CTG Reports 2002 Fourth Quarter and Annual Results; Billable Headcount Increases; Revenues and Earnings Meet Guidance.Business Editors BUFFALO, N.Y.--(BUSINESS WIRE)--Feb. 10, 2003 CTG CTG Cartridge CTG Center for Technology in Government (SUNY, Albany, New York) CTG Center for Technology in Government CTG Computer Task Group (IT consulting company; Buffalo, NY, USA) (NYSE NYSE See: New York Stock Exchange : CTG), an international information technology (IT) solutions and staffing company, today announced its financial results for the 2002 fourth quarter and full year. The Company reported 2002 fourth quarter revenues of $63.6 million, compared with 2001 fourth quarter revenues of $72.2 million. CTG's net income for the 2002 fourth quarter was $0.1 million, or $0.01 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with 2001 fourth quarter net income of $0.4 million, or $0.02 per diluted share. For 2002, CTG reported revenues of $263.3 million, compared to revenues of $320.2 million in 2001. CTG's 2002 net income before the cumulative effect of change in accounting principle was $1.4 million, or $0.08 per diluted share, compared with a 2001 net loss of $2.2 million, or $0.13 per diluted share. The Company's net loss for 2002 was $35.7 million, or $2.11 per diluted share, including a $37.0 million non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. for goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. . The goodwill impairment charge, effective at January 1, 2002, was related to CTG's required adoption of Statement of Financial Accounting Standard (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ) No. 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ." "Before the effect of the change in accounting principle, CTG posted a profit in 2002, despite another difficult year for the technology sector and the broader economy. We also remain in a sound financial position, reducing CTG's long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. by almost half in 2002 to just under $8.5 million, while maintaining sufficient liquidity to fund our business," said James R. Boldt, CTG chairman and chief executive officer. "Our strategy of focusing on our core services The introduction to this article provides insufficient context for those unfamiliar with the subject matter. Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. and strengths while actively managing costs has proven to be an effective one for enduring this prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. downturn in corporate IT spending and the general economy. We are encouraged by recent increased activity from our staffing offering, which supports the IT staffing needs of large companies in the U.S. Since mid last year, we signed two significant staffing contracts and have seen staffing demand increase in each of the last three quarters. In the 2002 fourth quarter, we again saw a 4 percent rise in billable headcount in our strategic staffing group, and our overall billable headcount was also up." Mr. Boldt continued, "Health care IT is another major area of our business that showed increased strength in 2002. CTG's revenues from its health care IT practice were up almost 20 percent for the year, and we are seeing continued opportunity in the health care market on several fronts -- the Health Insurance Portability and Accountability Act The Health Insurance Portability and Accountability Act (HIPAA) was enacted by the U.S. Congress in 1996. According to the Centers for Medicare and Medicaid Services (CMS) website, Title I of HIPAA protects health insurance coverage for workers and their families when (HIPAA (Health Insurance Portability & Accountability Act of 1996, Public Law 104-191) Also known as the "Kennedy-Kassebaum Act," this U.S. law protects employees' health insurance coverage when they change or lose their jobs (Title I) and provides standards for patient health, ), application management outsourcing Application Management Outsourcing refers to the ongoing maintenance, management, conversion, enhancement and support of an application software portfolio by an external company. (AMO AMO - America's Multimedia Online ), and computerized computerized adapted for analysis, storage and retrieval on a computer. computerized axial tomography see computed tomography. physician order entry (CPOE CPOE Computerized Physician Order Entry CPOE Computerized Provider Order Entry CPOE Computerized Prescriber Order Entry ) systems. Our HIPAA work to date has largely been compliance assessments, and we anticipate more extensive follow-on remediation work after the major software vendors issue their HIPAA-compliant packages for health care providers. We continue to have a significant pipeline of work in our AMO business that is approved and ready to proceed pending client action." CTG also issued guidance for the first quarter of 2003. Based on current business and market conditions, CTG expects that its revenues for the first quarter of 2003 will range from $62 million to $64 million, and its earnings per share will approximate breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations . Mr. Boldt concluded, "Our guidance for the 2003 first quarter reflects approximately the same revenues sequentially, despite three fewer billing days in our current quarter. As such, we are actually looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. a sequential increase in our daily revenue run rate, which currently is about $1 million per billing day. The lower number of billing days in the first quarter of 2003, combined with severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when associated with reducing the bench in Europe, is expected to limit this quarter's profitability to the breakeven level. We are feeling cautiously optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our performance in 2003, as historically a turn in staffing demand has been a leading indicator Leading Indicator A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators are used to predict changes in the economy, but are not always accurate. of a recovery in our business. Additionally, the strength of our health care offering is a positive for CTG, given the current opportunity in this market, and there is good long-term growth potential for our AMO offering, as more companies look to reduce costs and focus on their core businesses by outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. IT services." Backed by 37 years' experience, CTG provides IT application management, consulting, software development and integration, and staffing solutions to help Global 2000 clients focus on their core businesses and use IT as a competitive advantage to excel in their markets. CTG combines in-depth understanding of our clients' businesses with a full range of integrated services In computer networking, IntServ or integrated services is an architecture that specifies the elements to guarantee quality of service (QoS) on networks. IntServ can for example be used to allow video and sound to reach the receiver without interruption. and proprietary ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. 9001-certified service methodologies. Our 2,800 IT professionals based in an international network of offices in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Europe have a proven track record of delivering solutions that work. More information about CTG is available on the Web at www.ctg.com. This document contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. concerning the Company's current expectations as to future growth. These statements are based upon a review of industry reports, current business conditions in the areas where the Company does business, the availability of qualified professional staff, the demand for the Company's services, and other factors that involve risk and uncertainty. As such, actual results may differ materially in response to a change in such factors. Such forward-looking statements should be read in conjunction with the Company's disclosures set forth in the Company's 2001 Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial section of the Company's 2001 annual report, which are incorporated by reference. The Company assumes no obligation to update the forward-looking information contained in this release. CTG will hold a conference call on February 11, 2003 at 11:00 AM Eastern Time to discuss its financial results and business strategy. CTG Chairman and Chief Executive Officer James R. Boldt will lead the call. Interested parties can dial in to 1-800-869-4362 between 10:45 AM and 10:50 AM and ask for the CTG conference call and identify James Boldt as the conference chairperson chairperson Chairman The head of an academic department. See 'Chair.', Cf Chief. . A replay of the call will be available between 1:00 PM Eastern Time February 11, 2003 and 1:00 PM Eastern Time February 12, 2003 by dialing 1-800-642-1687 and entering the conference ID number 7555785.
COMPUTER TASK GROUP, INCORPORATED (CTG)
Consolidated Statements of Operations
(amounts in thousands except per share data)
For the Quarter Ended For the Year Ended
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
------------ ------------ ------------ ------------
Revenue (a) $ 63,566 $ 72,215 $ 263,276 $ 320,213
Direct costs (a) 46,351 51,049 190,736 228,461
Selling, general
and administrative
expenses (b) 16,802 20,036 68,518 91,338
------------ ------------ ------------ ------------
Operating income 413 1,130 4,022 414
Other expense, net (245) (756) (1,770) (3,697)
------------ ------------ ------------ ------------
Income (loss)
before income
taxes and
cumulative
effect of change
in accounting
principle 168 374 2,252 (3,283)
Provision (benefit)
for income taxes 67 21 890 (1,081)
------------ ------------ ------------ ------------
Net income (loss)
before cumulative
effect of change
in accounting
principle 101 353 1,362 (2,202)
Cumulative effect
of change in
accounting
principle (c) - - (37,038) -
------------ ------------ ------------ ------------
Net income (loss) $ 101 $ 353 $ (35,676) $ (2,202)
============ ============ ============ ============
Basic net income
(loss) per share:
Net income (loss)
before cumulative
effect of change
in accounting
principle $ 0.01 $ 0.02 $ 0.08 $ (0.13)
Cumulative effect
of change in
accounting
principle (c) - - (2.23) -
------------ ------------ ------------ ------------
Basic net income
(loss) per share $ 0.01 $ 0.02 $ (2.15) $ (0.13)
============ ============ ============ ============
Diluted net income
(loss) per share:
Net income (loss)
before cumulative
effect of change
in accounting
principle $ 0.01 $ 0.02 $ 0.08 $ (0.13)
Cumulative effect
of change in
accounting
principle (c) - - (2.19) -
------------ ------------ ------------ ------------
Diluted net income
(loss) per share $ 0.01 $ 0.02 $ (2.11) $ (0.13)
============ ============ ============ ============
Weighted average
shares
outstanding:
Basic 16,601 16,493 16,567 16,435
Diluted 16,766 16,594 16,895 16,435
a. During the first quarter of 2002, based upon new interpretive
guidance issued for the accounting for billable expenses, the
Company began to record its billable expenses on a gross basis as
both revenue and direct costs, rather than on a net basis. Such
costs totaled $1.3 million and $1.7 million in the fourth quarter
of 2002 and 2001, respectively, and $6.8 million and $8.1 million
in 2002 and 2001, respectively. The 2001 revenue and direct costs
balances have been adjusted by these amounts from that which was
previously reported.
b. On January 1, 2002, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 142, "Goodwill and Other
Intangible Assets," which discontinued the practice of amortizing
goodwill and indefinite-lived intangible assets. In the fourth
quarter of 2001 and in the full year 2001, the Company recorded
approximately $1.0 million and $4.0 million, respectively, of such
amortization expense.
c. In conjunction with the adoption of SFAS No. 142 and based upon an
independent appraisal, CTG recorded a pre-tax, non-cash loss for
impairment of $37.0 million, or $2.23 per basic share and $2.19
per diluted share, in the 2002 year-to-date results. The
impairment primarily relates to the goodwill that resulted from
the acquisition in February 1999 of the health care information
technology services provider Elumen Solutions, Inc.
COMPUTER TASK GROUP, INCORPORATED (CTG)
Consolidated Balance Sheets
(amounts in thousands)
Dec. Dec. Dec. Dec.
31, 31, 31, 31,
2002 2001 2002 2001
------ ------ ------ -------
Current Assets: Current Liabilities:
Cash and cash $ 69 $ 3,362 Accounts $ 6,520 $ 8,193
equivalents payable
Accounts receivable, 43,696 50,920 Accrued 19,139 24,133
net compensation
Other current assets 3,029 4,047 Other current 3,914 5,692
----- ------- liabilities ------ ------
Total Current 46,794 58,329 Total Current 29,573 38,018
Assets Liabilities
Property and 11,129 13,082 Long-term debt 8,497 15,512
equipment, net
Other assets (a) 41,261 78,077 Other 8,744 9,331
liabilities
Shareholders' 52,370 86,627
------- ------ equity (a) ------- -------
Total Liabilities
and Shareholders'
Total Assets $99,184 $149,488 Equity $99,184 $149,488
======= ======== ======= ========
a. In conjunction with the adoption of SFAS No. 142 and based upon an
independent appraisal, CTG recorded a pre-tax, non-cash loss for
impairment of $37.0 million in the 2002 year-to-date results. The
impairment primarily relates to the goodwill that resulted from
the acquisition in February 1999 of the health care information
technology services provider Elumen Solutions, Inc.
Today's news release, along with CTG news releases for the past year, is available on the Web at www.ctg.com. |
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