UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal
year ended December 31, 2002 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
---- SECURITIES EXCHANGE ACT OF 1934
For the Transition period from _______ to _______
Commission File No. 1-9410
COMPUTER TASK GROUP, INCORPORATED
- -------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
State of New York 16-0912632
- --------------------------- ----------------------------------
(State of incorporation) (I.R.S.Employer Identification No.)
800 Delaware Avenue, Buffalo, New York 14209
- -------------------------------------- ----------------------------------
(Address of principal executive offices) (Zip Code)
(716) 882-8000
--------------------------------------------------
Registrant's telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, $.01 par value New York Stock Exchange
Rights to Purchase Series A
Participating Preferred Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
----
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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2) YES [X] NO [ ]
The aggregate market value of the Registrant's voting stock held by
non-affiliates at June 28, 2002 was $80.2 million. Solely for the purposes of
this calculation, all persons who are or may be executive officers or directors
of the Registrant and all persons who have filed a Schedule 13D or Schedule 13G
with respect to the Registrant's stock have been deemed to be affiliates.
The total number of shares of Common Stock of the Registrant outstanding at
March 26, 2003 was 20,868,834.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in the
following parts of this report: Parts II and IV - the Registrant's 2002 Annual
Report to Shareholders; Part III - the Registrant's definitive Proxy Statement
as filed with the Securities and Exchange Commission and as used in connection
with the solicitation of proxies for the Registrant's annual meeting of
shareholders to be held on May 8, 2003.
1
PART I
FORWARD-LOOKING STATEMENTS
Statements included in this document, or incorporated herein by reference, 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 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 which 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 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.
ITEM 1. BUSINESS
Computer Task Group, Incorporated (the Company, CTG, or the Registrant) was
incorporated in Buffalo, New York on March 11, 1966, and its corporate
headquarters are located at 800 Delaware Avenue, Buffalo, New York 14209
(716-882-8000). CTG is an international information technology (IT) solutions
and staffing company. CTG employs approximately 2,800 people worldwide and
serves customers through an international network of offices in North America
and Europe. During 2002, the Company had seven operating subsidiaries: CTG
Services, Inc., CTG HealthCare Solutions (Kansas), Inc., and Computer Task Group
of Canada, Inc., primarily providing services in North America, and
Computer Task Group Belgium N.V., Computer Task Group Luxembourg S.A., Computer
Task Group Nederland B.V., and Computer Task Group (U.K.) Ltd. primarily
providing services in Europe.
The Company's web site can be found at www.ctg.com, and the periodic and current
reports filed by the Company with the Securities and Exchange Commission can be
found at www.sec.gov.
BACKGROUND
The Company operates in one industry segment, providing IT services to its
clients. The services provided typically encompass the IT business solution life
cycle, including phases for planning, developing, implementing, managing, and
ultimately maintaining the IT solution. A typical customer is an organization
with large, complex information and data processing requirements. Approximately
86.2 percent of consolidated 2002 revenue of $263.3 million was generated in
North America and 13.8 percent in Europe. The Company promotes a portion of its
services through four vertical market focus areas: Technology Service Providers,
Financial Services, HealthCare and Retail. CTG provides three primary services
to all of the markets that it serves. A brief discussion of these services is as
follows:
- IT STAFFING: CTG recruits, retains, and manages IT talent for its
clients. The Company services both large organizations with multiple
locations and high-volume IT requirements, and companies that need to
augment their own staff on a flexible basis. Our recruiting
organization works with customers to define their requirements and
develop the most competitive pricing to meet those requirements.
- APPLICATION MANAGEMENT OUTSOURCING (AMO): In an AMO project, a client
outsources the management of some or all of its applications so that
their internal management and staff can focus on projects that will
help them in creating and fostering initiatives that will aid in
delivering a competitive advantage to the company. CTG's services in
this area include support of single or multiple applications, help
desk, and facilities management through a full suite of cost-effective
maintenance, enhancement, and systems development and integrated
solutions.
- IT SOLUTIONS: CTG's services in this area range from helping clients
assess their business needs and identifying the right IT solutions to
meet them, to the delivery of services that include the selection and
implementation of packaged software and the design, construction,
testing, and integration of new systems.
2
International Business Machines Corporation (IBM) is CTG's largest customer. CTG
provides services to various IBM divisions in approximately 85 locations. In
November 2000, CTG signed a contract with IBM for three years as one of IBM's
national technical service providers for the United States. This contract
covered 95 percent of the total services provided to IBM by CTG in 2002. IBM
accounted for a total of $51.9 million or 19.7 percent of 2002 consolidated
revenue; $78.3 million or 24.5 percent of 2001 consolidated revenue; and a total
of $95.4 million or 26.9 percent of CTG's 2000 consolidated revenue. Although
revenues from IBM were constrained in 2002, the Company expects to continue to
derive a significant portion of its business from IBM in 2003 and future years.
While the decline in revenue from IBM has had a negative impact on the Company's
revenue and profits, the Company believes the 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.
The Company has registered its symbol and logo with the U.S. Patent and
Trademark Office. It has entered into agreements with various software and
hardware vendors from time to time in the normal course of business, none of
which are material to the business.
No employees are covered by a collective bargaining agreement or are represented
by a labor union. CTG is an equal opportunity employer.
PRICING AND BACKLOG
The majority of CTG's services are performed on a time-and-materials basis.
Rates vary based on the type and level of skill required by the customer, as
well as geographic location. Agreements for work performed on a
time-and-materials basis generally do not specify any dollar amount as services
are rendered on an "as required" basis.
The Company performs a portion of its business on a monthly fee basis, as well
as a small portion of its project business on a fixed-price basis. These
contracts generally have different terms and conditions regarding cancellation
and warranties, and are usually negotiated based on the unique aspects of the
project. Contract value for fixed-price contracts is generally a function of the
type and level of skills required to complete the related project and the risk
associated with the project. Risk is a function of the project deliverable,
completion date and CTG's management and staff performance. Fixed-price
contracts accounted for under the percentage of completion method represented
approximately two percent of 2002, one percent of 2001, and two percent of 2000
total consolidated revenues, respectively. Revenue from all fixed-price
contracts, including those accounted for under the percentage of completion
method and on a monthly fee basis, represented 14 percent, 12 percent, 15
percent of consolidated revenue in 2002, 2001, and 2000, respectively. As of
December 31, 2002 and 2001, the backlog for fixed-price and all managed-support
contracts was approximately $49.6 million and $79.3 million, respectively.
Approximately 74.8 percent of the December 31, 2002 backlog of $49.6 million, or
$37.1 million, is expected to be earned in 2003. Of the $79.3 million of backlog
at December 31, 2001, approximately 51.6 percent, or $40.9 million was earned in
2002. Revenue is subject to seasonal variations, with a minor downturn in months
of high vacation and legal holidays (July, August, and December). Backlog does
not tend to be seasonal, however, it does fluctuate based upon the timing of
long-term contracts.
COMPETITION
The IT services market is highly competitive. The market is also highly
fragmented with many providers with no single competitor maintaining a clear
market leadership. The Company's competition varies by location, the type of
service provided, and the customer to whom services are provided. Competition
comes from four major channels: large national or international vendors,
including major accounting and consulting firms; hardware vendors and suppliers
of packaged software systems; small local firms or individuals specializing in
specific programming services or applications; and, a customer's internal data
processing staff. CTG competes against all four of these channels for its share
of the market. The Company believes that to compete successfully it is necessary
to have a local geographic presence, offer appropriate IT solutions, provide
skilled professional resources, and price its services competitively.
CTG has implemented a Global Management System, with a goal to achieve
continuous, measured improvements in services and deliverables. As part of this
program, CTG has developed specific methodologies for providing high value
services that result in unique solutions and specified deliverables for its
clients. The Company believes these methodologies will enhance its ability to
compete. CTG initially achieved worldwide ISO 9001:1994 certification in June
2000. CTG received its worldwide ISO 9001:2000 in January 2003. The Company
believes it is the only IT services company of its size to achieve worldwide
certification.
3
FINANCIAL INFORMATION RELATING TO FOREIGN AND DOMESTIC OPERATIONS
(amounts in thousands)
2002 2001 2000
------ ------ ------
Revenue from Unaffiliated Customers:
North America $ 226,824 $ 273,724 $ 293,339
Europe 36,452 46,489 61,507
----------- ----------- -----------
$ 263,276 $ 320,213 $ 354,846
=========== =========== ===========
Operating Income (Loss):
North America $ 19,577 $ 15,618 $ 8,127
Europe (3,698) (2,399) 2,410
Corporate and other (11,857) (12,805) (16,182)
------------ ------------ ------------
$ 4,022 $ 414 $ (5,645)
=========== =========== ============
Identifiable Assets:
North America $ 79,816 $ 127,227 $ 133,841
Europe 9,866 10,958 15,947
Corporate and Other (1) 9,502 11,303 12,579
----------- ----------- -----------
$ 99,184 $ 149,488 $ 162,367
=========== =========== ===========
(1) Corporate and other identifiable assets consist principally of cash
and temporary cash investments and other assets.
4
EXECUTIVE OFFICERS OF THE COMPANY
Period During Other Positions
Which Served as and Offices with
Name Age Office Executive Officer (1) Registrant
- ---- --- ------ -------------------- ----------------
As of December 31, 2002, the following individuals were executive officers of
the Company:
James R. Boldt 51 Chairman, President and June 21, 2001 for President,
Chief Executive Officer July 16, 2001 for Chief
Executive Officer,
May 2002 for Chairman,
all to date Director
Executive Vice President February 2001 to June 2001
Vice President, Strategic December 2000 to
Staffing September 2001
Acting Chief Executive Officer June 2000 to November 2000
Vice President and February 12, 1996 to
Chief Financial Officer October 1, 2001
Arthur W. Crumlish 48 Vice President September 24, 2001 to date None
Gregory M. Dearlove 48 Vice President, October 1, 2001 to date Treasurer
Chief Financial Officer
Filip J.L. Gyde 42 Vice President October 1, 2000 to date None
Thomas J. Niehaus 41 Vice President July 22, 1999 to date None
Newton Parkes 55 Vice President October 28, 2002 to date None
Peter P. Radetich 49 Vice President, April 28, 1999 to date Secretary
General Counsel
(1) Business Experience
Mr. Boldt was appointed president and joined CTG's Board of Director's on June
21, 2001, and was appointed chief executive officer on July 16, 2001. Mr. Boldt
became the Company's Chairman in May 2002. Mr. Boldt joined the Company as a
vice president, chief financial officer and treasurer in February 1996.
Mr. Crumlish was promoted to vice president in September 2001, and is currently
responsible for the Company's Strategic Staffing Services organization. Prior to
that, he was controller of the Strategic Staffing Services organization. Mr.
Crumlish joined the Company in 1990.
Mr. Dearlove joined the Company as a vice president and its chief financial
officer in October 2001. Prior to that, Mr. Dearlove was the office managing
partner of Deloitte & Touche's (Deloitte) Upstate New York Offices from June
1997 to September 2001. Mr. Dearlove had been a partner with Deloitte since
1986.
Mr. Gyde was promoted to vice president in October 2000, and is currently
responsible for all of the Company's European operations. Prior to that, Mr.
Gyde was managing director of the Company's Belgium operation. Mr. Gyde has been
with the Company since May 1987.
5
Mr. Niehaus joined the Company in February 1999, and was promoted to vice
president of CTG HealthCare Solutions in July 1999. Previously, Mr. Niehaus was
executive vice president of Elumen Solutions, Inc. from September 1997 to
February 1999. Prior to that, Mr. Niehaus was vice president of Exemplar
Systems.
Mr. Parkes joined the Company in October 2002 as a vice president, and is
currently responsible for the Company's North American operations. Prior to
joining the Company, Mr. Parkes was a regional vice president for Ciber from
June 1997 until May 2002.
Mr. Radetich joined the Company in June 1988 as associate general counsel, and
was promoted to general counsel and secretary in April 1999.
6
ITEM 2. PROPERTIES
The Company owns and occupies a headquarters building at 800 Delaware Avenue,
and an office building at 700 Delaware Avenue, both located in Buffalo, New
York. The corporate headquarters consists of approximately 40,000 square feet
and is occupied by corporate administrative operations. The office building
consists of approximately 39,000 square feet and is also occupied by corporate
administrative operations. These assets are pledged as collateral for the
Company's revolving line of credit, due in 2005.
The Company also owns a 37,000 square foot building in Melbourne, Florida with a
net book value of $2.2 million, which, for approximately eight months in 2002,
was leased to a third party under a one-year lease. During the first quarter of
2002, the Company began to actively market this property for sale, and has
classified this property as held for sale on its consolidated balance sheet.
During 2002, the Company made an adjustment of approximately $0.1 million to the
carrying value of this asset in order to write-down the property's value to the
anticipated net fair value.
The remainder of the Company's locations are leased facilities. Most of these
facilities serve as sales and support offices and their size varies, generally
in the range of 250 to 25,000 square feet, with the number of people employed at
each office. The Company's lease terms generally vary from periods of less than
a year to five years and generally have flexible renewal options. The Company
believes that its present owned and leased facilities are adequate to support
its current and anticipated future needs.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings, including litigation
arising in the normal course of business. In the opinion of management, an
adverse outcome to any of these proceedings will not have a material effect on
the financial condition of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
7
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Information relating to the market for, and market prices of, the Company's
Common Stock, the approximate number of Company shareholders, and the Company's
dividend history for the past two years is included under the caption "Stock
Market Information" in the Company's Annual Report to Shareholders for the year
ended December 31, 2002, submitted herewith as an exhibit, and incorporated
herein by reference.
Information relating to equity compensation plans approved by security holders,
including the number of securities to be issued upon the exercise of outstanding
options, the weighted-average exercise price of outstanding options, and the
number of securities remaining available for future issuance under such equity
compensation plans is included in Note 10. Stock Option Plans in the Company's
Annual Report to Shareholders for the year ended December 31, 2002, submitted
herewith as an exhibit, and incorporated herein by reference.
At December 31, 2002, the Company does not have any outstanding rights or
warrants. Additionally, there are no equity compensation plans that have not
been approved by security holders.
ITEM 6. SELECTED FINANCIAL DATA
A five-year summary of certain financial information relating to the financial
condition and results of operations of the Company is included under the caption
"Consolidated Summary - Five-Year Selected Financial Information" in the
Company's Annual Report to Shareholders for the year ended December 31, 2002,
submitted herewith as an exhibit, and incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's discussion and analysis of financial condition and results of
operations is included in the Company's Annual Report to Shareholders for the
year ended December 31, 2002, under the heading "Management's Discussion and
Analysis of Results of Operations and Financial Condition," submitted herewith
as an exhibit, and incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company does not have any off balance sheet market risk sensitive
instruments for which disclosure is required, and historically the Company has
not been subject to material effects from foreign currency exchange rate
fluctuations. Information about the Company's long-term debt can be found in
footnote No. 4, Debt in the footnotes to the consolidated financial statements
in the Company's Annual Report to Shareholders for the year ended December 31,
2002, submitted herewith as an exhibit, and incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company and the required
Supplementary Data Information are included in the Company's Annual Report to
Shareholders for the year ended December 31, 2002, submitted herewith as an
exhibit, and incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
II-1
8
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information in response to this item is incorporated herein by reference to
the information set forth under "Election of Directors" and under "Section 16(a)
Beneficial Ownership Reporting" in the Company's definitive Proxy Statement
filed or to be filed under Regulation 14A and used in connection with the
Company's 2003 annual meeting of shareholders to be held on May 8, 2003, except
insofar as information with respect to executive officers is presented in Part
I, Item 1 hereof pursuant to General Instruction G(3) of Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information in response to this item is incorporated herein by reference to
the information under the caption "Executive Compensation and Other Information"
presented in the Company's definitive Proxy Statement filed or to be filed under
Regulation 14A and used in connection with the Company's 2003 annual meeting of
shareholders to be held on May 8, 2003, excluding the Compensation Committee
Report on Executive Compensation and the Company's Performance Graph.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information in response to this item is incorporated herein by reference to
the information under the caption "Security Ownership of the Company's Common
Shares by Certain Beneficial Owners and by Management" presented in the
Company's definitive Proxy Statement filed or to be filed under Regulation 14A
and used in connection with the Company's 2003 annual meeting of shareholders to
be held on May 8, 2003.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information in response to this item is incorporated herein by reference to
the information under the caption "Certain Relationships and Related
Transactions" presented in the Company's definitive Proxy Statement filed or to
be filed under Regulation 14A and used in connection with the Company's 2003
annual meeting of shareholders to be held on May 8, 2003.
ITEM 14. CONTROLS AND PROCEDURES
Based upon an evaluation completed within 90 days prior to the filing of this
annual 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 or these systems in light of our resources and
nature of our 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.
III-1
9
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) Index to Financial Statements and Financial Statement Schedules
(1) The following Consolidated Financial Statements and related information are
incorporated by reference from the 2002 Annual Report to Shareholders,
submitted herewith as Exhibit 13:
2002 Annual Report
Page Reference
--------------
Independent Auditors' Report 20
Consolidated Statements of Operations 21
Consolidated Balance Sheets 22
Consolidated Statements of Cash Flows 23
Consolidated Statements of Changes in
Shareholders' Equity 24
Notes to Consolidated Financial Statements 26
(2) Index to Consolidated Financial Statement Schedules
2002 Form 10-K
Page Reference
--------------
Independent Auditors' Report IV-2
Financial statement schedule:
Valuation and Qualifying Accounts
(Schedule II) IV-3
(B) Reports on Form 8-K or Form 8-K/A
During the quarter ended December 31, 2002, the Company filed Form 8-K or
Form 8-K/A reports on the following dates regarding the following matters:
October 8, 2002 - Press release entitled "CTG Announces 2002 Third Quarter
Conference Call Information"
October 14, 2002 - Press release entitled "CTG Reports 2002 Third Quarter
Financial Results"
November 12, 2002 - Form 8 - K/A which modified the diluted per share
information contained in the October 14, 2002 press release
(C) Exhibits
The Exhibits to this Form 10-K Annual Report are listed on the attached
Exhibit Index appearing on pages E-1 to E-3.
(D) Other Financial Statement Schedules
None
IV-1
10
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Computer Task Group, Incorporated
Buffalo, New York
We have audited the consolidated financial statements of Computer Task Group,
Incorporated (the "Company") and subsidiaries as of December 31, 2002 and 2001,
and for each of the three years in the period ended December 31, 2002, and have
issued our report thereon dated February 5, 2003, which report expresses an
unqualified opinion and includes an explanatory paragraph regarding an
accounting change for goodwill; such financial statements and report are
included in your 2002 Annual Report to Shareholders and are incorporated herein
by reference. Our audits also included the consolidated financial statement
schedule of Computer Task Group, Incorporated and subsidiaries, listed in Item
15. This consolidated financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Buffalo, New York
February 5, 2003
IV-2
11
COMPUTER TASK GROUP, INCORPORATED
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(amounts in thousands)
Balance at Balance at
Description January 1 Additions Deductions December 31
- ----------- ---------- --------- ---------- -----------
2002
ACCOUNTS DEDUCTED FROM ASSETS
Allowance for Doubtful Accounts $ 2,366 $ 57 (A) $ (1,253) (A) $ 1,170
Reserve for Projects $ 487 $ 50 $ (137) $ 400
2001
ACCOUNTS DEDUCTED FROM ASSETS
Allowance for Doubtful Accounts $ 1,923 $ 543 (A) $ (100) (A) $ 2,366
Reserve for Projects $ 531 $ - $ (44) $ 487
2000
ACCOUNTS DEDUCTED FROM ASSETS
Allowance for Doubtful Accounts $ 2,310 $ - $ (387) (A) $ 1,923
Reserve for Projects $ 891 $ - $ (360) $ 531
(A) Reflects additions charged to costs and expenses, less deductions for
accounts written off or collected, and translation adjustments.
IV-3
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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/ James R. Boldt
-----------------------
James R. Boldt,
Chairman, President and Chief Executive Officer
Dated: March 26, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
(i) Principal Executive Officer: Chairman, President
and Chief Executive Officer March 26, 2003
/s/ James R. Boldt
-----------------------------------
(James R. Boldt)
(ii) Principal Accounting and Vice President and March 26, 2003
Financial Officer Chief Financial Officer
/s/ Gregory M. Dearlove
---------------------------
(Gregory M. Dearlove)
(iii) Directors
/s/ George B. Beitzel Director March 26, 2003
---------------------------
(George B. Beitzel)
/s/ James R. Boldt Director March 26, 2003
-----------------------------------
(James R. Boldt)
/s/ Randall L. Clark Director March 26, 2003
---------------------------
(Randall L. Clark)
/s/ R. Keith Elliott Director March 26, 2003
-----------------------------------
(R. Keith Elliott)
/s/ Randolph A. Marks Director March 26, 2003
---------------------------
(Randolph A. Marks)
/s/ John M. Palms Director March 26, 2003
---------------------------
(John M. Palms)
/s/ Daniel J. Sullivan Director March 26, 2003
---------------------------
(Daniel J. Sullivan)
13
CERTIFICATION
I, James R. Boldt, certify that:
1. I have reviewed this annual report on Form 10-K of Computer Task
Group, Incorporated;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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
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
annual 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 annual report (the "Evaluation Date"); and
c. presented in this annual 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 auditor and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
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
annual 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: March 26, 2003
/s/ James R. Boldt
---------------------------
James R. Boldt
Chairman, President and CEO
14
CERTIFICATION
I, Gregory M. Dearlove, certify that:
1. I have reviewed this Annual report on Form 10-K of Computer Task
Group, Incorporated;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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
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
annual 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 annual report (the "Evaluation Date"); and
c. presented in this annual 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 auditor and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
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
annual 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: March 26, 2003
/s/ Gregory M. Dearlove
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Gregory M. Dearlove
Vice President and CFO
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EXHIBIT INDEX
Page Number
Exhibit Description or (Reference)
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2. Plan of acquisition, reorganization, arrangement, *
liquidation or succession.
3. (a) Restated Certificate of Incorporation of Registrant. (1)
(b) Restated By-laws of Registrant. (2)
4. (a) Specimen Common Stock Certificate. (2)
(b) Rights Agreement dated as of January 15, 1989, and (1)
amendment dated June 28, 1989, between Registrant
and The First National Bank of Boston, as Rights Agent.
(c) Form of Rights Certificate. (2)
9. Voting Trust Agreement. *
10. (a) Non-Compete Agreement, dated as of March 1, 1984, (2)
between Registrant and Randolph A. Marks.
(b) Stock Employee Compensation Trust Agreement, dated (2)
May 3, 1994, between Registrant and Thomas R. Beecher,
Jr., as trustee.
(c) Demand Grid Note, dated October 29, 1997, between Registrant (2)
and Computer Task Group, Incorporated Stock Employee
Compensation Trust.
(d) Pledge Agreement, between the Registrant and Thomas R. (2)
Beecher, Jr., as Trustee of the Computer Task Group, Incorporated
Stock Employee Compensation Trust.
(e) Stock Purchase Agreement, dated as of February 25, 1981, (3)
between Registrant and Randolph A. Marks.
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* None or requirement not applicable.
(1) Filed as an Exhibit to the Registrant's Form 8-A/A filed on January 13, 1999, and incorporated herein by
reference.
(2) Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, and
incorporated herein by reference.
(3) Filed as an Exhibit to the Registrant's Registration Statement No. 2 - 71086 on Form S-7 filed on February
27, 1981, and incorporated herein by reference.
E-1
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EXHIBIT INDEX (Continued)
Page Number
Exhibit Description or (Reference)
- ------- ----------- --------------
10. (f) Description of Disability Insurance and Health (4)
Arrangements for Executive Officers.
(g) 2002 Key Employee Compensation Plans. (5)
(h) Computer Task Group, Incorporated Non-Qualified Key Employee (2)
Deferred Compensation Plan
(i) 1991 Restricted Stock Plan (6)
(j) Computer Task Group, Incorporated 2000 Equity Award Plan (7)
(k) Executive Supplemental Benefit Plan 1997 Restatement (6)
(l) First Amendment to the Computer Task Group, Incorporated
Executive Supplemental Benefit Plan 1997 Restatement (6)
(m) Executive Compensation Plans and Arrangements. 19
(n) Change in Control Agreement, dated July 16, 2001, between
the Registrant and James R. Boldt (6)
(o) Employment Agreement, dated July 16, 2001, between the
Registrant and James R. Boldt (6)
(p) First Employee Stock Purchase Plan (Eighth Amendment and
Restatement) 20
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(4) Filed as an Exhibit to Amendment No. 1 to Registration Statement No. 2-71086 on Form S-7
filed on March 24, 1981, and incorporated herein by reference.
(5) Included in the Registrant's definitive Proxy Statement dated April 2003 on page 9
under the caption entitled "Annual Cash Incentive Compensation," and incorporated
herein by reference.
(6) Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 2001, and incorporated herein by reference.
(7) Included in the Registrant's definitive Proxy Statement dated March 22, 2002 as Exhibit A,
and incorporated herein by reference.
E-2
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EXHIBIT INDEX (Continued)
Page Number
Exhibit Description or (Reference)
- ------- ----------- --------------
11. Statement re: computation of per share earnings 23
12. Statement re: computation of ratios *
13. Annual Report to Shareholders 24
16. Letter re: change in certifying accountant. *
18. Letter re: change in accounting principles. *
21. Subsidiaries of the Registrant. 60
22. Published report regarding matters submitted to a vote *
of security holders.
23. Consent of experts and counsel. 61
24. Power of Attorney. *
99.1 Certificate Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 62
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E-3
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