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Exhibit 99.1
| FOR RELEASE at 8:00 a.m. EST | A. Emmet Stephenson, Jr. | |
| Wednesday, November 5, 2003 | Chairman | |
| (303) 399-2400 |
StarTek's Net Income Up 31% in Third Quarter
Quarterly Dividend is Increased to $.37 Per Share
DENVER—StarTek, Inc. (NYSE:SRT) reports that fully diluted earnings per share increased 29% to $0.40 for the third quarter ended September 30, 2003, from $0.31 last year. Net income increased 31% to $5.9 million from $4.5 million, and revenue grew 15% to $60.0 million this quarter compared to $52.1 million for the same quarter in 2002.
For the nine months ended September 30, 2003, net income was up 14% to $14.2 million, or $0.98 earnings per fully diluted share, compared to $12.5 million, or $0.87 earnings per fully diluted share in the same period last year. For the first nine months of 2003, revenue increased 17% to $165.1 million compared to $141.4 million for the same period last year.
The StarTek Board of Directors is pleased to declare an increase in its quarterly cash dividend to $0.37 per share, payable November 25, 2003, to StarTek holders of record on November 14, 2003. The previous quarter's dividend was $0.36 and was the company's first quarter of cash dividend payments.
Chairman A. Emmet Stephenson, Jr. said, "StarTek's business grew significantly during the September quarter as previously opened facilities ramped up on time and within budget. Our new associates in Decatur and Regina have completed an excellent start up for our clients in those two new locations for which we are most appreciative. We are currently opening two more facilities that will ultimately employ nearly 1,000 additional new employees when fully staffed in 2004. Currently, we expect next year to offer opportunity for growth in our technical support and business process management services platforms, and we will be fully prepared to capture that additional growth. After considering our capital needs to finance our growing business, the Board has decided to increase our quarterly dividend to share the cash flow from operations with our stockholders.
"StarTek is also pleased to announce the promotion of Gene McKenzie to Executive Vice President and Chief Financial Officer. Gene has been serving as the Controller for the past year and a half, and his experience provides excellent qualification for his new position. Before joining StarTek, Gene served as Director of Finance and Information Technology for a $700 million division of International Paper Company and ran his own business, Analytical Solutions, Inc., for 3 years. Previously, he worked 6 years for Atlantic Richfield and 10 years in auditing with Ernst and Young in Dallas and New York City. Mr. McKenzie has a BBA degree in accounting from Abilene Christian University and an MBA from the University of Denver.
"David Rosenthal is assuming the position of Adviser to the Chairman and will be assisting in an orderly transition of the CFO responsibilities over the next several months. All of us appreciate the contribution David has made at our company over the last two and a quarter years."
Company Profile
StarTek, Inc. is a leading global provider of business process outsourcing services and owns proprietary Internet businesses arising from a world-class portfolio of branded domain names. Our integrated outsourcing services include business process management, high-end inbound technical support and customer care, E-commerce support and fulfillment, Internet support, and a comprehensive offering of supply chain management services. StarTek has nineteen facilities, including six in Colorado, five in Canada, and one each in Illinois, Louisiana, Oklahoma, Tennessee, Texas, and Wyoming. International services are performed from two facilities in the United Kingdom. The Company's clients are in the software, telecommunications, consumer products, cable, Internet, E-commerce, and technology industries. We are also targeting financial services and health care companies. Please visit our web sites at www.startek.com and www.startekeurope.com.
Forward Looking Statements
The matters regarding the future discussed in this news release include certain forward-looking statements that involve specific risks and uncertainties. In accordance with the Private Securities Litigation Reform Act of 1995, the following are important risks and uncertainties that could cause StarTek's actual results to differ materially from those expressed or implied by such forward-looking statements. These include, but are not limited to, general economic conditions in the Company's markets, the loss of its principal clients, the loss or delayed implementation of a large project which could cause quarterly variation in StarTek's revenue and earnings, expectations regarding continued growth, dependence on key personnel and our labor force, dependence on key industries and the trend toward outsourcing, risks associated with StarTek's contracts, risks associated with rapidly changing technology, risks of business interruption, risks associated with international operations and expansion, risks from offshore competition, highly competitive domestic and international markets, and risks related to fluctuating values in the Company's portfolio of investment securities. Readers are encouraged to review Management's Discussion and Analysis of Financial Condition and Results of Operations—Factors That May Affect Future Results and all other disclosures appearing in the Company's Form 10-K and 10-Q filings with the Securities and Exchange Commission.
STARTEK, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(dollars in thousands)
| | December 31, 2002 | September 30, 2003 | |||||
|---|---|---|---|---|---|---|---|
| | | (unaudited) | |||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 13,143 | $ | 13,944 | |||
| Investments | 44,022 | 48,691 | |||||
| Trade accounts receivable, less allowance for doubtful accounts of $816 and $816, respectively | 37,232 | 32,719 | |||||
| Inventories | 1,463 | 2,171 | |||||
| Income tax receivable | 335 | — | |||||
| Deferred tax assets | 4,300 | 3,781 | |||||
| Prepaid expenses and other assets | 958 | 809 | |||||
| Total current assets | 101,453 | 102,115 | |||||
| Property, plant and equipment, net | 38,797 | 48,207 | |||||
| Long-term deferred tax assets | 110 | 1,382 | |||||
| Other assets | 61 | 185 | |||||
| Total assets | $ | 140,421 | $ | 151,889 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 11,156 | $ | 8,129 | |||
| Accrued liabilities | 7,235 | 9,886 | |||||
| Income taxes payable | — | 304 | |||||
| Current portion of long-term debt | 2,221 | 2,158 | |||||
| Other | 462 | 334 | |||||
| Total current liabilities | 21,074 | 20,811 | |||||
| Long-term debt, less current portion | 4,261 | 2,691 | |||||
| Other | 492 | 929 | |||||
| Stockholders' equity: | |||||||
| Common stock | 142 | 143 | |||||
| Additional paid-in capital | 50,060 | 52,019 | |||||
| Cumulative translation adjustment | (123 | ) | 112 | ||||
| Unrealized gain (loss) on investments available for sale | (738 | ) | 829 | ||||
| Retained earnings | 65,253 | 74,355 | |||||
| Total stockholders' equity | 114,594 | 127,458 | |||||
| Total liabilities and stockholders' equity | $ | 140,421 | $ | 151,889 | |||
STARTEK, INC. AND SUBSIDIARIES
Condensed Consolidated Income Statements
(dollars in thousands, except per share data)
(unaudited)
| | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 2002 | 2003 | 2002 | 2003 | |||||||||
| Revenues | $ | 52,095 | $ | 60,002 | $ | 141,406 | $ | 165,058 | |||||
| Cost of services | 39,016 | 44,448 | 106,030 | 124,549 | |||||||||
| Gross profit | 13,079 | 15,554 | 35,376 | 40,509 | |||||||||
| Selling, general and Administrative expenses | 5,834 | 7,146 | 16,133 | 20,699 | |||||||||
| Operating profit | 7,245 | 8,408 | 19,243 | 19,810 | |||||||||
| Net interest income and other | 47 | 986 | 1,013 | 2,850 | |||||||||
| Income before income taxes | 7,292 | 9,394 | 20,256 | 22,660 | |||||||||
| Income tax expense | 2,786 | 3,494 | 7,754 | 8,429 | |||||||||
| Net income(A) | $ | 4,506 | $ | 5,900 | $ | 12,502 | $ | 14,231 | |||||
| Weighted average shares of common stock(B) | 14,168,463 | 14,248,378 | 14,124,884 | 14,220,574 | |||||||||
| Dilutive effect of stock options | 227,991 | 432,674 | 237,192 | 338,656 | |||||||||
| Common stock and common stock equivalents(C) | 14,396,454 | 14,681,052 | 14,362,076 | 14,559,230 | |||||||||
| Earnings per share: | |||||||||||||
| Basic(A/B) | $ | 0.32 | $ | 0.41 | $ | 0.89 | $ | 1.00 | |||||
| Diluted(A/C) | $ | 0.31 | $ | 0.40 | $ | 0.87 | $ | 0.98 | |||||
STARTEK, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
| | Nine Months Ended September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| �� | 2002 | 2003 | |||||||
| Operating Activities | |||||||||
| Net income | $ | 12,502 | $ | 14,231 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
| Depreciation and amortization | 6,882 | 7,478 | |||||||
| Deferred income taxes | 3,072 | (1,815 | ) | ||||||
| Net (gain) loss on sale of assets | 2 | (28 | ) | ||||||
| Changes in operating assets and liabilities: | |||||||||
| Sales of trading securities, net | 1,856 | 1,956 | |||||||
| Trade accounts receivable, net | (739 | ) | 4,513 | ||||||
| Inventories | 536 | (708 | ) | ||||||
| Prepaid expenses and other assets | 403 | 25 | |||||||
| Accounts payable | (3,655 | ) | (3,027 | ) | |||||
| Income taxes payable | (2,171 | ) | 1,105 | ||||||
| Accrued and other liabilities | 1,595 | 2,960 | |||||||
| Net cash provided by operating activities | 20,283 | 26,690 | |||||||
| Investing Activities | |||||||||
| Purchases of investments available for sale | (31,785 | ) | (38,792 | ) | |||||
| Proceeds from disposition of investments available for sale | 18,803 | 34,657 | |||||||
| Purchases of property, plant and equipment | (3,495 | ) | (15,328 | ) | |||||
| Proceeds from disposition of property plant and equipment | 38 | 129 | |||||||
| Net cash used in investing activities | (16,439 | ) | (19,334 | ) | |||||
| Financing Activities | |||||||||
| Stock options exercised | 1,531 | 1,494 | |||||||
| Principal payments on borrowings, net | (4,295 | ) | (2,428 | ) | |||||
| Dividends on common stock | — | (5,128 | ) | ||||||
| Net cash used in financing activities | (2,764 | ) | (6,062 | ) | |||||
| Effect of exchange rate changes on cash | 320 | (493 | ) | ||||||
| Net decrease in cash and cash equivalents | 1,400 | 801 | |||||||
| Cash and cash equivalents at beginning of period | 14,282 | 13,143 | |||||||
| Cash and cash equivalents at end of period | $ | 15,682 | $ | 13,944 | |||||
StarTek's Net Income Up 31% in Third Quarter
STARTEK, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (dollars in thousands)