and telecommunications industries.   The Company’s four largest customers, Microsoft Corporation, AT&T Wireless, Inc., AT&T Corporation, and T-Mobile, a subsidiary of Deutsche Telekom, accounted for 34.4%, 26.3%, 13.3%, and 12.2% respectively, of the Company’s revenues in 2002.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”— “Risk Factors” set forth herein for a further discussion of the Company’s “Reliance on Principal Client Relationship” and “Risks Associated with the Company’s Contracts”.

 

Sales and Marketing

 

The Company’s marketing objective is to develop long-term relationships with existing and potential clients to become the preferred worldwide provider of process management services.  StarTek invests substantial resources to create a strategic partnership with its clients to understand their existing operations, customer service processes, culture, decision parameters, and goals.  A StarTek team assesses a client’s outsourcing service needs, and together with the client, develops and implements customized solutions.  Management believes, as a result of StarTek’s strategic relationship with its clients and comprehensive understanding of their businesses, the Company can identify new revenue generating opportunities, customer interaction possibilities, and product service improvements not adequately addressed by the client.  The Company’s sales strategy emphasizes multiple contacts with a client to strengthen its relationship and facilitate cross-selling of services.

 

StarTek markets its process management services through a variety of methods, including personal sales calls, client referrals, attendance at trade shows, and cross-selling of services to existing clients.  As part of its marketing efforts, the Company encourages visits to its facilities where the Company demonstrates its services, quality procedures, and ability to accommodate additional business.

 

Management believes an essential element to revenue growth is the ability to flexibly, effectively, and efficiently expand service capacity to meet client needs as its clients grow or outsource more of their non-core operations to the Company.  Additionally, to attract new clients to StarTek’s services, the Company maintains resources to develop a strategy to meet new clients’ outsourcing goals promptly, as well as the ability to implement operations for such clients quickly and accurately.

 

Technology

 

StarTek employs technology and proprietary software that incorporates digital switching, relational knowledge database management systems, call tracking systems, workforce management systems, object-oriented software modules, and computer telephony integration.  The Company’s digital switching technology is designed to enable calls to be routed to the next available teleservice representative with the appropriate product knowledge, skill, and language abilities.  Call tracking and workforce management systems generate and track call volumes by client, enabling the Company to schedule personnel efficiently, anticipate fluctuations in call volume, and provide clients with detailed information concerning the status and results of the Company’s services on a daily basis.  Management believes StarTek’s proprietary technology platform provides the Company with a competitive advantage in maintaining existing clients and attracting new clients.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”— “Risk Factors” set forth herein for a discussion of “Risks Associated with Rapidly Changing Technology”.

 

Employees and Training

 

StarTek’s success in recruiting, hiring, training, and retaining large numbers of full and part-time skilled employees, and obtaining large numbers of hourly and temporary employees during peak periods is critical to the Company’s ability to provide high quality outsourced services.  To maintain good employee relations and to minimize turnover, the Company offers competitive pay, a range of employee benefits, and provides employees with clear, visible career paths.  To meet its service objectives, the Company also utilizes temporary employees.  As of December 31, 2002, the Company had approximately 4,800 full-time equivalent employees. The number of temporary employees varies substantially due to the seasonal nature of StarTek’s clients’ businesses.  Management believes demographics surrounding StarTek’s facilities, and the Company’s reputation, stability, and compensation plans should allow the Company to continue to attract and retain qualified employees.  The Company considers its employee relations to be good.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”— “Risk Factors” set forth herein for a discussion of factors relating to the Company’s “Dependence on Labor Force” and “Dependence on Key Personnel”.

 

In keeping with StarTek’s continuous improvement philosophy, the Company is committed to training all of its employees.  StarTek provides formal training for senior management, supervisors, process managers, quality coordinators, and service representatives.  StarTek also maintains an employee quality program to back up every employee, including specialized quality coordinators who teach problem solving, assist with service calls, and offer immediate performance feedback.  On a more informal basis, the Company provides on-the-job process training and tutoring for all product assembly and packaging personnel.  Employee

 

5

 

teams gather daily to receive information about products to be produced and techniques to be utilized, and have an opportunity to ask questions and receive one-on-one training as necessary.

 

The Company’s in-house training programs for technical support and telecommunications process management employees involve an in-depth, structured learning environment that builds technical competence and teaches critical software skills necessary to provide effective services to its clients.  Each client service representative is designated and trained to support a particular product or group of products for a particular client.  These client service representatives receive training in product knowledge, call listening, and computer skills prior to answering any customer calls independently.  Training time depends on the complexity of the product for which such representative will provide services.  Further, the Company uses live and taped call reviews along with customer feedback surveys to continuously monitor and enhance its service quality.

 

Industry and Competition

 

Management believes businesses throughout the world are increasingly focusing on their core competencies, and are increasingly engaging outsourced service companies to perform specialized, non-core functions and services.  Outsourcing of non-core activities offers a strategic advantage to companies in a wide range of industries by offering them an opportunity to reduce operating costs and working capital needs, improve their reaction to business cycles, manage capacity, and improve customer and technical information gathering and utilization.  To realize these advantages, companies are outsourcing the process of planning, implementing, and controlling the efficient flow of goods, services, teleservices, and related information from point of origin to point of consumption.  Additionally, rapid technological changes and rising customer expectations for high-quality goods and services make it increasingly difficult and expensive for companies to maintain the necessary personnel and product capabilities in-house to support a product’s life-cycle on a cost-effective basis.  Management believes companies that focus on providing these services as their core business, including StarTek, are expected to continue to benefit from these outsourcing trends.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”— “Risk Factors” set forth herein for a discussion of the Company’s “Highly Competitive Market”.

 

StarTek competes on the basis of quality, reliability of service, price, efficiency, speed, and flexibility in tailoring services to client needs.  Management believes StarTek’s comprehensive and integrated services differentiate the Company from non-client competitors who may only be able to provide one or a few of the outsourced services StarTek provides.  The Company continuously explores new outsourcing service opportunities, typically in circumstances where clients are experiencing inefficiencies in non-core areas of their businesses.  Management believes it can develop superior outsourced solutions to such inefficiencies on a cost-effective basis.  Management believes StarTek competes primarily with in-house process management operations of its current and potential clients.  Such in-house operations include Internet operations, E-commerce support, technical support teleservices, and supply chain management.  StarTek also competes with certain companies that provide similar services on an outsourced basis. There are numerous competitors of all sizes that provide product order teleservices and product fulfillment distribution services.

 

Web Site Availability of Reports

 

Copies of StarTek Inc.’s 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 are available free of charge through StarTek’s web site (www.startek.com) as soon as reasonably practicable after the Company electronically files the material with, or furnishes it to, the Securities and Exchange Commission.

 

6

 

ITEM 2.  PROPERTIES

 

Facilities

 

As of December 31, 2002 StarTek owned or operated the following facilities, containing in aggregate, approximately 1,096,000 square feet:

 

Properties		Year Opened or Acquired		Square feet		Leased, Company Owned, or Otherwise
US Facilities
Greeley, Colorado		1987		100,000		Company Owned
Denver, Colorado		1995		138,000		Company Owned
Greeley, Colorado		1998		35,000		Company Owned
Laramie, Wyoming		1998		22,000		Company Owned
Clarksville, Tennessee		1998		305,000		Company Owned(a)
Grand Junction, Colorado		1999		46,350		Leased
Greeley, Colorado		1999		88,000		Company Owned
Big Spring, Texas		1999		30,000		Leased
Enid, Oklahoma		2000		47,524		Company Owned
Grand Junction, Colorado		2000		54,500		Leased
Denver, Colorado		2000		13,800		Leased
International Facilities
Hartlepool, England (2)		1993		73,000		Leased(b)
Kingston, Ontario Canada		2001		49,000		Company Owned
Kingston, Ontario Canada		2001		20,000		Leased
Cornwall, Ontario Canada		2001		74,000		Leased

 

        Substantially all of the Company’s facility space can be used to support several of the Company’s process management service platforms.  In February 2003, the Company announced the opening of two new facilities to meet increasing client demands.  A 61,988 square foot leased facility will be located in Regina, Saskatchewan, Canada.  Another 37,500 square foot leased facility will be located in Decatur, Illinois.  Both facilities are expected to open in the second quarter of 2003.  Management believes StarTek’s existing facilities are adequate for the Company’s current operations, but continued capacity expansion could be required to support continued growth.  Management intends to maintain a certain amount of excess capacity to enable StarTek to readily provide for needs of new clients, and increasing needs of existing clients.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”— “Risk Factors” set forth herein for a discussion of “Risks of Business Interruptions”.

 

(a)     See Note 9 to the consolidated financial statements set forth herein for a description of the Tennessee financing arrangement.

(b)     Single lease for two operating facilities.

 

ITEM 3.  LEGAL PROCEEDINGS

 

The Company has 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 the Company’s business, financial condition or results of operations.

 

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

No matters were submitted to a vote of security holders during the three months ended December 31, 2002.

 

7

 

PART II

 

ITEM 5.  MARKET FOR THE REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

 

Market Price of Common Stock

 

StarTek’s common stock has traded under the symbol “SRT” on the New York Stock Exchange since June 19, 1997, the effective date of the Company’s initial public offering.  StarTek’s common stock also trades on the Pacific Exchange, Chicago Stock Exchange, Boston Stock Exchange, Philadelphia Stock Exchange, and Berlin Stock Exchange.  High and low closing sale prices of StarTek’s common stock for 2001 and 2002 were:

 

		2001				2002
		High		Low		High		Low
First Quarter		19.66		11.60		24.93		16.70
Second Quarter		22.60		13.20		26.75		21.83
Third Quarter		26.60		15.81		26.17		21.00
Fourth Quarter		19.75		15.23		27.99		20.61

 

The closing sale price for StarTek’s common stock on March 10, 2003 was $22.53.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”—”Risk Factors” set forth herein for a discussion of “Volatility of Stock Price”.

 

Holders of Common Stock

 

As of March 10, 2003, there were approximately 3,133 stockholders of record and 14,206,101 shares of common stock outstanding.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”— “Risk Factors” set forth herein for a discussion of “Control by Principal Stockholders”.

 

Dividend Policy

 

StarTek currently intends to retain all earnings to finance continued growth of its business and does not expect to pay any dividends in the foreseeable future.  The payment of any dividends will be at the discretion of the Company’s Board of Directors and will depend upon, among other things, availability of funds, future earnings, capital requirements, contractual restrictions, general financial condition of the Company, and general business conditions.  Under its $10 million line of credit, the Company may not pay dividends in an amount that would cause a failure to meet its financial covenants.  See Note 7 to the consolidated financial statements, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”—”Liquidity and Capital Resources” set forth herein for a description of these financial covenants.

 

8

 

ITEM 6.  SELECTED FINANCIAL DATA

 

The following selected financial data should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Form 10-K.  Additionally, the following selected financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Form 10-K.

 

		Year Ended December 31,
		1998			1999			2000