UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the Transition period from to
Commission File No.
(Exact name of registrant as specified in its charter)
|
||
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
|
||
(Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol |
|
Name of each exchange on which registered |
|
|
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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “an emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
☒ |
|
|
|
|
|
Non-accelerated filer |
☐ |
Smaller reporting company |
|
|
|
|
|
Emerging growth company |
|||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ NO
APPLICABLE ONLY TO CORPORATE ISSUERS: |
||
|
|
|
|
|
Shares outstanding at |
Title of each class |
|
November 2, 2023 |
Common stock, par value $.01 per share |
|
|
SEC Form 10-Q Index
Section |
|
Page |
Part I Financial Information |
|
|
Item 1. |
1 |
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
24 |
Item 3. |
36 |
|
Item 4. |
36 |
|
|
|
|
Part II Other Information |
|
|
Item 1. |
37 |
|
Item 1A. |
38 |
|
Item 2. |
Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities |
38 |
Item 3. |
38 |
|
Item 4. |
38 |
|
Item 5. |
38 |
|
Item 6. |
39 |
|
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
COMPUTER TASK GROUP, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(amounts in thousands, except per share data)
(Unaudited)
|
For the Quarter Ended |
|
|
For the Three Quarters Ended |
|
||||||||||
|
September 29, 2023 |
|
|
September 30, 2022 |
|
|
September 29, 2023 |
|
|
September 30, 2022 |
|
||||
Revenue |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of services |
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income (loss) |
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Interest and other income |
|
|
|
|
|
|
|
|
|
|
|
||||
Interest and other expense |
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) before income taxes |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Provision (benefit) for income taxes |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Net income (loss) |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Diluted |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
COMPUTER TASK GROUP, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(amounts in thousands)
(Unaudited)
|
For the Quarter Ended |
|
|
For the Three Quarters Ended |
|
||||||||||
|
September 29, 2023 |
|
|
September 30, 2022 |
|
|
September 29, 2023 |
|
|
September 30, 2022 |
|
||||
Net income (loss) |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustment |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Change in pension, net of taxes of $ |
|
|
|
|
|
|
|
|
|
|
|
||||
Other comprehensive loss |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Comprehensive loss |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
COMPUTER TASK GROUP, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share balances)
(Unaudited)
|
September 29, |
|
|
December 31, |
|
||
|
2023 |
|
|
2022 |
|
||
Assets |
|
|
|
|
|
||
Current Assets: |
|
|
|
|
|
||
Cash and cash equivalents |
$ |
|
|
$ |
|
||
Accounts receivable, net of allowances of $ |
|
|
|
|
|
||
Prepaid and other current assets |
|
|
|
|
|
||
Income taxes receivable |
|
|
|
|
— |
|
|
Total current assets |
|
|
|
|
|
||
Property, equipment and capitalized software, net |
|
|
|
|
|
||
Operating lease right-of-use assets |
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
||
Acquired intangibles, net |
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
||
Cash surrender value of life insurance, net |
|
|
|
|
|
||
Other assets |
|
|
|
|
|
||
Investments |
|
|
|
|
|
||
Total assets |
$ |
|
|
$ |
|
||
Liabilities and Shareholders’ Equity |
|
|
|
|
|
||
Current Liabilities: |
|
|
|
|
|
||
Accounts payable |
$ |
|
|
$ |
|
||
Accrued compensation |
|
|
|
|
|
||
Advance billings on contracts |
|
|
|
|
|
||
Short-term operating lease liabilities |
|
|
|
|
|
||
Other current liabilities |
|
|
|
|
|
||
Income taxes payable |
|
— |
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
||
Long-term debt |
|
— |
|
|
|
— |
|
Deferred compensation benefits |
|
|
|
|
|
||
Long-term operating lease liabilities |
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
||
Other long-term liabilities |
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
||
Shareholders’ Equity: |
|
|
|
|
|
||
Common stock, par value $ |
|
|
|
|
|
||
Capital in excess of par value |
|
|
|
|
|
||
Retained earnings |
|
|
|
|
|
||
Less: Treasury stock of |
|
( |
) |
|
|
( |
) |
Accumulated other comprehensive loss |
|
( |
) |
|
|
( |
) |
Total shareholders’ equity |
|
|
|
|
|
||
Total liabilities and shareholders’ equity |
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
COMPUTER TASK GROUP, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(Unaudited)
|
For the Three Quarters Ended |
|
|||||
|
September 29, 2023 |
|
|
September 30, 2022 |
|
||
Cash flow from operating activities: |
|
|
|
|
|
||
Net income (loss) |
$ |
( |
) |
|
$ |
|
|
Adjustments to reconcile net income (loss) to net cash provided by |
|
|
|
|
|
||
Depreciation and amortization expense |
|
|
|
|
|
||
Equity-based compensation expense |
|
|
|
|
|
||
Deferred income taxes |
|
( |
) |
|
|
( |
) |
Deferred compensation benefits |
|
|
|
|
( |
) |
|
Loss on the sale of property and equipment |
|
|
|
|
— |
|
|
Changes in assets and liabilities that provide (use) cash, excluding the effects of acquisitions: |
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
||
Prepaid and other current assets |
|
( |
) |
|
|
( |
) |
Other long-term assets |
|
( |
) |
|
|
( |
) |
Cash surrender value of life insurance |
|
( |
) |
|
|
|
|
Accounts payable |
|
( |
) |
|
|
( |
) |
Accrued compensation |
|
( |
) |
|
|
( |
) |
Income taxes payable / receivable |
|
( |
) |
|
|
|
|
Advance billings on contracts |
|
( |
) |
|
|
|
|
Other current liabilities |
|
|
|
|
|
||
Other long-term liabilities |
|
( |
) |
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
||
Cash flow from investing activities: |
|
|
|
|
|
||
Cash paid for acquisitions, net of cash acquired |
|
|
|
|
( |
) |
|
Additions to property and equipment |
|
( |
) |
|
|
( |
) |
Additions to capitalized software |
|
( |
) |
|
|
( |
) |
Proceeds from sale of property & equipment |
|
|
|
|
|
||
Premiums paid for life insurance |
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
( |
) |
|
|
( |
) |
Cash flow from financing activities: |
|
|
|
|
|
||
Proceeds from long-term debt |
|
|
|
|
— |
|
|
Payments on long-term debt |
|
( |
) |
|
|
— |
|
Payment of contingent consideration |
|
( |
) |
|
|
— |
|
Proceeds from stock option plan exercises |
|
|
|
|
|
||
Taxes remitted for shares withheld from equity-based compensation |
|
( |
) |
|
|
( |
) |
Proceeds from Employee Stock Purchase Plan |
|
|
|
|
|
||
Change in cash overdraft, net |
|
|
|
|
— |
|
|
Net cash used in financing activities |
|
( |
) |
|
|
( |
) |
Effect of exchange rates on cash and cash equivalents |
|
( |
) |
|
|
( |
) |
Net decrease in cash and cash equivalents |
|
( |
) |
|
|
( |
) |
Cash and cash equivalents at beginning of year |
|
|
|
|
|
||
Cash and cash equivalents at end of quarter |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Supplemental disclosure of non-cash transactions |
|
|
|
|
|
||
Acquisition share issuance |
$ |
— |
|
|
$ |
|
|
Acquisition stock option issuance |
$ |
— |
|
|
$ |
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
COMPUTER TASK GROUP, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(amounts in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
Capital in |
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
Total |
|
||||||||
|
|
Common Stock |
|
|
Excess of |
|
|
Retained |
|
|
Treasury Stock |
|
|
Comprehensive |
|
|
Shareholders’ |
|
||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Par Value |
|
|
Earnings |
|
|
Shares |
|
|
Amount |
|
|
Income (Loss) |
|
|
Equity |
|
||||||||
Balances as of June 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Stock Option Plan share issuance, net |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
|
||
Restricted stock plan share |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
( |
) |
|
Equity-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Foreign currency adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Pension loss adjustment, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Balances as of September 29, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
Capital in |
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
Total |
|
||||||||
|
|
Common Stock |
|
|
Excess of |
|
|
Retained |
|
|
Treasury Stock |
|
|
Comprehensive |
|
|
Shareholders’ |
|
||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Par Value |
|
|
Earnings |
|
|
Shares |
|
|
Amount |
|
|
Income (Loss) |
|
|
Equity |
|
||||||||
Balances as of July 1, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Employee Stock Purchase Plan share |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
|
||
Restricted Stock Plan share |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
Acquisition share issuance |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
|
||
Acquisition stock option issuance |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Equity-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Foreign currency adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Pension loss adjustment, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Balances as of September 30, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
COMPUTER TASK GROUP, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(amounts in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
Capital in |
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
Total |
|
||||||||
|
||||||||||||||||||||||||||||||||