CTG Reports 2002 Third Quarter Financial Results Headcount Stabilizes; Revenues and Earnings Within Revised Guidance.Business Editors BUFFALO Buffalo, city, United States Buffalo, city (1990 pop. 328,123), seat of Erie co., W N.Y., on Lake Erie and the Niagara and Buffalo rivers; inc. 1832. With more than 37 mi (60 km) of waterfront, it is a major commercial and industrial port and railroad hub. , N.Y.--(BUSINESS WIRE)--Oct. 14, 2002 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 third quarter of 2002, which ended on September September: see month. 27, 2002. CTG's revenues for the third quarter of 2002 were $62.1 million, compared with revenues of $77.1 million in the third quarter of 2001. CTG's net income for the 2002 third 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 net income in the 2001 third quarter of $0.2 million, or $0.01 per diluted share. For the first three quarters of 2002, CTG reported revenues of $199.7 million, compared with revenues of $248.0 million in the first three quarters of 2001. CTG's net loss for the first three quarters of 2002 was $35.8 million, or $2.16 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. . Excluding the goodwill impairment charge, effective at January January: see month. 1, 2002, the date of CTG's 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. ," CTG's net income for the first three quarters of 2002 was $1.3 million, or $0.08 per diluted share, compared with a net loss of $2.6 million, or $0.16 per diluted share, for the first three quarters of 2001. "While client-related project delays prompted us to revise our third quarter guidance, we have seen some evidence that new business is moving forward with the recent signing of $5.0 million in 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 ) agreements," said CTG Chairman and Chief Executive Officer James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. R. Boldt. "Similar to the rest of the industry, we have several AMO engagements which have been delayed. While there are various reasons for the slippage Slippage The difference between estimated transaction costs and the amount actually paid. Notes: Slippage is usually attributed to a change in the spread. See also: Spread, Transaction Costs Slippage , we remain confident that at some point these opportunities will move forward, as they represent a significant financial savings for our customers. We believe that our decision to refocus Verb 1. refocus - focus once again; The physicist refocused the light beam" focus - cause to converge on or toward a central point; "Focus the light on this image" 2. on application management outsourcing just over a year ago is paying off and will have a positive impact on our earnings going forward. "Although the overall IT services market remains weak, we are seeing some positive signs in our business that are encouraging," Mr. Boldt added. "We continue to have strong proposal activity in our AMO business, although the longer nature of the AMO sales cycle means that this business takes much longer to close. Our decision to pursue preferred vendor status with large customers has produced several new contracts. As a result, our strategic staffing group, which has responsibility for our large staffing customers in the U.S., had a 4% increase in billable headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. during the third quarter of the year. This increase held our total employment constant for the quarter. While pricing for staffing remains competitive, we remain encouraged by the increase in our staffing requirements that the new clients have produced." Mr. Boldt also commented on activity in CTG's healthcare IT practice: "Our 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, ) assessments have exceeded expectations, contributing to a revenue growth rate in excess of 20% in our healthcare IT practice. Once the major healthcare software vendors release their HIPAA-compliant packages, we will be in an excellent position to secure the more significant remediation work related to HIPAA." CTG also issued guidance for the fourth quarter of 2002. Based on current business and market conditions, CTG expects that its revenues for the fourth quarter of 2002 will range from $63.0 million to $65.0 million and that its net income per diluted share will range from $0.01 to $0.03. Mr. Boldt concluded, "Our guidance for the fourth quarter reflects two additional billing days and flat to modest growth in billable headcount. While we will continue to actively manage our costs to achieve modest profitability and maintain CTG's strong financial position, we are adding to our recruiting and sales personnel given the demand that we currently are experiencing. For the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , we believe that we are well-positioned to take advantage of new market opportunities that fit our strategy and capabilities." Backed by 36 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 in-depth adj. Detailed; thorough: an in-depth study. in-depth Adjective detailed or thorough: an in-depth analysis 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 Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). 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 for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information contained in this release. CTG will hold a conference call on October 15, 2002 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 October 15, 2002 and 1:00 PM Eastern Time October 16, 2002 by dialing 1-800-642-1687 and entering the conference ID number 5814403.
COMPUTER TASK GROUP, INCORPORATED (CTG)
Consolidated Statements of Operations
(amounts in thousands except per share data)
For the Quarter For the Three Quarters
Ended Ended
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
2002 2001 2002 2001
--------- --------- -------- --------
Revenue (a) $ 62,149 $ 77,122 $199,710 $247,998
Direct costs (a) 45,250 54,780 144,385 177,412
Selling, general and
administrative
expenses (b) 16,399 21,275 51,716 71,302
--------- --------- -------- --------
Operating income (loss) 500 1,067 3,609 (716)
Net other expense (267) (808) (1,525) (2,941)
--------- --------- -------- --------
Income (loss) before
income taxes and
cumulative effect
of change in
accounting principle 233 259 2,084 (3,657)
Provision (benefit)
for income taxes 92 77 823 (1,102)
--------- --------- -------- --------
Net income (loss)
before cumulative
effect of change
in accounting
principle 141 182 1,261 (2,555)
Cumulative effect of
change in accounting
principle (c) -- -- (37,038) --
--------- --------- -------- --------
Net income (loss) $ 141 $ 182 $(35,777) $ (2,555)
========= ========= ======== ========
Basic and diluted net
income (loss) per share:
Income (loss) before
cumulative effect
of change in
accounting principle $ 0.01 $ 0.01 $ 0.08 $ (0.16)
Cumulative effect of
change in accounting
principle (c) -- -- (2.24) --
--------- --------- -------- --------
Basic and diluted net
income (loss)
per share $ 0.01 $ 0.01 $ (2.16) $ (0.16)
========= ========= ======== ========
Weighted average
shares outstanding:
Basic 16,575 16,443 16,555 16,415
Diluted 16,813 16,443 16,555 16,415
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 $1.6 million and $2.0 million in the third
quarter of 2002 and 2001, respectively, and $5.4 million and
$6.4 million in the year-to-date periods for 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 third quarter of 2001 and for the year-to-date 2001
period, the Company recorded approximately $1.0 million and
$3.0 million, respectively, of such amortization expense.
c. In conjunction with the adoption of SFAS No. 142 and based
upon an independent appraisal of the value of the Company's
intangible assets, CTG recorded a pre-tax, non-cash loss for
impairment of $37.0 million or $2.24 per share in the 2002
third quarter in its 2002 year-to-date results. The write-off
primarily relates to the goodwill that resulted from the
acquisition in February 1999 of the healthcare information
technology services provider Elumen Solutions, Inc.
COMPUTER TASK GROUP, INCORPORATED (CTG)
Consolidated Balance Sheets
(amounts in thousands)
Sept. 27, Sept. 28,
2002 2001
Current Assets:
Cash and cash equivalents $ 866 $ 6,586
Accounts receivable, net 46,427 60,562
Other current assets 3,820 3,619
-------- --------
Total Current Assets 51,113 70,737
Property and equipment, net 11,760 13,415
Other assets (a) 40,267 79,244
-------- --------
Total Assets $103,140 $163,426
======== ========
Sept. 27, Sept. 28,
2002 2001
Current Liabilities:
Accounts payable $ 5,920 $ 9,059
Accrued compensation 16,735 23,134
Income taxes payable 1,799 3,133
Other current liabilities 4,434 7,873
-------- --------
Total Current Liabilities 28,888 43,199
Long-term debt 13,197 23,508
Other liabilities 9,149 10,228
Shareholders' equity (a) 51,906 86,491
-------- --------
Total Liabilities and
Shareholders' Equity $103,140 $163,426
======== ========
a. In conjunction with the adoption of SFAS No. 142 and based
upon an independent appraisal of the value of the Company's
intangible assets, CTG recorded a pre-tax, non-cash loss for
impairment of $37.0 million in the 2002 third quarter in its
2002 year-to-date results. The write-off primarily relates to
the goodwill that resulted from the acquisition in February
1999 of the healthcare 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.
|
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion