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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 28, 2003
Commission file number 1-9410
------
COMPUTER TASK GROUP, INCORPORATED
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
New York 16-0912632
- -------------------------------------------- ----------------------------------
(State of incorporation) (IRS Employer Identification No.)
800 Delaware Avenue, Buffalo, New York 14209
- -------------------------------------------- --------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (716) 882-8000
Indicate by check mark 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 X No
---
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes X No
----- -----
Number of shares of common stock outstanding:
Shares outstanding
Title of each class at March 28, 2003
------------------- ------------------
Common stock, par value
$.01 per share 20,868,834
1
PART I. FINANCIAL INFORMATION
-----------------------------
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
COMPUTER TASK GROUP, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
QUARTER ENDED
MARCH 28, MARCH 29,
2003 2002
-------- --------
(amounts in thousands,
except per share data)
Revenue $ 63,862 $ 69,894
Direct costs 47,154 50,149
Selling, general and administrative expenses 16,286 17,943
-------- --------
Operating income 422 1,802
Interest and other income 27 80
Interest and other expense (225) (1,140)
-------- --------
Income before income taxes and cumulative
effect of change in accounting principle 224 742
Provision for income taxes 94 293
-------- --------
Net income before cumulative effect of change in
accounting principle 130 449
Cumulative effect of change in accounting principle - (37,038)
-------- --------
Net income (loss) $ 130 $(36,589)
======== ========
Basic net income (loss) per share:
Net income before cumulative effect of change in
accounting principle $ 0.01 $ 0.03
Cumulative effect of change in accounting principle - (2.24)
-------- --------
Basic net income (loss) per share $ 0.01 $ (2.21)
======== ========
Diluted net income (loss) per share:
Net income before cumulative effect of change in
accounting principle $ 0.01 $ 0.03
Cumulative effect of change in accounting principle - (2.19)
-------- --------
Diluted net income (loss) per share $ 0.01 $ (2.16)
======== ========
Weighted average shares outstanding:
Basic 16,623 16,533
Diluted 16,765 16,970
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
COMPUTER TASK GROUP, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
MARCH 28, DECEMBER 31,
2003 2002
----------- ------------
(amounts in thousands)
ASSETS
- ----------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and temporary cash investments $ 2,881 $ 69
Accounts receivable, net 46,855 43,696
Prepaids and other 3,199 2,406
Deferred income taxes 569 623
- ----------------------------------------------------------------------------------------------------------------------
Total current assets 53,504 46,794
Property and equipment, net of accumulated depreciation 8,387 8,939
Property held for sale 2,190 2,190
Goodwill 35,678 35,678
Deferred income taxes 4,330 4,412
Other assets 721 1,171
- ----------------------------------------------------------------------------------------------------------------------
Total assets $ 104,810 $ 99,184
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 7,211 $ 6,520
Accrued compensation 16,961 19,139
Advance billings on contracts 225 359
Other current liabilities 4,240 4,163
- ----------------------------------------------------------------------------------------------------------------------
Total current liabilities 28,637 30,181
Long-term debt 15,641 8,497
Deferred compensation benefits 7,496 7,786
Other long-term liabilities 350 350
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities 52,124 46,814
Shareholders' Equity:
Common stock, par value $.01 per share, 150,000,000
shares authorized; 27,017,824 shares issued 270 270
Capital in excess of par value 111,433 111,465
Retained earnings 37,827 37,697
Less: Treasury stock of 6,148,990 shares at cost (31,416) (31,416)
Stock Trusts of 4,222,612 and 4,313,609 shares at cost, respectively (58,747) (58,848)
Accumulated other comprehensive income:
Foreign currency adjustment (5,999) (6,116)
Minimum pension liability adjustment (682) (682)
- ----------------------------------------------------------------------------------------------------------------------
Accumulated other comprehensive income (6,681) (6,798)
- ----------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 52,686 52,370
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 104,810 $ 99,184
=========== ==========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
COMPUTER TASK GROUP, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
QUARTER ENDED
MARCH 28, MARCH 29,
2003 2002
---------- -----------
(amounts in thousands)
Cash flows from operating activities:
Net income (loss) $ 130 $ (36,589)
Adjustments:
Depreciation expense 942 992
Change in accounting principle - 37,038
Deferred income taxes 136 126
Deferred compensation (290) 61
Changes in assets and liabilities:
Increase in accounts receivable (3,051) (2,079)
Increase in prepaids and other (761) (493)
Decrease in other assets 450 42
Increase in accounts payable 628 945
Decrease in accrued compensation (2,207) (4,353)
Increase in income taxes payable - 905
Decrease in advance billings on contracts (134) (19)
Increase in other current liabilities 55 769
---------- -----------
Net cash used in operating activities (4,102) (2,655)
- ---------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property and equipment (624) (795)
Proceeds from sales of fixed assets 262 -
- ---------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (362) (795)
- ---------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term revolving debt, net 7,144 2,233
Proceeds from Employee Stock Purchase Plan 69 103
Purchase of stock for treasury - (6)
Proceeds from other stock plans - 8
---------- -----------
Net cash provided by financing activities 7,213 2,338
- ---------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and temporary cash investments 63 (147)
---------- -----------
Net increase (decrease) in cash and temporary cash investments 2,812 (1,259)
Cash and temporary cash investments at beginning of quarter 69 3,362
- ---------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at end of quarter $ 2,881 $ 2,103
========== ===========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
COMPUTER TASK GROUP, INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Financial Statements
The condensed consolidated financial statements included herein
reflect, in the opinion of the management of Computer Task Group, Incorporated
("CTG" or "the Company"), all normal recurring adjustments necessary to present
fairly the condensed consolidated financial position, results of operations and
cash flows for the periods presented. Certain amounts in the prior period's
condensed consolidated financial statements have been reclassified to conform to
the current year presentation.
2. Basis of Presentation
The condensed consolidated financial statements have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission (the SEC). Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the SEC rules
and regulations. Management believes that the information and disclosures
provided herein are adequate to present fairly the consolidated financial
position, results of operations and cash flows of the Company. It is suggested
that these condensed consolidated financial statements be read in conjunction
with the consolidated financial statements and notes thereto included in the
Company's latest Annual Report on Form 10-K filed with the SEC.
3. Comprehensive Income
Accumulated other comprehensive income totaled $(6,681,000) and
$(6,798,000) at March 28, 2003 and December 31, 2002, respectively. These
balances included adjustments of $117,000 and $(775,000) related to foreign
currency translation made in the first quarter of 2003 and 2002, respectively.
Total comprehensive income (loss) for the quarters ended March 28, 2003 and
March 29, 2002 was $247,000 and $(37,364,000), respectively.
4. Stock-Based Employee Compensation
The Company accounts for its stock-based employee compensation plans in
accordance with the provisions of Financial Accounting Standard (FAS) No. 123,
"Accounting for Stock-Based Compensation," and FAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure," which allows entities to
continue to apply the recognition and measurement provisions of Accounting
Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations. As such, no stock-based employee
compensation cost is reflected in the net income or loss of the Company for the
periods presented in these condensed consolidated financial statements, as all
options granted by the Company had an exercise price that was equal to or
greater than the underlying common stock at the date of grant.
5
The following table details the effect on net income (loss) and basic
and diluted net income (loss) per share as if the Company had adopted the fair
value recognition provisions of FAS No. 123 as they apply to stock-based
employee compensation:
FOR THE QUARTER ENDED
MARCH 28, MARCH 29,
2003 2002
-------------- ------------
(amounts in thousands,
except per share data)
Net income (loss), as reported $ 130 $ (36,589)
Stock-based employee compensation
expense as calculated under the fair
value method for all awards, net of tax 343 376
-------------- ------------
Pro forma net loss $ (213) $ (36,965)
============== ============
Basic net income (loss) per share:
As reported $ 0.01 $ (2.21)
============== ============
Pro forma $ (0.01) $ (2.24)
============== ============
Diluted net income (loss) per share:
As reported $ 0.01 $ (2.16)
============== ============
Pro forma $ (0.01) $ (2.18)
============== ============
Pro forma amounts for compensation cost may not be indicative of the effects on
earnings for future quarters.
5. Accounting Standards Pronouncements
In July 2001, the Financial Accounting Standards Board (FASB) issued
FAS No. 141, "Business Combinations," and FAS No. 142, "Goodwill and Other
Intangible Assets." The Company adopted these standards as of January 1, 2002.
In conjunction with the required adoption of FAS No. 142, the initial valuation
of the business unit for which the Company's goodwill relates was completed in
2002 by management with the assistance of an independent appraisal company. Such
valuation indicated that the carrying value of the business unit was greater
than the determined fair value. The goodwill on the Company's balance sheet
primarily related to the acquisition in February 1999 of the healthcare
information technology services provider Elumen Solutions, Inc. Although the
revenues and profits for this unit dipped in 2000 and 2001, in 2002 the revenues
and profits for that unit were similar to when the acquisition was completed in
1999. However, the valuation of technology companies in 1999 was relatively high
as compared to the valuations at the beginning of 2002. Accordingly, as a result
of the valuation which considered the fair market values of similar companies,
the Company recorded a $37.0 million non-cash charge for impairment of goodwill
in that business unit in the Company's 2002 year-to-date financial results, as a
cumulative effect of a change in accounting principle. There was no tax
associated with this impairment as the amortization of this goodwill was not
deductible for tax purposes.
As of January 1, 2003, the Company completed its annual valuation of
the business unit to which the Company's goodwill relates. This valuation
indicated that the estimated fair value of the business unit exceeded the
carrying value of this unit. Accordingly, the Company believes no additional
impairment is required to be recorded in its condensed consolidated financial
results.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE QUARTER ENDED MARCH 28, 2003
Forward-Looking Statements
- --------------------------
Statements included in this Management's Discussion and Analysis
of Financial Condition and Results of Operations and elsewhere in this document
that do not relate to present or historical conditions are "forward-looking
statements" within the meaning of that term in Section 27A of the Securities Act
of 1933, as amended, and in Section 21F of the Securities Exchange Act of 1934,
as amended. Additional oral or written forward-looking statements may be made by
the Company from time to time, and such statements may be included in documents
that are filed with the Securities and Exchange Commission. Such forward-looking
statements involve risks and uncertainties that could cause results or outcomes
to differ materially from those expressed in such forward-looking statements.
Forward-looking statements may include, without limitation, statements relating
to the Company's plans, strategies, objectives, expectations and intentions and
are intended to be made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Words such as "believes," "forecasts,"
"intends," "possible," "expects," "estimates," "anticipates," or "plans" and
similar expressions are intended to identify forward-looking statements. Among
the important factors on which such statements are based are assumptions
concerning the anticipated growth of the information technology (IT) industry,
the continued need of current and prospective customers for the Company's
services, the availability of qualified professional staff, and price and wage
inflation.
Results of Operations
- ---------------------
To better understand the financial trends of the Company, the following
table sets forth data as contained on the condensed consolidated statements of
operations, with the percentage information calculated as a percentage of
consolidated revenues.
Quarter ended: March 28, March 29,
2003 2002
------ ------
Revenue 100.0% $ 63,862 100.0% $ 69,894
Direct costs 73.8% 47,154 71.7% 50,149
Selling, general, and administrative expenses 25.5% 16,286 25.7% 17,943
- ---------------------------------------------------------------------------------------------------------------
Operating income 0.7% 422 2.6% 1,802
Interest and other expense, net (0.3)% (198) (1.5)% (1,060)
- ----------------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative
effect of change in accounting principle 0.4% 224 1.1% 742
Provision for income taxes 0.2% 94 0.5% 293
- ---------------------------------------------------------------------------------------------------------------
Net income before cumulative effect of
change in accounting principle 0.2% 130 0.6% 449
Cumulative effect of change in accounting principle - - (52.9)% (37,038)
- -----------------------------------------------------------------------------------------------------------------
Net income (loss) 0.2% $ 130 (52.3)% $(36,589)
===== ======== ===== ========
7
CTG's first quarter 2003 revenue was $63.9 million, a decrease of 8.6
percent when compared to first quarter 2002 revenue of $69.9 million. The
year-over-year revenue decrease is a result of the ongoing recession in the
technology sector which has had a significant negative effect on customer
spending for information technology services. North American revenue decreased
by $6.5 million or 10.7 percent in 2003 as compared to 2002, while revenue from
European operations increased by $0.5 million, or 5.4 percent. The European
increase is largely due to a significant increase in foreign currency exchange
rates as compared to the U.S. dollar, offset by a general economic slowdown in
the countries in which the Company operates. First quarter 2003 revenue,
however, approximated fourth quarter 2002 revenue of $63.6 million despite
three fewer billing days in the 2003 period. The increase in daily revenue in
the 2003 first quarter is primarily due to the increase in demand for staffing
services in North America.
The 2002 to 2003 quarter-to-quarter revenue decline was partially
offset by the weakening of the U.S. dollar as compared to the currencies of the
Netherlands, Belgium, the United Kingdom, and Luxembourg, the countries in
which the Company's European subsidiaries operate. If there had been no change
in these foreign currency exchange rates from the first quarter of 2002 to
2003, total consolidated revenues would have been $1.6 million lower.
In November 2000, the Company signed a contract with IBM for three
years as one of IBM's national technical service providers for the United
States. In the first quarter of 2003, IBM continued to be the Company's largest
customer, accounting for $13.6 million or 21.2 percent of total revenue as
compared to $13.8 million or 19.7 percent of first quarter 2002 revenue, and
$13.0 million or 20.5 percent of fourth quarter 2002 revenue. The Company
expects to continue to derive a significant portion of its revenue from IBM
throughout the remainder of 2003 and in future years. While the modest decline
in revenue from IBM has had a negative effect on the Company's revenues and
profits, the Company believes a simultaneous loss of all IBM business is
unlikely to occur due to the diversity of the projects performed for IBM and the
number of locations and divisions involved.
Direct costs, defined as costs for billable staff including billable
out-of-pocket expenses, were 73.8 percent of revenue in the first quarter of
2003 as compared to 71.7 percent of first quarter 2002 revenue. The increase in
direct costs as a percentage of revenue in 2003 as compared to 2002 is primarily
due to the costs, including severance of approximately $0.3 million, associated
with the reduction of unutilized personnel in the Company's European operations
and the recession previously mentioned, which has adversely affected the rates
at which the company bills customers for its services. During the first quarter
of 2003, the Company's European operations recorded a gain of approximately $0.2
million for the curtailment of a defined benefit plan. This gain was recorded as
an offset to direct costs during the quarter.
Selling, general and administrative (SG&A) expenses were 25.5 percent
of revenue in the first quarter of 2003 as compared to 25.7 percent of revenue
in the first quarter of 2002. The decline in SG&A expense year-over-year is due
to the Company continuing to align its cost structure to the current level of
revenue. Operating income from North America and Corporate operations was $0.9
million in the first quarter of 2003 and $3.0 million in the first quarter of
2002, while European operations recorded an operating loss of $0.5 million and
$1.2 million in the first quarters of 2003 and 2002, respectively.
Interest and other expense, net was 0.3 percent of revenue in the first
quarter of 2003 and 1.5 percent in the first quarter of 2002. The decrease as a
percentage of revenue from 2002 to 2003 is primarily due to lower average
outstanding indebtedness balances, and significantly lower interest rates in
2003. The provision for income taxes was 42.0 percent in 2003 and 39.5 percent
in 2002. The provision rate in each year is calculated based upon the estimated
tax rate for the entire year.
8
Net income for the first quarter of 2003 was 0.2 percent of
revenue or $0.01 per diluted share, compared to net income before the cumulative
effect of change in accounting principle for the first quarter of 2002 of 0.6
percent of revenue or $0.03 per diluted share. Including the cumulative effect
of the change in accounting principle in 2002, the net loss was 52.3 percent of
revenue or $2.21 per basic and $2.16 per diluted share. Diluted earnings per
share were calculated using 16.8 and 17.0 million equivalent shares outstanding
in 2003 and 2002, respectively. The decrease in equivalent shares outstanding in
2003 is due to a lesser dilutive effect of outstanding stock options.
Critical Accounting Policies
- ----------------------------
CTG has determined that its sole critical accounting estimate involves
the valuation of its existing goodwill balance. With the required adoption of
FAS No. 142 in 2002, CTG recorded a charge of $37.0 million, representing the
cumulative effect of the change in accounting principle. Going forward, the
remaining goodwill balance will be evaluated annually or more frequently if
facts and circumstances indicate impairment may exist. These evaluations will be
based on estimates and assumptions that may analyze the appraised value of
similar transactions from which the goodwill arose, the appraised value of
similar companies, or estimates of future discounted cash flows. The estimates
and assumptions on which the Company's evaluations are based necessarily involve
judgments and are based on currently available information, any of which could
prove wrong or inaccurate when made, or become wrong or inaccurate as a result
of subsequent events.
As of January 1, 2003, the Company completed its annual valuation of
the business unit to which the Company's goodwill relates. This valuation
indicated that the estimated fair value of the business unit exceeded the
carrying value of this unit. Accordingly, the Company believes no additional
impairment is required to be recorded in its consolidated financial results.
Changes in future valuations, however, could lead to additional impairment
charges.
9
Financial Condition and Liquidity
- ---------------------------------
Cash used by operating activities was $4.1 million for the first
quarter 2003. Net income totaled $0.1 million, and other non-cash adjustments,
primarily consisting of depreciation expense and deferred income taxes, totaled
$1.1 million. Accounts receivable increased by $3.1 million as compared to
December 31, 2002 primarily due to the timing of the collection of outstanding
balances in the first quarter of 2003, which resulted in an increase in days
sales outstanding of two days to 67 days from 65 days at December 31, 2002.
Accounts payable increased $0.6 million, and other current liabilities increased
$0.1 million, primarily due to the timing of certain payments. Accrued
compensation decreased $2.2 million due to the timing of the U.S. bi-weekly
payroll.
Net property and equipment and property held for sale decreased $0.6
million. Additions to property and equipment were $0.6 million, offset by
depreciation expense of $0.9 and proceeds from the sales of fixed assets of $0.3
million. The Company has no significant commitments for capital expenditures at
March 28, 2003.
Financing activities provided $7.2 million of cash in the first quarter
of 2003. Net proceeds from long-term revolving debt totaled $7.1 million, and
the Company received $0.1 million from employees for stock purchased under the
Employee Stock Purchase Plan.
The Company is authorized to repurchase a total of 3.4 million shares
of its common stock for treasury and the Company's stock trusts. At March 28,
2003, approximately 3.2 million shares have been repurchased under the
authorizations, leaving 0.2 million shares authorized for future purchases. No
share purchases were made in 2003.
At March 28, 2003, consolidated shareholders' equity totaled $52.7
million, which is an increase of $0.3 million from December 31, 2002. The
increase is primarily due to net income of $0.1 million, and the effect of
foreign currency translation of $0.1 million.
The Company believes existing internally available funds, cash
potentially generated by operations, and available borrowings under the
Company's revolving line of credit totaling approximately $35.4 million at March
28, 2003 will be sufficient to meet foreseeable working capital, capital
expenditure, and possible stock repurchases, and to allow for future internal
growth and expansion.
The Company did not have any related party transactions in either the
first quarter of 2003 or 2002.
10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is nominally exposed to market risk in the normal course of
its business operations. The Company has $15.6 million of borrowings at March
28, 2003 under a revolving credit agreement, which expose the Company to risk of
earnings or cash flow loss due to changes in market interest rates. Based upon
average bank borrowings of $15.9 million during the first quarter of 2003, a one
percentage point increase or decrease in market interest rates would increase or
decrease the Company's interest expense by $159,000. Additionally, as the
Company sells its services in North America and in Europe, financial results
could be affected by weak economic conditions in those markets.
ITEM 4. CONTROLS AND PROCEDURES
-----------------------
Based upon an evaluation completed within 90 days prior to the filing of this
quarterly report with the SEC, the Company's Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective for gathering and disclosing information as required
for reports filed under the Securities and Exchange Act of 1934. There have been
no significant changes in the Company's internal controls or in other factors
that could significantly affect these controls subsequent to the date of this
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
The Company's disclosure controls and procedures and internal controls provide
reasonable, but not absolute, assurance that all deficiencies in design or
operation of these control systems, or all instances of errors or fraud, will be
prevented or detected. These control systems are designed to provide reasonable
assurance of achieving the goals of these systems in light of the Company's
resources and nature of the Company's business operations. These control
systems remain subject to risks of human error and the risk that controls can
be circumvented for wrongful purposes by one or more individuals in management
or non-management positions.
11
PART II. OTHER INFORMATION
--------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders was held on May 8, 2003, at the
Company's Headquarters, 800 Delaware Avenue, Buffalo, New York at
10:00 a.m.
The Company submitted for shareholder approval the election of three
Class III directors.
Election of Directors
- Three Class III directors (Randall L. Clark, John M. Palms, and
Daniel J. Sullivan) were elected to hold office until the 2006
annual meeting of shareholders and until their successors are
elected and qualified. The results of the voting are as follows:
Total Vote Total Vote
Director For Withheld
-------- ------------- -----------
Randall L. Clark (Class III) 16,653,488 282,095
John M. Palms (Class III) 16,653,488 282,095
Daniel J. Sullivan (Class III) 16,653,488 282,095
- The Class I directors of the Company whose term of office extends
until the 2004 annual meeting of shareholders and until their
successors are elected and qualified are Randolph A. Marks and R.
Keith Elliott.
- The Class II directors of the Company whose term of office
extends until the 2005 annual meeting of shareholders and until
their successors are elected and qualified are George B. Beitzel
and James R. Boldt.
12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit Description Page
------- ----------- ----
11. Statement re: computation of earnings per share 16
99.1 Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 17
Reports on Form 8-K
-------------------
The following reports on Form 8-K were filed during the first quarter
of 2003:
Date Description
---- -----------
February 4, 2003 Press release entitled "CTG Announces 2002
Fourth Quarter Conference Call Information."
February 10, 2003 Press release entitled "CTG Reports 2002 Fourth
Quarter and Annual Results."
* * * * * * *
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMPUTER TASK GROUP, INCORPORATED
By: /s/ Gregory M. Dearlove
-------------------------
Gregory M. Dearlove
Principal Accounting and
Financial Officer
Title: Vice President and
Chief Financial Officer
Date: May 12, 2003
13
CERTIFICATION
I, James R. Boldt, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Computer Task
Group, Incorporated;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 12, 2003
/s/ James R. Boldt
------------------
James R. Boldt
Chairman, President and Chief Executive Officer
14
CERTIFICATION
I, Gregory M. Dearlove, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Computer Task
Group, Incorporated;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 12, 2003
/s/ Gregory M. Dearlove
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Gregory M. Dearlove
Vice President and Chief Financial Officer
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