Computer Task Group Incorporated provides information technology (IT) staffing IT solutions and application management outsourcing services in North America and Europe. The company?s staffing services consist of recruiting retaining and managing IT talent for its clients. Its IT solutions include helping clients assess their business needs and identifying the IT solutions for these needs as well as the delivery of services including the selection and implementation of packaged software and the design construction testing and integration of new systems. It serves primarily technology service providers financial services healthcare and life sciences market areas.Computer Task Group was founded in 1966 by Randolph A. Marks and G. David Bae. The company is headquartered in Buffalo New York Computer Task Group Inc. has a market cap of $71.7 million; its shares were traded at around $3.92 with a P/E ratio of 7.7 and P/S ratio of 0.2. Computer Task Group Inc. had an annual average earning growth of 25.4% over the past 5 years. Highlight of Business Operations: change in these exchange rates from the 2008 first quarter to the 2009 first quarter, total European revenue would have been approximately $2.8 million higher, or $20.5 million as compared with the $17.7 million reported.
In the 2009 first quarter, IBM was the Companys largest customer, accounting for $19.1 million or 25.6% of consolidated revenue as compared with $27.3 million or 31.4% of revenue in the comparable 2008 period. The Companys current National Technical Services (NTS Agreement) contract with IBM runs until July 1, 2011. As part of the NTS agreement, the Company also provides its services as a predominant supplier to IBMs Integrated Technology Services and Systems and Technology Group business units. We expect to continue to derive a significant portion of our revenue from IBM throughout the remainder of 2009 and in future years. However, a significant decline or the loss of the revenue from IBM would have a significant negative effect on our operating results. The Companys accounts receivable from IBM at April 3, 2009 and March 28, 2008 totaled $10.3 million and $11.5 million, respectively. No other customer accounted for more than 10% of the Companys revenue in either 2008 or 2009.
At April 3, 2009, the Company has deferred tax assets recorded resulting from net operating losses totaling approximately $2.6 million. Management of the Company has analyzed each jurisdictions tax position, including forecasting potential taxable income in future periods, and the expiration of the net operating loss carryforwards as applicable, and determined that it is unclear whether some of these deferred tax assets will be realized at any point in the future. At April 3, 2009, the Company has offset a portion of these deferred tax assets with a valuation allowance totaling $2.3 million, resulting in a net deferred tax asset from net operating loss carryforwards of approximately $0.3 million.
Cash used in operating activities was $0.4 million in the first quarter of 2009. Net income totaled $1.3 million, while other non-cash adjustments, primarily consisting of depreciation expense, equity-based compensation expense, and deferred taxes totaled to a net of $0.3 million. Accounts receivable balances decreased $1.6 million as compared with December 31, 2008. This decline resulted from a decrease in revenue in the 2009 first quarter of approximately 14% as compared with the corresponding period in 2008, but was offset by an increase in days sales outstanding to 58 days at April 3, 2009 as compared with 57 days at December 31, 2008. Accrued compensation decreased $3.4 million in 2009 due to the timing of the U.S. bi-weekly payroll. Income taxes payable increased $1.1 million primarily due to the timing of estimated tax payments.
Investing activities used $1.1 million in the first quarter of 2009, which primarily represented the additions to property and equipment of $0.8 million and net purchases of investments for the Computer Task Group, Incorporated Non-qualified Key Employee Deferred Compensation Plan of $0.2 million. The Company has no significant commitments for the purchase of property or equipment at April 3, 2009.
During the first quarter of 2009, revenue was affected by the year-over-year foreign currency exchange rate changes of Belgium, the United Kingdom, Luxembourg and Germany, the countries in which the Companys European subsidiaries operate. In Belgium, Luxembourg and Germany, the functional currency is the Euro, while in the United Kingdom, the functional currency is the British pound. During the first quarter of 2009, as compared with the prior year, the average value of the Euro and the British pound as compared to the U.S. dollar decreased by 12.4% and 27.3%, respectively. Had there been no change in these exchange rates from the 2008 first quarter to the 2009 first quarter, total European revenue would have been approximately $2.8 million higher, or $20.5 million as compared to the $17.7 million reported. The Company has historically not used any market risk sensitive instruments to hedge its foreign currency exchange risk.
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