N E W S R E L E A S E
CONTACT:
GREGORY M. DEARLOVE
SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
(716) 887-7262
CTG REPORTS 2004 SECOND QUARTER RESULTS
BUFFALO, N.Y. -- July 19, 2004 -- CTG (NYSE: CTG), an international information
technology (IT) staffing, solutions, and application management company, today
announced its financial results for the 2004 second quarter which ended on July
2, 2004. Current and prior period results reflect CTG's divestiture of its
business operations in The Netherlands, which are reported as discontinued
operations. The divestiture was announced on April 6, 2004 and has an effective
date of January 1, 2004.
CTG reported 2004 second quarter revenues from continuing operations of $59.0
million, compared with 2003 second quarter revenues from continuing operations
of $62.4 million. Income from continuing operations was $0.7 million, or $0.04
per diluted share, in the 2004 second quarter, compared with $0.8 million, or
$0.05 per diluted share a year ago. CTG's net income for the 2004 second quarter
was $0.6 million, or $0.04 per diluted share, compared with 2003 second quarter
net income of $0.5 million, or $0.03 per diluted share.
For the 2004 first half, CTG reported revenues from continuing operations of
$120.5 million, compared with $124.5 million in the 2003 first half. CTG's
income from continuing operations for the first half of 2004 was $1.4 million,
or $0.08 per diluted share, compared with 2003 first half income from continuing
operations of $1.1 million, or $0.07 per diluted share. CTG's net loss for the
2004 first half, which includes the $4.4 million loss from discontinued
operations, was $2.9 million, or $0.17 per diluted share, compared with 2003
first half net income of $0.6 million, or $0.04 per diluted share.
"CTG's second quarter results reflect the ramp up of major projects in our
healthcare practice later than we initially expected and a need to further
increase recruiting staff to keep pace with rising demand from our strategic
staffing clients," said CTG Chairman and Chief Executive Officer James R. Boldt.
"While these factors combined with higher turnover and some pricing pressure
reduced revenues in the quarter from our initial forecast, our earnings per
share for the quarter were within our target range. Additionally, with the
divestiture of our Dutch operations completed, our remaining European business
was profitable in the quarter and is also experiencing rising demand."
Mr. Boldt added, "In the last month, we signed a contract and began to make
placements and provide support for a new significant healthcare project, secured
a three-year application management engagement in the food industry, and became
a preferred staffing provider for a major financial services company."
CTG's balance on its revolving debt agreement, which is used to fund business
growth and working capital needs, was $6.6 million at the end of the 2004 second
quarter, compared with $9.0 million at the end of the 2004 first quarter and
$7.6 million a year ago.
CTG also issued guidance for the third quarter of 2004. Based on current
business and market conditions, CTG expects that its revenues from continuing
operations and net income per diluted share for the third quarter of 2004 will
range from $56.0 million to $58.0 million and $0.01 to $0.03, respectively. Mr.
Boldt said, "Our guidance for the third quarter reflects the normal seasonal
effect from increased vacation usage by billable staff during the summer months
and the conclusion at the end of July of an application management engagement in
our financial services vertical. The anticipated revenue expected from our new
large healthcare engagements and staffing demand should offset a significant
portion of the impact of this assignment ending."
Mr. Boldt concluded, "Looking ahead, we continue to feel optimistic about CTG's
strategic direction and future. There has been a significant increase in IT
staffing demand in the last 90 days. We plan to continue to increase our
recruiting resources in response to the increased staffing opportunities and
believe that after four years of a weak market we are finally seeing the return
of more normal IT staffing demand. As to the solutions side of the business,
over the last three years we have repositioned the company into the
faster-growing sectors such as healthcare and information security and are
seeing increased opportunities there as well. For the first time since the
downturn in the industry started, all of our business units are once again
profitable and with that accomplished our primary focus will be on improving
margins and volumes."
Backed by 38 years' experience, CTG provides IT application management,
consulting, software development and integration, and staffing solutions to help
Global 2000 clients focus on their core businesses and use IT as a competitive
advantage to excel in their markets. CTG combines in-depth understanding of our
clients' businesses with a full range of integrated services and proprietary ISO
9001:2000-certified service methodologies. Our 2,500 IT professionals based in
an international network of offices in North America and Europe have a proven
track record of delivering solutions that work. More information about CTG is
available on the Web at www.ctg.com.
This document contains certain forward-looking statements 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 2003 Form
10-K and Management's Discussion and Analysis section of the Company's 2003
annual report, which are incorporated by reference. The Company assumes no
obligation to update the forward-looking information contained in this release.
CTG will hold a conference call on July 20, 2004 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 1-877-531-2987 between 10:45 AM and 10:50 AM and ask for the CTG
conference call and identify James Boldt as the conference chairperson. A replay
of the call will be available between 1:00 PM Eastern Time July 20, 2004 and
1:00 PM Eastern Time July 23, 2004 by dialing 1-800-475-6701 and entering the
conference ID number 725746.
COMPUTER TASK GROUP, INCORPORATED (CTG)
Consolidated Statements of Operations
(amounts in thousands except per share data)
FOR THE QUARTER ENDED FOR THE TWO QUARTERS ENDED
JULY 2, JUNE 27, JULY 2, JUNE 27,
2004 2003 2004 2003
--------- --------- --------- ---------
(amounts in thousands, except per share data)
Revenue $ 59,047 $ 62,377 $ 120,494 $ 124,466
Direct costs 43,196 45,232 88,049 90,943
Selling, general and administrative expenses 15,033 15,330 30,196 30,962
- -----------------------------------------------------------------------------------------------
Operating income 818 1,815 2,249 2,561
Net other expense (185) (424) (312) (600)
- -----------------------------------------------------------------------------------------------
Income from continuing operations before
income taxes 633 1,391 1,937 1,961
Provision (benefit) for income taxes (34) 584 488 823
- -----------------------------------------------------------------------------------------------
Income from continuing operations 667 807 1,449 1,138
Loss from discontinued operations (including
loss on disposal of $3.7 million in the
first quarter of 2004) (62) (349) (4,378) (550)
- -----------------------------------------------------------------------------------------------
Net income (loss) $ 605 $ 458 $ (2,929) $ 588
========= ========= ========= =========
Basic net income (loss) per share:
Continuing operations $ 0.04 $ 0.05 $ 0.09 $ 0.07
Discontinued operations 0.00 (0.02) (0.27) (0.03)
--------- --------- --------- ---------
Basic income (loss) per share $ 0.04 $ 0.03 $ (0.18) $ 0.04
========= ========= ========= =========
Diluted net income (loss) per share:
Continuing operations $ 0.04 $ 0.05 $ 0.08 $ 0.07
Discontinued operations 0.00 (0.02) (0.25) (0.03)
--------- --------- --------- ---------
Diluted income (loss) per share $ 0.04 $ 0.03 $ (0.17) $ 0.04
========= ========= ========= =========
Weighted average shares outstanding:
Basic 16,744 16,646 16,731 16,635
Diluted 17,235 16,711 17,239 16,738
COMPUTER TASK GROUP, INCORPORATED (CTG)
Consolidated Balance Sheets
(amounts in thousands)
JULY 2, JUNE 27, JULY 2, JUNE 27,
2004 2003 2004 2003
---------- ------ ------ ------
Current Assets: Current Liabilities:
Cash and cash equivalents $ 27 $ 1,692 Accounts payable $ 4,778 $ 8,427
Accounts receivable, net 43,890 46,235 Accrued compensation 15,887 19,303
Other current assets 3,634 2,967 Other current liabilities 6,485 5,011
Assets from Current portion of
discontinued operations - 2,418 long-term debt 6,649 -
Liabilities from
discontinued operations - 621
-------- --------- --------- --------
Total Current Assets 47,551 53,312 Total Current Liabilities 33,799 33,362
Property and equipment, net 6,410 7,743 Long-term debt - 7,643
Other assets 42,051 41,251 Other liabilities 8,364 7,499
Shareholders' equity 53,849 53,802
-------- --------- --------- ---------
Total Liabilities and
Total Assets $ 96,012 $ 102,306 Shareholders' Equity $ 96,012 $ 102,306
======== ========= ========= =========
-- END --
Today's news release, along with CTG news releases for the past year, is
available on the Web at www.ctg.com.