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 ☒ NO ☐

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). YES ☒ NO ☐

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.

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 Act). YES ☐ NO ☒

	For the Quarter Ended					For the Three Quarters Ended				For the Quarter Ended
	September 25, 2020			September 27, 2019		September 25, 2020		September 27, 2019		April 2, 2021		March 27, 2020
Revenue	$	88,648		$	97,204	$	264,743	$	294,850	$	97,129	$	86,949
Cost of services		69,101			78,462		209,412		240,056		76,362		69,903
Gross profit		19,547			18,742		55,331		54,794		20,767		17,046
Selling, general and administrative expenses		17,723			17,218		49,526		50,290		18,669		14,979
Operating income		1,824			1,524		5,805		4,504		2,098		2,067
Interest and other income		87			34		221		110		84		3
Gain on sale of building		—			—		824		—
Non-taxable life insurance gain		574			—		963		—
Interest and other expense		327			236		657		858		234		194
Income before income taxes		2,158			1,322		7,156		3,756		1,948		1,876
Provision (benefit) for income taxes		(673	)		443		1,422		1,302
Provision for income taxes											440		732
Net income	$	2,831		$	879	$	5,734	$	2,454	$	1,508	$	1,144
Net income per share:
Basic	$	0.21		$	0.07	$	0.42	$	0.18	$	0.11	$	0.08
Diluted	$	0.20		$	0.06	$	0.40	$	0.18	$	0.10	$	0.08
Weighted average shares outstanding:
Basic		13,655			13,470		13,603		13,429		13,696		13,547
Diluted		14,401			14,045		14,334		13,916		14,944		14,316

The accompanying notes are an integral part of these condensed consolidated financial statements.

	For the Quarter Ended						For the Three Quarters Ended						For the Quarter Ended
	September 25, 2020			September 27, 2019			September 25, 2020			September 27, 2019			April 2, 2021			March 27, 2020
Net Income	$	2,831		$	879		$	5,734		$	2,454		$	1,508		$	1,144

Foreign currency translation adjustment, net of taxes		2,117			(1,540	)		2,061			(2,019	)		(2,245	)		(788	)
Change in pension, net of taxes of $2 and $0 in the 2020 and 2019 third quarters, respectively, and $1 and $0 in the first three quarters of 2020 and 2019, respectively		(135	)		258			(74	)		356
Other comprehensive income (loss)		1,982			(1,282	)		1,987			(1,663	)
Change in pension, net of taxes of $(32) and $(44) in the 2021 and 2020 first quarters, respectively														550			149
Other comprehensive loss														(1,695	)		(639	)

Comprehensive income (loss)	$	4,813		$	(403	)	$	7,721		$	791		$	(187	)	$	505

The accompanying notes are an integral part of these condensed consolidated financial statements.

	September 25,			December 31,			April 2,			December 31,
	2020			2019			2021			2020
Assets
Current Assets:
Cash and cash equivalents	$	33,412		$	10,781		$	33,524		$	32,865
Accounts receivable, net of allowances of $529 and $84 in 2020 and 2019, respectively		74,907			88,772
Accounts receivable, net of allowances of $301 and $561 in 2021 and 2020, respectively								74,468			76,892
Prepaid and other current assets		2,684			2,064			2,780			2,207
Income taxes receivable		580			231			1,134			1,174
Total current assets		111,583			101,848			111,906			113,138
Property, equipment and capitalized software, net		5,573			6,379			5,799			5,515
Operating lease right-of-use assets		20,616			21,253			23,884			22,116
Deferred income taxes		258			453			392			393
Acquired intangibles, net		9,001			8,439			8,391			9,097
Goodwill		20,200			16,681			20,415			21,275
Cash surrender value of life insurance, net		3,533			3,133			3,415			3,587
Other assets		711			328			1,088			924
Investments		193			192			213			208
Total assets	$	171,668		$	158,706		$	175,503		$	176,253
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable	$	15,045		$	18,612		$	14,307		$	18,784
Accrued compensation		24,279			23,538			23,488			21,968
Advance billings on contracts		2,589			1,704			4,152			3,102
Short-term operating lease liabilities		6,030			5,904			6,433			6,427
Short-term deferred payroll taxes								3,329			3,329
Other current liabilities		7,696			7,096			6,920			7,535
Total current liabilities		55,639			56,854			58,629			61,145
Long-term debt		6,000			5,290
Deferred compensation benefits		12,773			12,346			14,052			14,420
Long-term operating lease liabilities		14,527			15,349			17,328			15,564
Deferred payroll taxes		4,321			—			3,329			3,329
Deferred income taxes		2,203			2,101			1,986			2,174
Other long-term liabilities		501			530			105			113
Total liabilities		95,964			92,470			95,429			96,745
Shareholders’ Equity:
Common stock, par value $0.01 per share, 150,000,000 shares authorized; 27,017,824 shares issued in 2020 and 2019		270			270
Common stock, par value $0.01 per share, 150,000,000 shares authorized; 27,017,824 shares issued in 2021 and 2020								270			270
Capital in excess of par value		108,867			112,096			108,385			109,407
Retained earnings		92,407			86,673			95,820			94,312
Less: Treasury stock of 11,836,143 and 12,311,010 shares at cost, in 2020 and 2019, respectively		(109,285	)		(114,261	)
Less: Treasury stock of 11,635,774 and 11,841,960 shares at cost, in 2021 and 2020, respectively								(107,339	)		(109,114	)
Accumulated other comprehensive loss		(16,555	)		(18,542	)		(17,062	)		(15,367	)
Total shareholders’ equity		75,704			66,236			80,074			79,508
Total liabilities and shareholders’ equity	$	171,668		$	158,706		$	175,503		$	176,253

The accompanying notes are an integral part of these condensed consolidated financial statements.

	For the Three Quarters Ended						For the Quarter Ended
	September 25, 2020			September 27, 2019			April 2, 2021			March 27, 2020
Cash flow from operating activities:
Net income	$	5,734		$	2,454		$	1,508		$	1,144
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		2,576			2,422			854			816
Equity-based compensation expense		1,805			1,161			590			512
Deferred income taxes		(113	)		(300	)		(95	)		(102	)
Deferred compensation benefits		399			66			135			48
Gain on the sale of property and equipment		(829	)		—
Non-taxable life insurance gain		(963	)		—
Changes in assets and liabilities that provide (use) cash, excluding the effects of acquisitions:
Accounts receivable		16,611			(2,904	)		994			18,187
Prepaid and other current assets		(557	)		(1,500	)		(600	)		(960	)
Other long-term assets		(383	)		(70	)		(173	)		(248	)
Cash surrender value of life insurance		779			708			172			202
Accounts payable	��	(3,901	)		(3,478	)		(4,139	)		(2,530	)
Accrued compensation		11			9,891			2,267			1,009
Income taxes payable / receivable		(671	)		794			40			740
Deferred payroll taxes		4,321			—
Advance billings on contracts		839			(1,763	)		1,140			377
Other current liabilities		(109	)		(2,644	)		(430	)		(70	)
Other long-term liabilities		(90	)		(608	)		(8	)		54
Net cash provided by operating activities		25,459			4,229			2,255			19,179
Cash flow from investing activities:
Cash paid for acquisitions, net of cash acquired		(4,324	)		(8,457	)		—			(3,995	)
Additions to property and equipment		(1,029	)		(838	)		(891	)		(392	)
Additions to capitalized software		(832	)		(408	)		—			(291	)
Proceeds from sale of property & equipment		2,442			—
Premiums paid for life insurance		(616	)		(586	)
Proceeds from life insurance		400			—
Deferred compensation plan investments, net								—			25
Net cash used in investing activities		(3,959	)		(10,289	)		(891	)		(4,653	)
Cash flow from financing activities:
Proceeds from long-term debt		40,845			133,455			—			40,845
Payments on long-term debt		(40,135	)		(128,492	)		—			(34,135	)
Proceeds from stock option plan exercises		—			91			223			—
Taxes remitted for shares withheld from equity-based compensation transactions		(160	)		(153	)		(96	)		(81	)
Proceeds from Employee Stock Purchase Plan		102			110			36			28
Change in cash overdraft, net		(370	)		(8	)		—			(370	)
Net cash provided by financing activities		282			5,003			163			6,287
Effect of exchange rates on cash and cash equivalents		849			(681	)		(868	)		(113	)
Net increase (decrease) in cash and cash equivalents		22,631			(1,738	)
Net increase in cash and cash equivalents								659			20,700
Cash and cash equivalents at beginning of year		10,781			12,431			32,865			10,781
Cash and cash equivalents at end of quarter	$	33,412		$	10,693		$	33,524		$	31,481

The accompanying notes are an integral part of these condensed consolidated financial statements.

																Accumulated																					Accumulated
					Capital in											Other			Total							Capital in											Other			Total
	Common Stock				Excess of			Retained		Treasury Stock						Comprehensive			Shareholders’			Common Stock				Excess of			Retained		Treasury Stock						Comprehensive			Shareholders’
	Shares		Amount		Par Value			Earnings		Shares			Amount			Income (loss)			Equity			Shares		Amount		Par Value			Earnings		Shares			Amount			Income (loss)			Equity
(amounts in thousands)
Balances as of June 26, 2020		27,018	$	270	$	108,207		$	89,576		11,835		$	(109,320	)	$	(18,537	)	$	70,196
Balances as of December 31, 2020																							27,018	$	270	$	109,407		$	94,312		11,842		$	(109,114	)	$	(15,367	)	$	79,508
Employee Stock Purchase Plan share issuance		—		—		(39	)		—		(8	)		78			—			39			—		—		(7	)		—		(5	)		43			—			36
Stock Option Plan share issuance, net																							—		—		(387	)		—		(82	)		610			—			223
Restricted stock plan share issuance/forfeiture		—		—		43			—		9			(43	)		—			—			—		—		(1,218	)		—		(119	)		1,122			—			(96	)
Equity-based compensation		—		—		656			—		—			—			—			656			—		—		590			—		—			—			—			590
Net income		—		—		—			2,831		—			—			—			2,831			—		—		—			1,508		—			—			—			1,508
Foreign currency adjustment		—		—		—			—		—			—			2,117			2,117			—		—		—			—		—			—			(2,245	)		(2,245	)
Pension loss adjustment, net of tax		—		—		—			—		—			—			(135	)		(135	)
Balances as of September 25, 2020		27,018	$	270	$	108,867		$	92,407		11,836		$	(109,285	)	$	(16,555	)	$	75,704
Pension gain adjustment, net of tax																							—		—		—			—		—			—			550			550
Balances as of April 2, 2021																							27,018	$	270	$	108,385		$	95,820		11,636		$	(107,339	)	$	(17,062	)	$	80,074

																Accumulated																					Accumulated
					Capital in											Other			Total							Capital in											Other			Total
	Common Stock				Excess of			Retained		Treasury Stock						Comprehensive			Shareholders’			Common Stock				Excess of			Retained		Treasury Stock						Comprehensive			Shareholders’
	Shares		Amount		Par Value			Earnings		Shares			Amount			Income (loss)			Equity			Shares		Amount		Par Value			Earnings		Shares			Amount			Income (loss)			Equity
(amounts in thousands)
Balances as of June 28, 2019		27,018	$	270	$	113,684		$	84,123		12,565		$	(117,044	)	$	(14,992	)	$	66,041
Balances as of December 31, 2019																							27,018	$	270	$	112,096		$	86,673		12,311		$	(114,261	)	$	(18,542	)	$	66,236
Employee Stock Purchase Plan share issuance		—		—		(34	)		—		(7	)		66			—			32			—		—		(23	)		—		(5	)		51			—			28
Stock Option Plan share issuance, net		—		—		(468	)		—		(40	)		558			—			90
Restricted stock plan share issuance/forfeiture		—		—		(1,926	)		—		(200	)		1,926			—			—			—		—		(3,473	)		—		(356	)		3,392			—			(81	)
Equity-based compensation		—		—		468			—		—			—			—			468			—		—		512			—		—			—			—			512
Net income		—		—		—			879		—			—			—			879			—		—		—			1,144		—			—			—			1,144
Foreign currency adjustment		—		—		—			—		—			—			(1,540	)		(1,540	)		—		—		—			—		—			—			(788	)		(788	)
Pension gain adjustment, net of tax		—		—		—			—		—			—			258			258			—		—		—			—		—			—			149			149
Balances as of September 27, 2019		27,018	$	270	$	111,724		$	85,002		12,318		$	(114,494	)	$	(16,274	)	$	66,228
Balances as of March 27, 2020																							27,018	$	270	$	109,112		$	87,817		11,950		$	(110,818	)	$	(19,181	)	$	67,200

The accompanying notes are an integral part of these condensed consolidated financial statements.

Accumulated

Capital in

Other

Total

Common Stock

Excess of

Retained

Treasury Stock

Comprehensive

Shareholders’

Shares

Amount

Par Value

Earnings

Shares

Amount

Income (loss)

Equity

(amounts in thousands)

Balances as of December 31, 2019

27,018

$
270

$
112,096

$
86,673

12,311

$
(114,261
)

$
(18,542
)

$
66,236

Employee Stock Purchase Plan share
issuance

—

—

(104
)

—

(22
)

206

—

102

Restricted stock plan share
issuance/forfeiture

—

—

(4,930
)

—

(453
)

4,770

—

(160
)
Equity-based compensation

—

—

1,805

—

—

—

—

1,805

Net income

—

—

—

5,734

—

—

—

5,734

Foreign currency adjustment

—

—

—

—

—

—

2,061

2,061

Pension loss adjustment, net of tax

—

—

—

—

—

—

(74
)

(74
)
Balances as of September 25, 2020

27,018

$
270

$
108,867

$
92,407

11,836

$
(109,285
)

$
(16,555
)

$
75,704

Accumulated

Capital in

Other

Total

Common Stock

Excess of

Retained

Treasury Stock

Comprehensive

Shareholders’

Shares

Amount

Par Value

Earnings

Shares

Amount

Income (loss)

Equity

(amounts in thousands)

Balances as of December 31, 2018

27,018

$
270

$
116,427

$
82,548

12,746

$
(120,406
)

$
(14,611
)

$
64,228

Employee Stock Purchase Plan share
   issuance

—

—

(126
)

—

(25
)

236

—

110

Stock Option Plan share issuance, net

—

—

(467
)

—

(41
)

558

—

91

Restricted stock plan share
   issuance/forfeiture

—

—

(3,237
)

—

(147
)

3,084

—

(153
)
Deferred compensation plan share
   issuance

—

—

(2,034
)

—

(215
)

2,034

—

—

Equity-based compensation

—

—

1,161

—

—

—

—

1,161

Net income

—

—

—

2,454

—

—

—

2,454

Foreign currency adjustment

—

—

—

—

—

—

(2,019
)

(2,019
)
Pension gain adjustment, net of tax

—

—

—

—

—

—

356

356

Balances as of September 27, 2019

27,018

$
270

$
111,724

$
85,002

12,318

$
(114,494
)

$
(16,274
)

$
66,228

~~The accompanying notes are an integral part of these condensed consolidated 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, comprehensive income (loss), cash flows, and shareholders’ equity for the periods presented. Certain prior period amounts were reclassified to conform to the current year’s presentation. These condensed consolidated financial statements should 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.

The Company's fiscal year-end is December 31. During the year, the quarters generally consist of a 13-week fiscal period where the last day of each of the first three quarters is a Friday. The ~~2020 third~~2021 first quarter began on ~~June 27,~~January 1, 2021 and ended on April 2, 2021. The 2020 first quarter began on January 1, 2020 and ended on ~~September 25,~~March 27, 2020. ~~The 2019 third quarter began on June 29, 2019 and ended on September 27, 2019.~~ There were ~~63 billable days in both the third quarters of 2020~~65 and ~~2019, and 189 and 190~~62 billable days in the ~~2020~~first quarters of 2021 and ~~2019 year-to-date periods,~~2020, respectively.

These condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to the SEC rules and regulations. There are no unconsolidated entities, or off-balance sheet arrangements other than certain guarantees supporting office leases and the performance under government contracts in the Company's European operations. All inter-company accounts have been eliminated.

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires the Company's management to make estimates, judgments and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes, which could be impacted by existing market conditions and factors, including the COVID-19 pandemic. Such estimates primarily relate to the recognition of revenue, leased assets and liabilities, the purchase accounting for acquisitions and the valuation of goodwill, the valuation allowance for deferred tax assets, actuarial assumptions including discount rates and expected return on assets, as applicable, for the Company’s defined benefit plans, the valuation of stock options and restricted stock for recording equity-based compensation expense, the allowance for doubtful accounts receivable, investment valuation, legal matters, other contingencies, and estimates of progress toward completion and direct profit or loss on contracts, as applicable. Management believes that the information and disclosures provided herein are adequate to present fairly the condensed consolidated financial position, results of operations, comprehensive income, cash flows, and shareholders’ equity of the Company.

The Company evaluated subsequent events from the date of the most recent balance sheet through the date of this filing. Through the date of this filing, about 10% of the Company’s billable resources have been idled since the beginning of the COVID-19 pandemic in March 2020. To offset this reduction in billable resources, during April 2020, the Company took a number of actions to reduce costs and mitigate the potential impact of the COVID-19 pandemic, including a full-time furlough of about 5% of its North American non-billable staff, and a reduced work schedule (20% furlough) for nearly all other non-billable staff, including senior management, that are not directly or indirectly related to business development. The reduced work schedule for the non-billable staff, including senior management, ended on September 27, 2020.

There were no ~~other~~ subsequent events as of the date of this filing from the end of the fiscal ~~third~~first quarter on ~~September 25, 2020~~April 2, 2021 that require recognition or disclosure in these unaudited interim condensed consolidated financial statements.

The Company operates in 1 industry segment, providing information and technology-related services to its clients. These services include information and technology-related solutions, including ~~supplemental~~ staffing as a solution. CTG provides these services to all of the markets that it serves. The services provided typically encompass the IT

business solution life cycle, including phases for planning, developing, implementing, managing, and ultimately maintaining the IT solution. These services ensure that our clients utilize the right information technology to meet their business needs, maximize their IT systems’ value, and operate efficiently and effectively. A typical client is an organization with large, complex technology, information, and data ~~processing~~ requirements.

IT solutions and IT and other staffing revenue as a percentage of total revenue for the ~~quarter and three~~ quarters ended ~~September 25,~~April 2, 2021 and March 27, 2020 ~~and September 27, 2019~~ was as follows:

	For the Quarter Ended						For the Three Quarters Ended						For the Quarter Ended
	September 25, 2020			September 27, 2019			September 25, 2020			September 27, 2019			April 2, 2021			March 27, 2020
IT solutions		39.6	%		33.9	%		37.3	%		34.6	%		44.3	%		39.5	%
IT and other staffing		60.4	%		66.1	%		62.7	%		65.4	%		55.7	%		60.5	%
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

The Company promotes a significant portion of its services through 5 vertical market focus areas: technology service providers, ~~manufacturing,~~financial services, healthcare (which includes services provided to healthcare providers, health insurers (payers), and life sciences companies), ~~financial services,~~manufacturing, and energy. The Company focuses on these five vertical areas as it believes that these areas either are ~~either~~ higher growth markets than the general IT services market and the general economy, or are areas that provide greater potential for the Company’s growth due to the size of the vertical market. The remainder of CTG’s revenue is derived from general markets.

The Company’s revenue by vertical market as a percentage of total revenue for the ~~quarter and three~~ quarters ended ~~September 25,~~April 2, 2021 and March 27, 2020 ~~and September 27, 2019~~ was as follows:

	For the Quarter Ended						For the Three Quarters Ended						For the Quarter Ended
	September 25, 2020			September 27, 2019			September 25, 2020			September 27, 2019			April 2, 2021			March 27, 2020
Technology service providers		33.1	%		32.9	%		33.3	%		32.4	%		30.8	%		35.3	%
Financial services		14.8	%		13.0	%		14.6	%		13.6	%		17.0	%		14.5	%
Healthcare		14.4	%		16.9	%		13.8	%		16.7	%		15.5	%		13.6	%
Manufacturing		13.7	%		17.6	%		14.1	%		17.2	%		12.4	%		15.2	%
Energy		5.6	%		5.4	%		6.3	%		5.2	%		5.5	%		6.4	%
General markets		18.4	%		14.2	%		17.9	%		14.9	%		18.8	%		15.0	%
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

The Company recognizes revenue when control of the promised good or service is transferred to clients, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. For time-and-material contracts, revenue is recognized as hours are incurred and costs are expended. For contracts with progress billing schedules (i.e. progress billing), primarily monthly, revenue is recognized as services are rendered to the client. Revenue for fixed-price contracts is recognized over time using an input-based approach. ~~Recognizing revenue~~Revenue recognition over time best portrays the Company’s performance in transferring control of the goods or services to the client. On most fixed price contracts, revenue recognition is supported through contractual clauses that require the client to pay for work performed to date, including cost plus a reasonable profit margin, for goods or services that have no alternative use to the Company. On certain contracts, revenue recognition is supported through contractual clauses that indicate the client controls the asset, or work in process, as the Company creates or enhances the asset. On a given project, actual salary and indirect labor costs incurred are measured and compared with the total estimate of costs of such items at the completion of the project. Revenue is recognized based upon the percentage-of-completion calculation of total incurred costs to total estimated costs. The Company infrequently works on fixed-price projects that include significant amounts of material or other non-labor related costs that could distort the percent complete within a percentage-of-completion calculation. The Company’s estimate of the total labor costs it expects to incur over the term of the contract is based on the nature of the project and our experience on similar projects, and includes management judgments and estimates that affect the amount of revenue recognized on fixed-price contracts in any accounting period. Losses on fixed-price projects are recorded when identified.

The Company’s revenue from contracts accounted for under time-and-material, progress billing and percentage-of-completion methods as a percentage of consolidated revenue for the ~~quarter and three~~ quarters ended ~~September 25,~~April 2, 2021 and March 27, 2020 ~~and September 27, 2019~~ was as follows:

	For the Quarter Ended						For the Three Quarters Ended						For the Quarter Ended
	September 25, 2020			September 27, 2019			September 25, 2020			September 27, 2019			April 2, 2021			March 27, 2020
Time-and-material		80.5	%		80.7	%		80.7	%		80.2	%		79.1	%		82.4	%
Progress billing		14.6	%		10.1	%		14.7	%		10.2	%		18.4	%		14.0	%
Percentage-of-completion		4.9	%		9.2	%		4.6	%		9.6	%		2.5	%		3.6	%
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

The Company recorded revenue in the ~~quarter and three~~ quarters ended ~~September 25,~~April 2, 2021 and March 27, 2020 ~~and September 27, 2019~~ as follows:

For the Quarter Ended:	September 25, 2020					September 27, 2019					Year-over-Year Change			April 2, 2021					March 27, 2020					Year-over-Year Change
	(amounts in thousands)													(amounts in thousands)
North America		54.9	%	$	48,625		63.6	%	$	61,866		(21.4	)%		51.0	%	$	49,504		57.9	%	$	50,307		(1.6	)%
Europe		45.1	%		40,023		36.4	%		35,338		13.3	%		49.0	%		47,625		42.1	%		36,642		30.0	%
Total		100.0	%	$	88,648		100.0	%	$	97,204		(8.8	)%		100.0	%	$	97,129		100.0	%	$	86,949		11.7	%

For the Three Quarters Ended:	September 25, 2020					September 27, 2019					Year-over-Year Change
	(amounts in thousands)
North America		56.0	%	$	148,289		62.4	%	$	183,953		(19.4	)%
Europe		44.0	%		116,454		37.6	%		110,897		5.0	%
Total		100.0	%	$	264,743		100.0	%	$	294,850		(10.2	)%

With the exception of cost estimates on certain fixed-price projects, there are no other significant judgments used to determine the timing of the satisfaction of performance obligations or determining the transaction price and amounts allocated to performance obligations. The Company allocates the transaction price based on standalone selling prices for contracts with clients that include more than one performance obligation. We determine standalone selling price based on the expected cost of the good or service plus margin approach. Certain clients may qualify for discounts and rebates, which we account for as variable consideration. We estimate variable consideration and reduce revenue recognized based on the amount we expect to provide to clients.

For time-and-material contracts and contracts with periodic billing schedules, the timing of the Company’s satisfaction of its performance obligations is consistent with the timing of billing. For these contracts, the Company has the right to payment in the amount that corresponds directly with the value of the Company’s performance to date. The Company uses the practical expedient that allows it to recognize revenue in the amount for which it has the right to invoice for time-and-material contracts and contracts with periodic billing schedules. Billing schedules for fixed-price contracts are generally consistent with the Company’s performance in transferring control of the goods or services to the client. There are no significant financing components in contracts with clients. The Company records advanced billings that represent contract liabilities for cash payments received in advance of performance on the condensed consolidated balance sheet. Unbilled receivables are reported within “accounts receivable” on the condensed consolidated balance sheet. Accounts receivable and advanced billing balances fluctuate based on the timing of the client’s billing schedule and the Company’s month-end date. There are no significant costs to obtain or fulfill contracts with clients.

As of ~~September 25, 2020,~~April 2, 2021, the aggregate transaction price allocated to unsatisfied or partially unsatisfied performance obligations for fixed-price and all managed-support contracts was approximately ~~$11.0~~$9.2 million and ~~$34.6~~$53.7 million, respectively. Approximately ~~$13.0 million of the transaction price allocated to unsatisfied or partially unsatisfied performance obligations is expected to be earned in 2020, and approximately $32.6~~$38.9 million of the transaction price allocated to unsatisfied or partially unsatisfied performance obligations is expected to be earned in 2021, and approximately $24.0 million of the transaction price allocated to unsatisfied or partially unsatisfied performance obligations is expected to be earned in 2022 and beyond. As

~~the~~The Company uses the ~~“right~~right to ~~invoice”~~invoice practical ~~expedient, we do not disclose the value of~~expedient. Therefore, no disclosure is required for unsatisfied performance obligations for contracts ~~for~~in which we recognize revenue at the amount to which we have the right to invoice for services performed.

~~In instances where the~~The Company ~~collects~~records taxes collected from its clients for remittance to governmental authorities, primarily in its international locations, ~~revenue and expenses are not presented~~ on a ~~gross~~net basis in the condensed consolidated financial ~~statements as such taxes are recorded in the Company's accounts on a net basis.~~statements.

Fair value is defined as the exchange price that would be received for an asset or paid for a liability in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants. The Company utilizes a fair value hierarchy for its assets and liabilities, as applicable, based upon three levels of input, which are:

Level 1—quoted prices in active markets for identical assets or liabilities (observable)

Level 2—inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in inactive markets, or other inputs that are observable or can be supported by observable market data for essentially the full term of the asset or liability (observable)

Level 3—unobservable inputs that are supported by little or no market activity, but are significant to determining the fair value of the asset or liability (unobservable)

At ~~September 25, 2020~~April 2, 2021 and December 31, ~~2019,~~2020, the carrying amounts of the Company’s cash of ~~$33.4~~$33.5 million and ~~$10.8~~$32.9 million, respectively, approximated fair value.

As described in Note 3 of the condensed consolidated financial statements, the Company acquired 100% of the equity of StarDust in the 2020 first quarter and Tech-IT in the 2019 ~~first quarter and Soft Company in the 2018~~ first quarter. Level 3 inputs were used to estimate the fair values of the assets acquired and liabilities assumed. The valuation techniques used to assign fair values to intangible assets included the relief-from-royalty method and excess earnings method.

The Company has recorded a contingent consideration liability related to the earn-out provision of which a portion will be payable in each period subject to the achievement by ~~Stardust~~StarDust of ~~certain~~consolidated direct profit targets for fiscal 2020 and 2021, and for Tech-IT for certain direct profit targets for fiscal 2019 and 2020. In addition, the Company has a remaining contingent consideration liability related to the earn-out provision of which a portion will be payable subject to the achievement by Soft Company of certain revenue and EBIT targets for fiscal 2019.2021. There is no payout if the achievements are below the target ~~thresholds.~~threshold. The fair value of ~~these~~this contingent ~~considerations~~consideration liability is determined using level 3 inputs. The fair value assigned to the contingent consideration ~~liabilities~~liability is determined using the real options method, which requires inputs such as ~~revenue forecasts, EBIT~~consolidated direct profit forecasts, discount rate, and other market variables to assess the probability of ~~Tech-IT and Soft Company~~StarDust achieving their ~~respective~~revenue and EBIT targets. The Company expects to make the ~~payments~~payment for Stardust for 2020 in the second quarter of 2021. No earn-out was earned or recorded for Tech-IT ~~and Soft Company~~ for ~~2019 in the 2020 fourth quarter.~~2020.

The Company has purchased life insurance on the lives of a number of former employees who are plan participants in the non-qualified defined benefit Executive Supplemental Benefit Plan. In total, there are policies currently on 16 individuals, whose average age is 77 years old. Those policies have generated cash surrender value and the Company has taken loans against the policies. At ~~September 25, 2020,~~April 2, 2021, these insurance policies have a gross cash surrender value of ~~$26.7~~$27.3 million, outstanding loans and interest totaling ~~$24.1~~$24.7 million, and a net cash surrender value of $2.6 million. At December 31, ~~2019,~~2020, these insurance policies had a gross cash surrender value of ~~$29.7~~$27.1 million, outstanding loans and interest totaling ~~$27.2~~$24.4 million, and a net cash surrender value of ~~$2.5~~$2.7 million. The net cash surrender values are included on the condensed consolidated balance sheet in “Cash surrender value of life insurance” under non-current assets.

At ~~September 25, 2020~~both April 2, 2021 and December 31, ~~2019,~~2020, the total death benefit for the remaining policies was approximately ~~$34.7 million and $37.7 million, respectively.~~$35.0 million. Currently, upon the death of all of the remaining plan participants, the Company would expect to receive approximately ~~$10.3~~$10.0 million after the payment of obligations, and, under current tax regulations, record a non-taxable gain of approximately ~~$7.7~~$7.4 million.

During both, the 2020 second and third quarter, a participant in the plan passed away. Upon their deaths, the Company recorded a non-taxable life insurance gain totaling approximately $1.0 million for the three quarters ended September 25, 2020, which it has recorded on its condensed consolidated statements of income.

For purposes of the statement of cash flows, cash and cash equivalents are defined as cash on hand, demand deposits, and short-term, highly liquid investments with ~~an original~~a maturity of three months or less. As the Company does not fund its bank accounts for the checks it has written until the checks are presented to the bank for payment, the "change in cash overdraft, ~~net,"~~net" line item as presented on the condensed consolidated ~~statements~~statement of cash flows represents the increase or decrease in outstanding checks infor a given period. The cash in the Company’s U.S. banks is insured by the Federal Deposit Insurance Corporation up to the insurable limit of $250,000. As of April 2, 2021 and December 31, 2020, the Company has multiple accounts that carry balances in excess of this insurable limit. The Company’s cash in its foreign bank accounts is not insured.

The Company entered into a factoring agreement during the 2020 first quarter to sell certain trade accounts receivables associated with its largest client on a non-recourse basis to a third-party financial institution. The Company accounts for these transactions as sales of receivables and presents cash proceeds as cash provided by operating activities in the condensed consolidated statements of cash flows. Total trade accounts receivable sold under the factoring agreement was approximately ~~$17.8~~$15.5 million and ~~$43.2~~$11.9 million during the ~~quarter~~quarters ended April 2, 2021 and ~~year-to-date periods ended September 25, 2020.~~March 27, 2020, respectively. Fees for the factoring arrangement were recorded in cost of services and were less than $0.1 million in each of the quarters ended April 2, 2021 and $0.1 million in the quarter and year-to-date periods ended September 25, 2020, respectively. There were no accounts receivable factoring activities during the quarter and year-to-date periods ended SeptemberMarch 27, ~~2019.~~2020.

Property, equipment and capitalized software at ~~September 25, 2020~~April 2, 2021 and December 31, ~~2019~~2020 are ~~summarized~~recorded as follows:

(amounts in thousands)	September 25, 2020			December 31, 2019			April 2, 2021			December 31, 2020
Property, equipment and capitalized software	$	14,468		$	17,384		$	15,192		$	14,543
Accumulated depreciation and amortization		(8,895	)		(11,005	)		(9,393	)		(9,028	)
Property, equipment and capitalized software, net	$	5,573		$	6,379		$	5,799		$	5,515

The Company capitalizes software projects developed for commercial use. The Company recorded capitalized software costs during the ~~quarter and three~~ quarters ended ~~September 25,~~April 2, 2021 and March 27, 2020 ~~and September 27, 2019~~ as follows:

	For the Quarter Ended				For the Three Quarters Ended				For the Quarter Ended
(amounts in thousands)	September 25, 2020		September 27, 2019		September 25, 2020		September 27, 2019		April 2, 2021		March 27, 2020
Capitalized software, beginning balance	$	2,741	$	1,955	$	2,147	$	1,864	$	2,397	$	2,147
Additions		200		318		794		409		—		291
Foreign currency exchange										26		—
Capitalized software	$	2,941	$	2,273	$	2,941	$	2,273	$	2,423	$	2,438

Capitalized software amortization periods range from three to five years, and are evaluated periodically for propriety. Amortization expense and accumulated amortization for these projects for the ~~quarter and three~~ quarters ended ~~September 25,~~April 2, 2021 and March 27, 2020 ~~and September 27, 2019~~ are as follows:

	For the Quarter Ended				For the Three Quarters Ended				For the Quarter Ended
(amounts in thousands)	September 25, 2020		September 27, 2019		September 25, 2020		September 27, 2019		April 2, 2021		March 27, 2020
Accumulated amortization, beginning balance	$	1,076	$	1,017	$	866	$	745	$	1,280	$	866
Amortization expense		91		126		301		398		135		105
Accumulated amortization	$	1,167	$	1,143	$	1,167	$	1,143	$	1,415	$	971

During the 2020 second quarter, the Company sold its corporate headquarters located in Buffalo, NY. As the sale price of the building was $2.5 million, and the book value of the building was approximately $1.6 million, the Company recorded a profit on the sale after related fees of about $0.8 million in the 2020 second quarter.

The Company has a number of guarantees in place in its European operations that support office leases and performance under government contracts. These guarantees totaled approximately ~~$3.1 million and $3.0~~$3.2 million at ~~September 25, 2020~~both April 2, 2021 and December 31, ~~2019, respectively,~~2020, and generally have expiration dates ranging from ~~September 2020~~April 2021 through October 2034.

The goodwill recorded on the Company's condensed consolidated balance sheet at ~~September 25, 2020~~April 2, 2021 relates to the ~~acquisition~~acquisitions of Soft Company in ~~the~~ 2018, ~~first quarter,~~ Tech-IT in ~~the~~ 2019, ~~first quarter,~~ and StarDust in ~~the 2020 first quarter.~~2020. In accordance with current accounting guidance for “Intangibles - Goodwill and Other,” the Company performs goodwill impairment testing at least annually (in the Company’s fourth quarter), unless indicators of impairment exist in interim periods. There were 0 impairment indicators noted in the quarters ~~or three quarters~~ ended ~~September 25, 2020~~April 2, 2021 and ~~September~~March 27, ~~2019~~2020.

The changes in the carrying amount of goodwill for the ~~three quarters~~quarter ended ~~September 25, 2020~~April 2, 2021 are as follows:

Acquired intangible assets at ~~September 25, 2020~~April 2, 2021 consist of the following:

(amounts in thousands)	Estimated Economic Life	Gross Carrying Amount		Accumulated Amortization		Foreign Currency Translation			Net Carrying Amount		Estimated Economic Life	Gross Carrying Amount		Accumulated Amortization			Foreign Currency Translation			Net Carrying Amount
Trademarks	2 year	$	1,532	$	1,282	$	(30	)	$	220	2 years	$	1,532	$	(1,469	)	$	(15	)	$	48
Technology	10 years		591		36		26			581	10 years		591		(68	)		33			556
Customer relationships	7-13 years		10,496		1,966		(330	)		8,200	7-13 years		10,496		(2,487	)		(222	)		7,787
Total		$	12,619	$	3,284	$	(334	)	$	9,001		$	12,619	$	(4,024	)	$	(204	)	$	8,391

Estimated amortization expense ~~for the remainder~~as of ~~2020, the five succeeding years, and thereafter is~~April 2, 2021 are as follows:

Year	Annual Amortization		Annual Amortization
(amounts in thousands)
2020	$	364
2021		1,163
2021 (remaining)			$	837
2022		1,061		1,072
2023		1,052		1,064
2024		1,052		1,064
2025		1,052		1,064
2026				1,064
Thereafter		3,257		2,226
Total	$	9,001	$	8,391

In ~~June 2016,~~August 2018, the FASB issued ASU ~~2016-13, “Measurement~~2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20)". The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans by removing disclosures that no longer are considered cost beneficial, clarifying the specific requirements of Credit Losses on Financial Instruments,” which requires the immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, including trade receivables,disclosures, and ~~replaces the existing incurred loss model.~~adding disclosure requirements identified as relevant. The new ~~standard requires an estimate of expected credit losses, measured over the contractual life of an asset, which considers relevant information~~

about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. It requires entities to consider the risk of loss even if it is remote, which will result in the recognition of credit losses on assets that do not have evidence of deterioration. The allowance for credit losses will be the difference between the amortized cost balance of a financial asset and the amount of amortized cost expected to be collected over the remaining contractual life. This guidanceASU is effective for ~~reporting periods beginning~~fiscal years ending after December 15, ~~2019; however, early adoption is permitted.~~

The Company adopted the new credit loss standard on January 1, 2020. The Company estimated its allowance for credit losses by pooling assets with similar risk characteristics, reviewing historical losses within the last five years2020, and taking into consideration any reasonable supportable forecasts of future economic conditions. The Company cannot guarantee that the rate of future credit losses will be similar to past experience, but considers all available information when assessing the adequacy of its allowance for credit losses each quarter. As the impact from this standard on the Company was immaterial, no adjustment was made to the beginning retained earnings balance.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. This guidance is effective for reporting periods beginning after December 15, 2019; however, early adoption is permitted. The Company adopted ~~the~~this new standard ~~on January 1, 2020~~retrospectively for the year ending December 31, 2020, ~~on a prospective basis~~ and the adoption did not have a ~~significant~~material impact on ~~the Company’s operations.~~ its condensed consolidated financial statements and associated disclosures.

In ~~August 2018,~~December 2019, the FASB issued ASU ~~2018-15, “Customer’s~~2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for ~~Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,~~Income Taxes.” ~~which helps entities evaluate~~Among other clarifications and simplifications related to income tax accounting, the new standard simplifies the accounting for ~~fees paid~~income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in ~~a cloud computing arrangement (hosting arrangement) by providing guidance~~an interim period, hybrid taxes and the recognition of deferred tax liabilities for ~~determining when the arrangement includes a software license. This guidance~~outside basis differences. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, ~~2019; however, early adoption is permitted.~~2020. The Company adopted ~~the~~this new standard ~~on January 1, 2020~~ for the ~~year ending December 31, 2020 on a prospective basis~~quarter ended April 2, 2021, and the adoption did not have a ~~significant~~material impact on ~~the Company’s operations.~~its condensed consolidated financial statements and associated disclosures.

entities between March 12, 2020 and December 31, 2022. The Company does not expect a significant impact from the adoption of this standard as provisions have been made in our Credit and Security Agreement to use an alternate benchmark interest rate when the use of LIBOR is discontinued.

On March 3, 2020, the Company acquired 100% of the equity of StarDust, for approximately $6.1 million (€5.5 million based on a EUR into USD exchange rate of 1.1145). The acquisition was funded using cash on hand and borrowings under the Credit and Security Agreement. The France-based StarDust, is a leading provider of testing and quality assurance for digital services with offices in Marseille, France, and Montreal, Canada. StarDust offers a complete range of testing services, including functional, multilingual, operational, environmental, regression, and application benchmarking, covering digital services and website, software, mobile applications, and Internet of Things connected objects. The acquisition ~~is expected to expand~~expanded the Company’s global testing capabilities.

The results of operations of StarDust have been included in the Company’s consolidated financial results since the date of acquisition. As the Company has determined that the acquisition is not material to its existing operations, certain disclosures, including pro forma financial information, have not been included in this quarterly report on Form 10-Q.

An earn-out of up to $1.1 million (€1.0 million based on a EUR into USD exchange rate of 1.1145) can be earned, a portion of which will be payable in each period subject to the achievement of consolidated direct profit targets for fiscal 2020 and 2021. Additionally, for each €10,000 of consolidated direct profit achieved above the target, an additional €1,000 can be earned, with no maximum limit. There is no payout if the achievement is below the target threshold. The fair value as of the March 3, 2020 acquisition date was determined to be $0.1 million, and was ~~$0.2~~$0.5 million as of ~~September 25, 2020. As such, the~~April 2, 2021. The Company ~~recorded $0.1 million in~~did not record any selling, general, and administrative expenses during the first ~~three~~

~~quarters~~quarter of ~~2020~~2021 related to this earn-out. ~~Approximately $0.1 million of the~~The remaining contingent consideration liability is recorded in ~~both~~ “other current liabilities” ~~and “other long-term liabilities”~~ on the ~~September 25, 2020~~April 2, 2021 condensed consolidated balance sheet.

The acquisition date fair value of the consideration for the acquisition of StarDust consisted of the following as of March 3, 2020:

The following table summarizes the allocation of the aggregate purchase consideration to the fair value of the assets acquired and liabilities assumed as of March 3, 2020:

(amounts in thousands)
Assets Acquired:
Cash	$	1,798	$	1,798
Accounts receivable		1,303		1,303
Prepaids & other		71		71
Property & equipment		327
Property & equipment, net				327
Acquired intangibles		1,282		1,282
Goodwill		2,757		2,757
Total assets acquired	$	7,538	$	7,538

Liabilities Assumed:
Accounts payable	$	285	$	285
Accrued compensation		307		307
Taxes payable		222		222
Other liabilities		163		163
Deferred income taxes		328		328
Total liabilities assumed		1,305		1,305
Net assets acquired	$	6,233	$	6,233

The purchase consideration for the acquisition was allocated to the assets acquired and liabilities assumed based upon their respective fair values. The excess consideration was recorded as goodwill, which is not deductible for income tax purposes.

(amounts in thousands)	Fair Value		Estimated Useful Life	Fair Value		Estimated Useful Life
Trademarks	$	100	2 years	$	100	2 years
Technology	$	591	10 years		591	10 years
Customer relationships		591	7 years		591	7 years
Fair value of purchase consideration	$	1,282		$	1,282

The Company incurred ~~acquisition-related legal and consulting fees and~~ amortization of intangible assets of approximately ~~$0.2 million and $0.3~~$0.1 million in the ~~2020 third~~2021 first quarter and ~~year-to-date period, respectively,~~NaN in the 2020 first quarter, which were recorded as a component of selling, general, and administrative expenses in the condensed consolidated statements of income. The purchase price allocation for this acquisition has been finalized.

On February 6, 2019, the Company acquired 100% of the equity of Tech-IT for approximately $9.7 ~~million.~~million (€8.5 million based on a EUR into USD exchange rate of 1.1386). The acquisition was funded using cash on hand and borrowings under the Credit and Security Agreement. Tech-IT, located in Bertrange, Luxembourg, is a leading provider of software and hardware services, including consulting, infrastructure and software design and development, infrastructure integration, project management, and training. The acquisition of Tech-IT ~~is expected to enable~~has enabled the Company to strengthen its market position in Luxembourg and broaden its portfolio to offer complete end-to-end IT solutions.

The results of operations of Tech-IT have been included in the Company’s consolidated financial results since the date of acquisition. As the Company has determined that the acquisition is not material to its existing operations, certain disclosures, including pro forma financial information, have not been included in this quarterly report on Form 10-Q.

An earn-out of up to a maximum of $1.7 million (€1.5 million based on a EUR into USD exchange rate of 1.1386) can be earned, a portion of which will be payable in each period subject to the achievement of direct profit targets for fiscal ~~2018,~~ 2019 and 2020. There is no payout if the achievement ~~on the target~~ is below the target threshold. The fair value as of the February 6, 2019 acquisition date was determined to be $0.6 ~~million, and was $0.7 million as of~~ ~~September 25, 2020. Approximately $0.4 million and $0.3 million~~million. The fair value of the remaining contingent consideration liability ~~is recorded in “other current liabilities” and “other long-term liabilities,” respectively, on~~was determined to be $0.0 million as of December 31, 2020 as the direct profit target threshold was not met by Tech-IT for the fiscal year~~September 25,~~ 2020 ~~condensed consolidated balance sheet.~~.

The acquisition date fair value of the consideration for the acquisition of Tech-IT consisted of the following as of February 6, 2019:

The following table summarizes the allocation of the aggregate purchase consideration to the fair value of the assets acquired and liabilities assumed as of February 6, 2019:

(amounts in thousands)
Assets Acquired:
Cash	$	1,217	$	1,217
Accounts receivable		4,491		4,491
Prepaids & other		1,122		1,122
Property & equipment		98
Property & equipment, net				98
Acquired intangibles		4,099		4,099
Goodwill		5,331		5,331
Total assets acquired	$	16,358	$	16,358

Liabilities Assumed:
Accounts payable	$	2,378	$	2,378
Accrued compensation		172		172
Other short-term liabilities		2,447		2,447
Deferred income taxes		1,114		1,114
Total liabilities assumed		6,111		6,111
Net assets acquired	$	10,247	$	10,247

The Company incurred ~~acquisition-related legal and consulting fees and~~ amortization of intangible assets of approximately $0.2 million ~~and $0.6 million~~ in both the ~~2020 third~~2021 first quarter and ~~year-to-date period, respectively, and approximately $0.4 million and $0.5 million in the 2019 third quarter and year-to-date period, respectively,~~2020 first quarters, which were recorded as a component of selling, general, and administrative expenses in the condensed consolidated statements of income. The purchase price allocation for this acquisition has been finalized.

On February 15, 2018, the Company acquired 100% of the equity of Soft Company for approximately $16.9 million (€13.6 million based on a EUR into USD exchange rate of 1.2392). The acquisition was funded using cash on hand and borrowings under the Company’s Credit and Security Agreement. Soft Company, located in Paris, France, is an IT consulting company that specializes in providing IT services to finance, insurance, telecom, and media services companies. The acquisition of Soft Company is expected to enable the Company to expand its position in Europe and enhance its service offerings.

The Company has a contingent consideration liability related to an earn-out provision of which a portion will be payable in each period subject to the achievement by Soft Company of certain revenue and EBIT targets for fiscal 2017, 2018, and 2019. There is no payout if the achievement on either target is below a certain target threshold. The fair value as of the February 15, 2018 acquisition date was determined to be $2.0 million. The fair value of the remaining contingent consideration liability, which is recorded in “other current liabilities” on the condensed consolidated balance sheet, was approximately $0.9 million as of September 25, 2020, and is expected to be paid in the 2020 fourth quarter.

The results of operations of Soft Company have been included in the Company’s consolidated financial results since the date of acquisition. As the Company has determined that the acquisition is not material to its existing operations, certain disclosures, including pro forma financial information, have not been included in this quarterly report on Form 10-Q. The Company incurred acquisition-related legal and consulting fees, adjustments to the fair value of the earn-out liability, and amortization of intangible assets of approximately $0.1 million and $0.4 million in the 2020 third quarter and year-to-date period, respectively, and approximately $0.4 million and $1.2 million in the 2019 third quarter and year-to-date period, respectively, which were recorded as a component of selling, general, and administrative expenses in the condensed consolidated statements of income.

Basic and diluted earnings per share (EPS) for the ~~quarter and three~~ quarters ended ~~September 25,~~April 2, 2021 and March 27, 2020 ~~and September 27, 2019~~ were as follows:

	For the Quarter Ended				For the Three Quarters Ended				For the Quarter Ended
(amounts in thousands, except per-share data)	September 25, 2020		September 27, 2019		September 25, 2020		September 27, 2019		April 2, 2021		March 27, 2020
Weighted-average number of shares outstanding during period		13,655		13,470		13,603		13,429		13,696		13,547
Common stock equivalents from incremental shares under equity-based compensation plans		746		575		731		487		1,248		769
Number of shares on which diluted earnings per share is based		14,401		14,045		14,334		13,916		14,944		14,316
Net income	$	2,831	$	879	$	5,734	$	2,454	$	1,508	$	1,144
Net income per share
Basic	$	0.21	$	0.07	$	0.42	$	0.18	$	0.11	$	0.08
Diluted	$	0.20	$	0.06	$	0.40	$	0.18	$	0.10	$	0.08

Weighted-average shares represent the average number of issued shares less treasury shares, and for the basic EPS calculations, unvested restricted stock.

Certain options representing ~~1.1~~0.6 million and 0.8 million shares of common stock were outstanding at ~~both September 25,~~April 2, 2021 and March 27, 2020, ~~and September 27, 2019~~respectively, but were not included in the computation of diluted earnings per share as their effect on the computation would have been anti-dilutive.

The Company records a right-of-use asset and liability for substantially all leases for which it is a lessee, in accordance with ASC 842. The Company is obligated under a number of long-term operating leases for office space and office equipment, and for automobiles leased in Europe.

Most leases contain both lease components (fixed payments for rent) and non-lease components (common-area maintenance and other services). The Company has elected the practical expedient to separate lease and non-lease components for its office leases and has elected to group lease and non-lease components for its vehicle leases. Some leases contain renewal options with escalation clauses commensurate with local market fluctuations, however, generally limiting an annual increase to no more than 5.0% of the existing lease payment. The exercise of lease renewal options is at the Company’s sole discretion. The Company has excluded renewal options in the measurement of right-of-use assets and lease liabilities if they are not reasonably certain of exercise.

Operating leases are included in the right-of-use lease assets, short-term lease liabilities, and long-term lease liabilities on the condensed consolidated balance sheet. The Company measures the operating lease liabilities at lease commencement date based on the present value of remaining lease payments using the rate implicit in the lease when readily determinable, or the Company’s secured incremental borrowing rate. The Company has made an accounting policy election not to recognize a lease liability or right-of-use asset for leases with a lease term of twelve months or less and do not include an option to purchase the underlying asset. The Company recognizes lease expense on a straight-line basis over the lease term and variable lease expense in the period incurred. Variable lease cost consists primarily of common-area maintenance, insurance, and taxes, which are paid based on actual costs incurred by the lessor. Operating lease cost for the 2021 and 2020 first quarters was $1.8 million and $1.6 million, respectively. In both the 2021 and ~~$4.7 million for~~2020 first quarters, the ~~2020 third quarter and year-to-date period, respectively, and $1.7 million and $5.1 million for the 2019 third quarter and year-to-date period, respectively. The~~ Company incurred variable lease cost of $0.1 million and $0.4 million in the 2020 third quarter and year-to-date period, respectively, and $0.1 million and $0.4 million in the 2019 third quarter and year-to-date period, respectively. The Company also incurred short-term lease cost of ~~$0.2 million and $0.4 million in the 2020 third quarter and year-to-date period, respectively, and~~ $0.1 ~~million and $0.4 million in the 2019 third quarter and year-to-date period, respectively.~~million.

Maturities for the Company’s lease liabilities for all operating leases as of ~~September 25, 2020~~April 2, 2021 are as follows:

	Total			Total
Year	Operating Leases			Operating Leases
(amounts in thousands)
2020 (remaining)	$	1,640
2021		5,752
2021 (remaining)				$	4,983
2022		4,362			5,515
2023		3,034			4,136
2024		1,788			2,647
2025 & thereafter		5,049
2025					1,859
2026 & thereafter					5,998
Total undiscounted operating lease payments	$	21,625			25,138
Less: Interest		(1,068	)		(1,377	)
Total present value of operating lease liabilities	$	20,557		$	23,761

~~Operating lease payments exclude $3.9 million of legally binding lease payment for leases signed, but not yet commenced.~~ The weighted average remaining lease terms and discount rates for all operating leases as of ~~September 25,~~April 2, 2021 and March 27, 2020 ~~and September 27, 2019~~ were as follows:

	September 25, 2020			September 27, 2019			April 2, 2021			March 27, 2020
Weighted average remaining lease term (years)		6.13			3.36			6.40			6.40
Weighted average remaining discount rate		2.00	%		2.83	%		2.00	%		2.06	%

Supplemental cash flow information related to the Company’s operating leases for the first ~~three quarters~~quarter of ~~2020~~2021 is as follows:

(amounts in thousands)	September 25, 2020		April 2, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	4,747	$	1,797
Right-of-use assets obtained in exchange for new operating lease liabilities		3,193		3,990

~~As of December 31, 2019, minimum obligations under operating leases were expected to be:~~

The Company has a credit and security agreement (the “Credit and Security Agreement”) with its bank, which provides for a three-year revolving credit facility in an aggregate principal amount of $45.0 million, including a sublimit of $10.0 million for letters of credit.

The Credit and Security Agreement expires in December 2022, and has interest rates ranging from 150 to 200 basis points over LIBOR or the greater of (i) the prime rate, (ii) the federal funds effective rate plus 50 basis points, and (iii) adjusted LIBOR plus 100 basis points plus a spread ranging from 50 to 100 basis points based on the amounts outstanding under the Credit and Security Agreement. The Company can borrow under the agreement at either rate at its discretion.

At ~~September 25, 2020~~both April 2, 2021 and December 31, ~~2019,~~2020, there ~~was $6.0 million and $5.3 million~~were 0 amounts outstanding under the Credit and Security Agreement, respectively. The Company borrows or repays its debts as needed based upon its working capital obligations, including the timing of the U.S. bi-weekly payroll.

There were 0 borrowings during the 2021 first quarter. The maximum amounts outstanding under its credit agreement in the 2020 ~~and 2019 third quarters were~~first quarter was $12.0 million, ~~and $17.0 million, respectively,~~ while borrowings during ~~those quarters~~that quarter averaged ~~$9.5~~$3.1 million, and ~~$10.5 million, respectively, and~~ carried a weighted average interest ~~rates~~rate of ~~2.1% and 2.7%, respectively.~~2.5%.

borrowings by CTG under the Credit and Security Agreement are subject to a borrowing base, which is a formula based on certain eligible receivables and reserves. Receivable balances from our largest client, IBM, have been removed from the credit facility as collateral as the Company had entered into a factoring arrangement for those receivables. Total availability as of ~~September 25, 2020~~April 2, 2021 was approximately ~~$12.4~~$14.4 million. The Company was in compliance with these covenants at ~~September 25, 2020~~April 2, 2021 as the fixed charge ratio was ~~53.9~~56 to 1, the adjusted EBITDA, a non-GAAP measure, for the trailing twelve months was ~~$14.5~~$15.6 million, and capital expenditures for property, equipment and capitalized software were ~~$1.9~~$0.9 million in the ~~2020 year-to-date period.~~2021 first quarter. The Company was also in compliance with its covenants at ~~September~~March 27, ~~2019.~~2020.

The components that make up accumulated other comprehensive loss on the condensed consolidated balance sheets at ~~September 25, 2020~~April 2, 2021 and December 31, ~~2019~~2020 are as follows:

(amounts in thousands)	September 25, 2020			December 31, 2019			April 2, 2021			December 31, 2020
Foreign currency	$	(7,045	)	$	(9,106	)
Pension loss, net of tax of $257 in 2020 and $265 in 2019		(9,510	)		(9,436	)
Foreign currency translation adjustment, net of taxes							$	(5,890	)	$	(3,645	)
Pension loss, net of tax of $423 in 2021 and $455 in 2020								(11,172	)		(11,722	)
Accumulated other comprehensive loss	$	(16,555	)	$	(18,542	)	$	(17,062	)	$	(15,367	)

During the 2021 and 2020 ~~and 2019 third~~first quarter ~~and year-to-date~~ periods, actuarial losses were amortized to expense as follows:

	For the Quarter Ended					For the Three Quarters Ended					For the Quarter Ended
(amounts in thousands)	September 25, 2020			September 27, 2019		September 25, 2020			September 27, 2019		April 2, 2021			March 27, 2020
Amortization of actuarial losses	$	76		$	45	$	221		$	138	$	124		$	73
Income tax		(2	)		—		(1	)		—		(10	)		—
Net of tax	$	74		$	45	$	220		$	138	$	114		$	73

The amortization of both prior service cost and actuarial losses, with the exception of the actuarial gains related to the post retirement benefit plan, are included in determining net periodic pension cost. See note 9, "Deferred Compensation and Other Benefits" for additional information.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. The CARES Act is a relief package intended to assist many aspects of the American economy and includes provisions relating to refundable payroll tax credits, deferral of certain payment requirements for the employer portion of Social Security taxes, net operating loss carryback periods and temporarily increasing the amount of net operating losses that corporations can use to offset income, alternative minimum tax (“AMT”) credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property.

On July 20, 2020 The Department of the Treasury and the Internal Revenue Service issued final regulations addressing the treatment of income earned by certain foreign corporations that is subject to a high rate of foreign tax. The final regulations allow taxpayers to exclude certain high-taxed income of a controlled foreign corporation from their Global Intangible Low Taxed Income (GILTI) computation on an elective basis (“the GILTI High Tax Exclusion election” or “the election”). Taxpayers make the election on an annual basis. Taxpayers may make the election retroactively to tax years beginning after December 31, 2017 if certain requirements are met.

The Company has reflected the impact of the GILTI High Tax Exclusion election as well as the impact of the extended net operating loss carryback periods provided by the CARES Act in its 2020 income tax provision and continues to assess the future implications of these provisions on its consolidated condensed financial statements.

The ETR was lower in the ~~2020 third~~2021 first quarter ~~and year-to-date period~~ as compared with the corresponding ~~2019 periods~~2020 first quarter primarily resulting from the ~~GILTI High Tax Exclusion election and extended net operating loss carryback periods noted above. The combined impact~~reversal of ~~these~~certain previously non-deductible items ~~was approximately $1.1 million or $0.08 per diluted share during~~due to the ~~2020 third quarter.~~full valuation allowance against the U.S. deferred tax assets.

The Company elected to use the incremental cash tax savings approach when considering ~~GILTI~~Global Intangible Low Taxed Income (GILTI) in its assessment of the realizability of its U.S. deferred tax assets. ~~Based upon the Company’s recent history of U.S.~~The Company generated US book and tax income during 2019 and 2020 but incurred significant losses ~~for tax purposes, including~~in 2018 resulting in a cumulative ~~three-year loss in~~near break-even position for the ~~U.S. as~~three years ended April 2, 2021. The Company believes its financial outlook remains positive; however, the COVID-19 pandemic has created a high level of ~~September 25, 2020,~~uncertainty. Because of difficulties with forecasting financial results historically, and ~~uncertain profitability in future years, management has determined that it is likely that it will not realize~~due to the ~~U.S. deferred tax assets, and~~uncertainties associated with the COVID-19 pandemic, the Company maintained a full valuation allowance ~~against these~~on its US deferred tax assets ~~continues to be recorded.~~at April 2, 2021.

The Company has not recorded a U.S. deferred tax liability for the excess book basis over the tax basis of its investments in foreign subsidiaries as these amounts continue to be indefinitely reinvested in foreign operations. The Company does not anticipate repatriating any funds from its foreign operations, as they are needed in the local operations to meet working capital demands.

The Company maintains a non-qualified defined benefit Executive Supplemental Benefit Plan (ESBP) that provides certain former key executives with deferred compensation benefits, based on years of service and base compensation, payable during retirement. The plan was amended as of November 30, 1994, to freeze benefits for the participants in the plan at that time.

The Company retained certain potential obligations related to a contributory defined-benefit plan for its previous employees located in the Netherlands (NDBP) when the Company disposed of its subsidiary, CTG Nederland, B.V. Benefits paid are a function of a percentage of career average pay. This plan was curtailed for additional contributions in January 2003.

The Company also maintains a fully funded pension plan related to Belgium employees (BDBP). This is a plan with active employees and the Company expects to make future contributions.

~~As a result of the acquisition of Soft Company on February 15, 2018, the~~The Company maintains an unfunded pension plan related to the current Soft Company employees (FDBP). The Company does not anticipate contributing to the ~~plan in 2020.~~plan. NaN benefit payments were made in ~~2019~~2020 and NaN are expected to be paid in ~~2020.~~2021.

On March 3, 2020, the Company acquired StarDust and now maintains an unfunded pension plan related to the current StarDust employees (SDBP). The Company does not anticipate contributing to this plan and 0 benefit payments are expected to be paid in ~~2020.~~2021.

Net periodic pension cost for the ~~quarter and three~~ quarters ended ~~September 25,~~April 2, 2021 and March 27, 2020 ~~and September 27, 2019~~ for the plans is as follows:

	For the Quarter Ended						For the Three Quarters Ended						For the Quarter Ended
(amounts in thousands)	September 25, 2020			September 27, 2019			September 25, 2020			September 27, 2019			April 2, 2021			March 27, 2020
Service cost	$	109		$	82		$	314		$	249		$	127		$	103
Interest cost		90			145			264			438			51			87
Expected return on assets		(167	)		(152	)		(484	)		(460	)		(179	)		(159	)
Amortization of actuarial loss		76			48			224			144			125			74
Net periodic pension cost	$	108		$	123		$	318		$	371		$	124		$	105

The ESBP is deemed to be unfunded as the Company has not specifically identified assets to be used to discharge the deferred compensation benefit liabilities. The Company has purchased insurance on the lives of certain plan participants in amounts deemed to be sufficient to reimburse the Company for the costs associated with the plan for those participants (see Note 2 for “Life Insurance Policies”). The Company does not anticipate contributing to the plan other than for benefit payments as required in ~~2020~~2021 and future years. In both the 2021 and 2020 ~~third quarter and year-to-date period,~~first quarters, the Company made benefit payments totaling approximately $0.1 million, and ~~$0.4 million, respectively, and~~ expects to make payments in ~~2020~~2021 totaling approximately ~~$0.6~~$0.5 million. ~~The Company made benefit payments totaling approximately $0.1 million and $0.4 million in the 2019 third quarter and year-to-date period, respectively.~~

As the NDBP was curtailed for additional contributions in January 2003, 0no contributions were made in ~~2019~~2020 and ~~NaN~~none are expected to be made in the remainder of ~~2020.~~

2021. The assets for the NDBP are held by Aegon, a financial services firm located in the Netherlands. The Company maintains a contract with Aegon to insure future benefit payments of the NDBP; however, due to certain terms of the agreement and potential obligations to the Company, the NDBP has not been settled. The benefit payments to be made in ~~2020~~2021 are expected to be paid by Aegon from plan assets. The assets for the plan are included in a general portfolio of government bonds, a portion of which is allocated to the NDBP based upon the estimated pension liability associated with the plan. The fair market value of the plan’s assets equals the contractual value of the NDBP at any point in time. The fair

value of the assets is determined using a Level 3 methodology (see Note 2 for “Fair Value”). In ~~2020,~~2021, the plan investments have a targeted minimum return to the Company of 4.0%, which is consistent with historical returns and the 4.0% return guaranteed to the participants of the plan. The Company, in conjunction with Aegon, intends to maintain the current investment strategy of investing plan assets solely in government bonds throughout ~~2020.~~2021.

The BDBP is considered fully funded. The Company made contributions of $0.2 million in the 2021 first quarter, and ~~$0.5~~$0.1 million in the 2020 ~~third~~first quarter, ~~and year-to-date period, respectively, and $0.2 million and $0.4 million in the 2019 third quarter and year-to-date period,~~ respectively. The Company made benefit payments totaling less than $0.1 million in both the 2021 and 2020 ~~and 2019 third~~first quarters, ~~respectively,~~ and expects to make payments in ~~2020 of less than~~2021 totaling $0.1 million.

The assets for the BDBP are held by Allianz, a financial services firm located in Belgium. The Company maintains a contract with Allianz to insure future benefit payments of the BDBP. Contributions made by the Company to Allianz are based on employees’ current salaries. The benefit payments to be made in ~~2020~~2021 are expected to be paid by Allianz from plan assets. The assets for the plan are included in the overall portfolio of assets held by Allianz. The fair market value of the plan’s assets equals the contractual value of the BDBP in any given year (which is the mathematical reserve held by Allianz). The fair value of the assets is determined using a Level 3 methodology (see Note 2 “Fair Value”). Allianz does

not guarantee a minimum return on the plan investments, whereas Belgian law sets a minimum return to be guaranteed to the participants of the plan.

The change in the fair value of plan assets for the plans for the quarters ended ~~September 25,~~April 2, 2021 and March 27, 2020 ~~and September 27, 2019~~ was as follows:

	For the Quarter Ended						For the Quarter Ended
(amounts in thousands)	September 25, 2020			September 27, 2019			April 2, 2021			March 27, 2020
Fair value of plan assets at beginning of period	$	18,078		$	17,403		$	20,654		$	18,077
Return on plan assets		504			460			179			159
Contributions		878			829			298			284
Benefits paid		(624	)		(610	)		(225	)		(204	)
Effect of exchange rate changes		690			(798	)		(840	)		(254	)
Fair value of plan assets at end of quarter	$	19,526		$	17,284		$	20,066		$	18,062

The Company maintains the Key Employee Non-Qualified Deferred Compensation Plan for certain key executives. Company contributions to this plan, if any, are based on annually defined financial performance objectives. The Company made 0 cash contributions in either the 2021 or 2020 ~~or 2019 third quarter or year-to-date periods~~first quarters for amounts earned in the previous year. Participants in the plan have the ability to purchase stock units from the Company at current market prices using their available investment balances within the plan. In exchange for the cash received, the Company releases shares out of treasury stock equivalent to the number of share units purchased by the participants. These shares of common stock are not entitled to any voting rights, but will receive dividends in the event any are paid. The shares are being held by the Company, and will be released to the participants as prescribed by their payment elections under the plan. There were 0 stock units purchased in the 2021 or 2020 ~~or 2019 third quarter or year-to-date periods~~first quarters.

The Company maintains the Non-Employee Director Deferred Compensation Plan for its non-employee directors. There were 0 cash contributions in either the 2021 or 2020 ~~or 2019 third~~first quarters. Contributions deposited in the director’s accounts in the 2021 and 2020 first quarters ~~or year-to-date periods. Contributions to the plan~~ consisted of equity grants from the 2020 Equity Award Plan, and the 2010 Equity Award Plan, ~~that were deposited in the director’s accounts. Prior to 2019,~~ when cash contributions were made, the non-employee directors elected to purchase stock units from the Company at current market prices using their available investment balance within the plan. Consistent with the Key Employee Non-Qualified Deferred Compensation Plan, in return for funds received, the Company released shares out of treasury stock equivalent to the number of share units purchased by the participants.respectively. These shares of common stock are not entitled to any voting rights, but will receive dividends in the event any are paid. The shares are being held by the Company, and will be released to the participants as prescribed by their payment elections under the plan.

During the ~~2020 third~~2021 first quarter, ~~there were 0 restricted stock grants issued, but~~ the Company ~~has~~ granted restricted stock totaling ~~599,928 shares in the year-to-date period.~~135,000 shares. During the ~~2019 third~~2020 first quarter, ~~and year-to-date period,~~ the Company granted restricted stock totaling ~~217,542 and 636,268 shares, respectively.~~380,000 shares. All grants in ~~2020~~2021 and ~~2019~~2020 were funded out of treasury stock.

Director Board fees are paid ~~exclusively~~ in ~~deferred~~part with quarterly grants of stock units. Of the total shares granted during the ~~2020~~2021 first quarter, ~~170,848~~15,000 shares represented restricted stock units that were granted to Board members. The shares vest over the quarter in ~~four equal quarterly increments~~which they were granted and the Company is expensing these grants ~~ratably during the quarter in which they vest. There were no additional shares granted to the directors in the 2020 second or third quarters.~~as such. Grants of similar units to the Board members totaled ~~215,326~~171,000 share units in the ~~2019~~2020 first quarter, ~~with no additional grants in~~and represented the ~~2019 year-to-date period.~~annual grant for all of 2020.

Of the shares granted in the ~~2020~~2021 first quarter, ~~209,280~~120,000 shares were granted to senior management, of which ~~115,410~~80,000 shares included a performance condition. The shares will only vest, in part, to senior management if at least 80% of a three-year cumulative target for diluted earnings per share is met for the three-year period ended December 31, 2022. If at least 80% of the three-year EPS target is not met, the grants will expire. ~~The 217,542~~Of the shares granted ~~in the 2019 third~~during 2020 first quarter, 209,000 were granted to senior management, ~~with~~of which 115,000 shares included a performance condition. The shares will only vest in part, to senior management if at least 80% of a three-year cumulative target for diluted earnings per share is met for the three-year period ended December 31, 2021. If at least 80% of the three-year EPS target is not met, the grants will expire.

The remaining shares granted in the 2021 and 2020 ~~and 2019 third~~first quarters ~~and year-to-date periods~~ include shares that vest ratably over a period of three or four years, beginning one year from the date of grant.

The restricted shares granted are considered outstanding, can be voted, and are eligible to receive dividends in the event any are paid. However, these shares do not include a non-forfeitable right for the holder to receive dividends and none will be paid in the event the awards do not vest. Accordingly, only vested shares of outstanding restricted stock are included in the basic earnings per share calculation. The shares and share units were granted in 2021 from the 2020 Equity Award Plan, and in 2020 from the 2010 Equity Award Plan.

A total of ~~173,010~~106,000 stock options were issued during the 2021 first quarter on March 24, 2021 from the 2020 Equity Award Plan. The options have a fair value of $3.46 per share using the Black-Scholes valuation model. The assumptions used to calculate the fair value include the price on the date of grant of $9.17 per option, an expected life of 5.1 years, expected volatility of 41.9%, an expected dividend yield of 0, and a risk free rate of 0.8%. The options vest ratably over three years, and are being expensed over that period. The options were granted from the 2020 Equity Award Plan. A total of 173,000 options were granted during the 2020 first quarter on March 6, 2020. The options have a fair value of $1.96 per share using the Black-Scholes valuation model. The assumptions used to calculate the fair value include the price on the date of grant of $5.88 per option, an expected life of 5.2 years, expected volatility of 36.7%, an expected dividend yield of 0, and a risk free rate of 0.6%. The options ~~vest ratably over three years, and are being expensed over that period. NaN stock options were granted during the 2020 third quarter. The Company did 0t grant any~~stock options during the 2019 third quarter. A total of 26,500 options were granted during the 2019 second quarter on May 31, 2019. The options have a fair value of $1.26 per share using the Black-Scholes valuation model. The assumptions used to calculate the fair value include the price on the date of grant of $4.20 per option, an expected life of 3.7 years, expected volatility of 36.1%, an expected dividend yield of 0, and a risk free rate of 2.2%. The options were granted from the 2010 Equity Award Plan.

The Company’s Board of Directors has previously authorized the repurchase ~~of its stock~~ up to ~~a total of~~ $30.0 ~~million.~~million of the Company’s stock. The Company did 0tnot purchase shares for treasury during the ~~2020 third quarter or year-to-date period.~~2021 first quarter. As of ~~September 25, 2020,~~April 2, 2021, the Company ~~had repurchased approximately 3.2 million shares pursuant to the current authorization and~~ had approximately $7.7 million left in its current stock repurchase authorization.

The Company ~~did 0t issue any~~issued approximately 0.2 million shares during the ~~2020 third~~2021 first quarter ~~but has issued approximately 600,000~~ ~~shares out of treasury stock during the year-to-date period primarily~~ to fulfill the ~~share~~ requirements from ~~purchases~~the grant of restricted shares or units, or the exercise of stock ~~in the Non-Employee Director Deferred Compensation Plan, stock option exercises, and restricted stock grants.~~options.

The Company did 0tnot purchase shares for treasury during the ~~2019 third quarter or year-to-date period.~~2020 first quarter. At ~~September~~March 27, ~~2019,~~2020, the Company had approximately $7.7 million remaining in its stock repurchase authorization. During the ~~2019 third~~2020 first quarter, ~~and year-to-date period,~~ the Company issued ~~217,000 and 636,000~~0.4 million shares ~~respectively,~~ out of treasury stock primarily to fulfill the share requirements from purchases of stock in the Non-Employee Director Deferred Compensation Plan, the grant of restricted shares or units, or the exercise of stock ~~options exercises, and restricted stock grants.~~options.

In the ~~2020 third~~2021 first quarter, International Business Machines Corporation (IBM) was the Company’s largest client and accounted for ~~$18.6~~$19.6 million or ~~21.0%~~20.2% of consolidated revenue compared with ~~$21.3~~$19.9 million or ~~21.9%~~22.9% of consolidated revenue in the comparable ~~2019 period. In the~~ 2020 ~~year-to-date period, IBM accounted for $57.4 million or 21.7% of consolidated revenue, compared with $63.4 million or 21.5% of consolidated revenue in the comparable 2019~~ period. The National Technical Services Agreement with IBM ~~was originally scheduled to expire on December 31, 2019, but has been~~

~~extended and now~~ expires on ~~November~~October 27, ~~2020.~~2023. The Company’s accounts receivable from IBM at ~~September 25, 2020~~April 2, 2021 and December 31, ~~2019~~2020 totaled ~~$13.9~~$13.3 million and ~~$23.0~~$11.3 million, respectively.

NaN other client accounted for 10% or more of the Company's revenue during the 2021 or 2020 ~~or 2019 third quarters or year-to-date periods.~~first quarters.

This quarterly report on Form 10-Q contains forward-looking statements made by the management of Computer Task Group, Incorporated (CTG, the Company or the Registrant) that are subject to a number of risks and uncertainties. These forward-looking statements are based on information as of the date of this report. The Company assumes no obligation to update these statements based on information from and after the date of this report. Generally, forward-looking statements include words or phrases such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “projects,” “could,” “may,” “might,” “should,” “will” and words and phrases of similar impact. The forward-looking statements include, but are not limited to, statements regarding future operations, industry trends or conditions and the business environment, and statements regarding future levels of or trends in business strategy and expectations, new business opportunities, cost control initiatives, business wins, market demand, revenue, operating expenses, capital expenditures, and financing. The forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including the following: (i) the availability to CTG of qualified professional staff, (ii) domestic and foreign industry competition for clients and talent, including technical, sales and management personnel, (iii) increased bargaining power of large clients, (iv) the Company's ability to protect confidential client data, (v) the partial or complete loss of the revenue the Company generates from International Business Machines Corporation (IBM), (vi) the uncertainty of clients' implementations of cost reduction projects, (vii) the effect of healthcare reform and initiatives, (viii) the mix of work between staffing and solutions, (ix) currency exchange risks, (x) risks associated with operating in foreign jurisdictions, (xi) renegotiations, nullification, or breaches of contracts with clients, vendors, subcontractors or other parties, (xii) the impact of current and future laws and government regulations, as well as repeal or modification of such, affecting the information technology (IT) solutions and staffing industry, taxes and the Company's operations in particular, (xiii) industry and economic conditions, including fluctuations in demand for IT services, (xiv) consolidation among the Company's competitors or clients, (xv) the need to supplement or change our IT services in response to new offerings in the industry or changes in client requirements for IT products and solutions, (xvi) the risks associated with acquisitions, (xvii) actions of activist shareholders, and (xviii) the effects of the COVID-19 pandemic and the regulatory, social, and business responses thereto on the Company’s business, operations, employees, contractors, and clients, and (xix) the risks described in Item 1A of the Company’s most recently filed annual report on Form 10-K, and from time to time, in the Company's reports filed with the Securities and Exchange Commission (SEC).

The Company operates in one industry segment, providing information and technology-related services to its clients. At the highest level, CTG delivers services that are considered either IT solutions or IT and other staffing. IT solutions typically encompasses services where the Company takes management responsibility for a project, has a deliverable, or service level agreements are included in the services delivered. Staffing services typically include providing IT and other resources to clients under client ~~management~~management.

IT solutions and IT and other staffing revenue as a percentage of total revenue for the quarters ended April 2, 2021 and ~~year-to-date periods ended September 25,~~March 27, 2020 ~~and September 27, 2019~~ was as follows:

	For the Quarter Ended						For the Three Quarters Ended						For the Quarter Ended
	September 25, 2020			September 27, 2019			September 25, 2020			September 27, 2019			April 2, 2021			March 27, 2020
IT solutions		39.6	%		33.9	%		37.3	%		34.6	%		44.3	%		39.5	%
IT and other staffing		60.4	%		66.1	%		62.7	%		65.4	%		55.7	%		60.5	%
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

The Company promotes a significant portion of its services through five vertical market focus areas: technology service providers, ~~manufacturing,~~financial services, healthcare (which includes services provided to healthcare providers, health insurers (payers), and life sciences companies), ~~financial services,~~manufacturing, and energy. The Company focuses on these five vertical areas as it believes that these areas are either higher growth markets than the general IT services market and the general economy, or are areas that provide greater potential for the Company’s growth due to the size of the vertical market. The remainder of CTG’s revenue is derived from general markets.

	For the Quarter Ended						For the Three Quarters Ended						For the Quarter Ended
	September 25, 2020			September 27, 2019			September 25, 2020			September 27, 2019			April 2, 2021			March 27, 2020
Technology service providers		33.1	%		32.9	%		33.3	%		32.4	%		30.8	%		35.3	%
Financial services		14.8	%		13.0	%		14.6	%		13.6	%		17.0	%		14.5	%
Healthcare		14.4	%		16.9	%		13.8	%		16.7	%		15.5	%		13.6	%
Manufacturing		13.7	%		17.6	%		14.1	%		17.2	%		12.4	%		15.2	%
Energy		5.6	%		5.4	%		6.3	%		5.2	%		5.5	%		6.4	%
General markets		18.4	%		14.2	%		17.9	%		14.9	%		18.8	%		15.0	%
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

The IT services industry is extremely competitive and characterized by continuous changes in client requirements and improvements in technologies. The Company’s competition varies significantly by geographic region, as well as by the type of service provided. Many of the Company’s competitors are larger than CTG, and have greater financial, technical, sales and marketing resources. In addition, the Company frequently competes with a client’s own internal IT staff. The industry is impacted by the ~~growing~~continuing use of lower-cost offshore delivery capabilities (primarily India and other parts of Asia). Regularly, new IT products and services are introduced which may render the Company’s existing IT solutions and IT staffing services obsolete. The economic conditions in the markets we serve are continuously changing and may negatively affect our business if we cannot adapt to negative conditions as they occur. There can be no assurance that CTG will be able to continue to compete successfully with existing or future competitors or that future competition will not have a material adverse effect on our results of operations and financial condition.

The Company recognizes revenue when control of the promised good or service is transferred to clients, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. For time-and-material contracts, revenue is recognized as hours are incurred and costs are expended. For contracts with progress billing schedules (i.e. progress billing), primarily monthly, revenue is recognized as services are rendered to the client. Revenue for fixed-price contracts is recognized over time using an input-based approach. Revenue recognition over time best portrays the Company’s performance in transferring control of the goods or services to the client. On most fixed price contracts, revenue recognition is supported through contractual clauses that require the client to pay for work performed to date, including cost plus a reasonable profit margin, for goods or services that have no alternative use to the Company. On certain contracts, revenue recognition is supported through contractual clauses that indicate the client controls the asset, or work in process, as the Company creates or enhances the asset. On a given project, actual salary and indirect labor costs incurred are measured and compared with the total estimate of costs of such items at the completion of the project. Revenue is recognized based upon the percentage-of-completion calculation of total incurred costs to total estimated costs. The Company infrequently works on fixed-price projects that include significant amounts of material or other non-labor related costs that could distort the percent complete within a percentage-of-completion calculation. The Company’s estimate of the total labor costs it expects to incur over the term of the contract is based on the nature of the project and experience on similar projects, and includes management judgments and estimates that affect the amount of revenue recognized on fixed-price contracts in any accounting period. Losses on fixed-price projects are recorded when identified.

	For the Quarter Ended						For the Three Quarters Ended						For the Quarter Ended
	September 25, 2020			September 27, 2019			September 25, 2020			September 27, 2019			April 2, 2021			March 27, 2020
Time-and-material		80.5	%		80.7	%		80.7	%		80.2	%		79.1	%		82.4	%
Progress billing		14.6	%		10.1	%		14.7	%		10.2	%		18.4	%		14.0	%
Percentage-of-completion		4.9	%		9.2	%		4.6	%		9.6	%		2.5	%		3.6	%
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

The table below sets forth data as contained in the condensed consolidated statements of income with the percentage information calculated as a percentage of consolidated revenue.

For the Quarter Ended:

September 25, 2020

September 27, 2019

(amounts in thousands)

Revenue

100.0
%

$
88,648

100.0
%

$
97,204

Cost of services

77.9
%

69,101

80.7
%

78,462

Gross profit

22.1
%

19,547

19.3
%

18,742

Selling, general and administrative expenses

20.0
%

17,723

17.7
%

17,218

Operating income

2.1
%

1,824

1.6
%

1,524

Interest and other income (expense), net

0.3
%

334

(0.2
)%

(202
)
Income before income taxes

2.4
%

2,158

1.4
%

1,322

Provision (benefit) for income taxes

(0.8
)%

(673
)

0.5
%

443

Net income

3.2
%

$
2,831

0.9
%

$
879

For the Three Quarters Ended:	September 25, 2020					September 27, 2019
For the Quarter Ended:												April 2, 2021						March 27, 2020
	(amounts in thousands)											(amounts in thousands)
Revenue		100.0	%	$	264,743		100.0	%	$	294,850			100.0	%	$	97,129			100.0	%	$	86,949
Cost of services		79.1	%		209,412		81.4	%		240,056			78.6	%		76,362			80.4	%		69,903
Gross profit		20.9	%		55,331		18.6	%		54,794			21.4	%		20,767			19.6	%		17,046
Selling, general and administrative expenses		18.7	%		49,526		17.1	%		50,290			19.2	%		18,669			17.2	%		14,979
Operating income		2.2	%		5,805		1.5	%		4,504			2.2	%		2,098			2.4	%		2,067
Interest and other income (expense), net		0.5	%		1,351		(0.3	)%		(748	)
Interest and other expense, net													(0.2	)%		(150	)		(0.2	)%		(191	)
Income before income taxes		2.7	%		7,156		1.2	%		3,756			2.0	%		1,948			2.2	%		1,876
Provision for income taxes		0.5	%		1,422		0.4	%		1,302			0.4	%		440			0.9	%		732
Net income		2.2	%	$	5,734		0.8	%	$	2,454			1.6	%	$	1,508			1.3	%	$	1,144

The Company recorded revenue in the ~~quarter and three~~ quarters ended ~~September 25,~~April 2, 2021 and March 27, 2020 ~~and September 27, 2019~~ as follows:

For the Three Quarters Ended:	September 25, 2020					September 27, 2019					Year-over-Year Change
For the Quarter Ended:														April 2, 2021					March 27, 2020					Year-over-Year Change
	(amounts in thousands)													(amounts in thousands)
North America		56.0	%	$	148,289		62.4	%	$	183,953		(19.4	)%		51.0	%	$	49,504		57.9	%	$	50,307		(1.6	)%
Europe		44.0	%		116,454		37.6	%		110,897		5.0	%		49.0	%		47,625		42.1	%		36,642		30.0	%
Total		100.0	%	$	264,743		100.0	%	$	294,850		(10.2	)%		100.0	%	$	97,129		100.0	%	$	86,949		11.7	%

There were ~~63 billable days in both of the 2020~~65 and ~~2019 third quarters. Reimbursable expenses billed to clients and included in revenue totaled $0.1 million and $0.7 million in the 2020 and 2019 third quarters, respectively.~~

~~There were 189 and 190~~62 billable days in the 2021 and 2020 ~~and 2019 year-to-date periods,~~first quarters, respectively. Reimbursable expenses billed to clients and included in revenue totaled ~~$0.7~~$0.5 million and ~~$2.0~~$0.4 million in the 2021 and 2020 ~~and 2019 year-to-date periods,~~first quarters, respectively.

The Company’s strategic plan includes investing in IT solutions-based business development, marketing and solutions resources as part of a concerted effort to increase the mix of solutions services within its total revenue. Generally,

solutions services have much higher bill rates and produce higher profits than IT staffing services. Additionally, within solutions, the Company is focused on expanding the digital solutions it provides, including cloud related activities, robotic process automation and artificial intelligence, in response to the demand ~~it is seeing~~ in the end markets where services are provided. Finally, as a third part of its plan, the Company is focused on disengaging from its lowest margin staffing business.

On a consolidated basis, IT solutions revenue increased ~~$2.1~~$8.7 million to ~~$35.1~~$43.0 million, or ~~39.6%~~44.3% of consolidated revenue in the ~~2020 third~~2021 first quarter. This compares with ~~$33.0~~$34.3 million or ~~33.9%~~39.5% in the corresponding ~~2019 period. Solutions revenue totaled $98.6 million or 37.3% in the~~ 2020 ~~year-to-date period as compared with $102.1 million or 34.6% of revenue in the corresponding 2019~~ period. The increase in solutions revenue in the ~~2020 third~~2021 first quarter was primarily due to the Company’s continued ~~concerted effort~~efforts to ~~focus on and~~ increase its solution services as part of overall revenue. ~~The 2020 year-to-date solutions revenue was less than the prior year-to-date period due to reduced demand from the macroeconomic conditions resulting from the COVID-19 pandemic.~~

IT and other staffing revenue ~~decreased $10.7~~increased $1.5 million to ~~$53.6~~$54.1 million and represented ~~60.4%~~55.7% of consolidated revenue in the ~~2020 third~~2021 first quarter. This compares with ~~$64.2~~$52.6 million or ~~66.1%~~60.5% of revenue in the corresponding ~~2019 period. Staffing revenue totaled $166.1 million or 62.7% in the~~ 2020 ~~year-to-date period compared with $192.8 million or 65.4% in the corresponding 2019~~ period. The IT staffing revenue ~~decrease~~increase in ~~both~~ the ~~third~~first quarter ~~and year-to-date period~~ was primarily due to the ~~Company~~growth in the company’s European operations, offset by disengaging from a number of low margin, non-core staffing engagements in ~~the 2019 fourth quarter and~~North America in the first quarter of 2020, consistent with the Company’s overall strategy to focus on solutions services as a higher mix of its overall revenue. Additionally, the Company has experienced lower demand starting in March 2020 from clients in its staffing business in the COVID-19 pandemic environment.2021.

The COVID-19 pandemic had ~~relatively~~ limited ~~additional~~ financial impact on the ~~business~~Company’s operations in the ~~2020 third~~2021 first quarter as compared with the 2020 ~~second~~first quarter. The Company did not experience ~~significant~~ additional headcount reductions or project cancellations during the ~~third quarter as occurred at the end of the~~2021 first quarter. At this time, given the global pandemic continues to affect all of the countries where the Company ~~does not have any~~has operations, there is no clear visibility into the potential magnitude of ~~an additional potential~~a downturn ~~of its~~in operations that would negatively affect financial results for the remainder of 2020. The Company, however, in anticipation of lower revenue resulting from reduced demand from the pandemic took steps in April 2020 to reduce its expenses, with a full-time furlough of certain non-billable employees, and a 20% furlough of nearly all other non-billable employees, including the senior management team. Additionally, all discretionary spending was eliminated, and business travel has been restricted. At the beginning of the Company’s 2020 fiscal fourth quarter on September 27, the Company eliminated the 20% furlough for all remaining non-billable employees, including senior management, that had already not returned to full-time employment during the 2020 third quarter.2021.

The Company has also actively participated in government-sponsored programs in its European operations, including Belgium, France and Luxembourg, that partially reimburses the Company for employees who have been made idle as a result of the pandemic. This primarily includes employees that were previously billable on an engagement, but

the client made a decision to stop or end a project before completion. The Company is continuing to participate in these programs, but the benefit to the Company’s European operations was diminished subsequent to August 2020 as the respective governments reduced the reimbursements under these programs. Additionally, the Company has greatly reduced the number of idled billable resources since the beginning of the pandemic in March 2020. The Company ~~also~~ believes that if these employees had remained billable throughout 2020 and through the end of the 2021 first quarter, the revenue that they would have generated would have approximated the reimbursements received from the various European governments.

The Company includes all billable consultants, consisting of both employees and subcontractors, and its support services in its headcount totals. CTG’s headcount at ~~September 25, 2020~~April 2, 2021 was approximately ~~3,750,~~3,700, down from approximately ~~4,350~~4,000 at ~~September~~March 27, ~~2019,~~2020, and a decrease from approximately ~~3,950~~3,900 at December 31, ~~2019.~~2020. The decrease in headcount year-over-year is primarily due to the Company’s plan to move away from its low margin staffing business and headcount reductions resulting from lower demand due to the COVID-19 pandemic, primarily in the Company’s staffing business. ~~Headcount was positively impacted by the acquisition of StarDust, a small testing solutions company with locations in France and Canada, in March 2020.~~

The revenue increase in Europe in the countries in which the Company operates (Belgium, France, Luxembourg, and the United Kingdom) was impacted in the ~~2020 third~~2021 first quarter ~~and year-to-date period~~ by the weakness of the U.S. dollar as compared with the value of the Euro, the currency used in Belgium, France, and Luxembourg, and the British pound, the currency used in the United Kingdom. If there had been no change in these exchange rates from the ~~2019 third~~2020 first quarter to the ~~2020 third~~2021 first quarter, total European revenue would have been approximately ~~$1.8~~$4.0 million lower, and operating income would have been lower by ~~less than $0.1~~$0.3 million. If there had been no change in the rates from the 2019 year-to-date period to the corresponding 2020 period, total European revenue would have been approximately $0.1 million higher, and operating income would have been higher by less than $0.1 million.

The Company continues to monitor the impact ~~that~~on its operations from the United Kingdom’s exit from the European Union (Brexit) ~~has had on its operations.~~. To date, there has been ~~a nominal~~an insignificant impact ~~on the Company’s operating results~~ from Brexit. As the total revenue generated by our British subsidiary is immaterial as compared with the Company’s total consolidated revenue, we do not expect the ~~nominal~~ impact ~~the exit has had on the Company’s operations to date~~ to change in the foreseeable future.

No other client accounted for 10% or more of the Company's revenue during the 2021 or 2020 ~~or 2019 third quarters or year-to-date periods.~~

Cost of services, defined as the costs for billable staff including billable out-of-pocket expenses, were 77.9% and 79.1% of revenue in the 2020 third quarter and year-to-date period, respectively, as compared with 80.7% and 81.4% of revenue in the 2019 corresponding periods, respectively. The Company’s cost of services as a percentage of revenue decreased in the 2020 third quarter and year-to-date period due to a shift in the mix to a higher level of Solutions revenue which has lower direct costs. Additionally, the overall utilization for the Company’s billable resources improved in the third quarter of 2020 as compared with the prior year. Lowering costs and improving margins is part of the Company’s solutions strategy. first quarters.

The gross profit margin was ~~22.1% and 20.9%~~21.4% of revenue in the ~~2020 third~~2021 first quarter ~~and year-to-date period, respectively,~~ as compared with ~~19.3% and 18.6%~~19.6% of revenue in the corresponding ~~2019 periods, respectively. Within the overall gross margin,~~2020 period. The increase in the gross profit margin onin 2021 was primarily due to a shift to a larger mix of IT solutions ~~services improved about 280 basis points~~business, which generates higher margins than IT staffing, within consolidated revenue. Additionally, utilization of billable resources was higher in the ~~2020 third~~first quarter of 2021 as compared with ~~the corresponding prior year period.~~ 2020.

Selling, general and administrative (“SG&A”) expenses were ~~20.0%~~19.2% of revenue in the ~~2020 third~~2021 first quarter as compared with ~~17.7%~~17.2% in the corresponding ~~2019 period, and 18.7% in the~~ 2020 ~~year-to-date period as compared with 17.1% in the corresponding 2019~~ period. The increase in SG&A expenses as a percentage of revenue in ~~both~~ the ~~2020 third~~2021 first quarter ~~and year-to date periods~~ as compared with the comparable prior year ~~periods~~period is primarily due to ~~the loss of operating leverage with a decrease in revenue of $8.6 million and $30.1 million, respectively, year-over-year. Additionally, it is part of the Company’s strategic plan to invest~~continued investments in solutions-based business development, marketing and solutions resources to increase the mix of solutions services within ~~its~~ total revenue. As the Company made a number of investments in the 2020 third quarter, SG&A expense increased $0.5 million in the 2020 third quarter as compared with the 2019 third quarter, but was $0.8 million less in the 2020 year-to-date period as compared with the prior year.

Consolidated operating income was ~~2.1%~~2.2% of revenue in the 2021 first quarter, compared with 2.4% of revenue in the 2020 ~~third quarter, compared with 1.6% of revenue in the 2019 third quarter, and 2.2% in the 2020 year-to-date period, as compared with 1.5% in the corresponding 2019 period.~~

Other income, net in the 2020 third quarter was $0.3 million. This included approximately $0.6 million or $0.04 per diluted share of a non-taxable life insurance gain from the death of a former executive, offset by other expense.first quarter.

The Company’s effective tax rate (“ETR”) is calculated quarterly based upon current assumptions relating to the full year’s estimated operating results and various tax-related items. The 2021 and 2020 ~~third~~first quarter ETR’s were 22.6% and ~~year-to-date ETR was (31.2)% and 19.9%, respectively, and the 2019 third quarter and year-to-date ETR was 33.5% and 34.7%~~39.0%, respectively. The ETR was lower in the ~~2020 third~~2021 first quarter ~~and year-to-date period~~ as compared with the corresponding ~~2019 periods~~2020 first quarter primarily resulting from the ~~GILTI High Tax Exclusion election and extended NOL carryback periods noted above. The combined impact~~reversal of ~~these~~certain previously non-deductible items ~~was approximately $1.1 million or $0.08 per diluted share during~~due to the ~~2020 third quarter.~~full valuation allowance against the U.S. deferred tax assets.

Net income was ~~$0.20 and $0.40~~$0.10 per diluted share in the 2021 first quarter as compared with $0.08 per diluted share in the 2020 ~~third quarter and year-to-date period, respectively, as compared with $0.06 and $0.18 per diluted share in the 2019 third quarter and year-to-date period, respectively.~~first quarter. Diluted earnings per share was calculated using ~~14.4~~14.9 million and ~~14.0~~14.3 million weighted-average equivalent shares outstanding for the quarters ended ~~September 25,~~April 2, 2021 and March 27, 2020, ~~and September 27, 2019, respectively, and 14.3 million and 13.9~~respectively.

~~million weighted-average equivalent shares outstanding for the three quarters ended September 25, 2020 and September 27, 2019, respectively.~~

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires the Company’s management to make estimates, judgments and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company’s significant accounting policies, along with the underlying assumptions and judgments made by the Company’s management in their application, have a significant impact on the Company’s condensed consolidated financial statements. The Company identifies its critical accounting policies as those that are the most pervasive and important to the portrayal of the Company’s financial position and results of operations, and that require the most difficult, subjective and/or complex judgments by management regarding estimates about matters that are inherently uncertain. The Company’s critical accounting policies are those related to income taxes, specifically relating to the valuation allowance for deferred income ~~taxes.~~taxes, and the valuation of goodwill.

At ~~September 25, 2020,~~April 2, 2021, the Company had a total of approximately ~~$7.0~~$8.0 million of deferred tax assets offset by a valuation allowance of approximately ~~$6.7~~$7.6 million, resulting in a net deferred tax asset of approximately ~~$0.3~~$0.4 million and approximately ~~$2.2~~$2.0 million of deferred tax liabilities, recorded on its condensed consolidated balance sheet. The deferred tax assets, net, primarily consist of deferred compensation, loss carryforwards and state taxes. ~~The changes in~~

In assessing the realizability of deferred tax assets, and liabilities from period to period are determined based upon the changes in differences between the basis of assets and liabilities for financial reporting purposes and the basis of assets and liabilities for tax purposes, as measured by the expected tax rates when these differences are estimated to reverse. The Company has made certain assumptions regarding the timingmanagement considers, within each taxing jurisdiction, whether it is more likely than not that all or some portion of the ~~reversal of these assets and liabilities, and whether taxable income in future periods will be sufficient to recognize all or a part of any gross deferred tax asset of the Company.~~

At September 25, 2020, the Company had deferred tax assets recorded resulting from net operating losses in previous years totaling approximately $0.4 million. The Company has analyzed each jurisdiction’s 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 all of these deferred tax assets will be realized, ~~at any point in the future. Accordingly, at September 25, 2020, the Company had offset a portion of these assets with~~or that a valuation allowance ~~totaling $0.3 million, resulting~~is required. Management considers all available evidence, both positive and negative, in ~~a net~~assessing realizability of its deferred tax ~~asset from net operating~~assets. A key component of this assessment is management’s critical evaluation of current and future impacts of business and economic factors on the Company’s ability to generate future taxable income. Factors that may affect the Company’s ability to generate taxable income include, but are not limited to increased competition, a decline in revenue or margins, a loss ~~carryforwards~~ of ~~$0.1 million.~~market share, the availability of qualified professional staff, and a decrease in demand for the Company’s services. The Company had a total of $5.3 million of deferred tax assets in its North American operations that were fully offset by a valuation allowance at April 2, 2021.

The Company’s deferred tax assets and their potential realizability are evaluated each quarter to determine if any changes should be made to the valuation allowance. Any change in the valuation allowance in the future could result in a change in the Company’s ETR. A 1% change in the ETR in the ~~2020 third~~2021 first quarter ~~and year-to-date period~~ would have increased or decreased net income by approximately ~~$21,500~~$19,500.

As of April 2, 2021, goodwill recorded on the Company's consolidated balance sheet totaled $20.4 million, which relates to the acquisitions completed by the Company in 2018, 2019, and ~~$71,600, respectively.~~2020. The acquisition of Soft Company in 2018 and StarDust in 2020 are in the France reporting unit, while the 2019 acquisition of Tech-IT is in the Luxembourg reporting unit.

As of October 2020 fiscal month-end, we performed our annual goodwill impairment test with the assistance of an external consultant and estimated the fair value of our reporting units based on a combination of the income (estimates of future discounted cash flows) and the market approach (market multiples for similar companies). The income approach uses a discounted cash flow (DCF) method that utilizes the present value of cash flows to estimate fair value of the reporting unit. The future cash flows for the reporting units were projected based upon on our estimates of future revenue, operating income and other factors such as working capital and capital expenditures. As part of our projections, we took into account expected industry and market conditions for the industries in which the reporting units operate, as well as trends currently impacting the reporting units. The market approach utilizes multiples of earnings before interest expense, taxes, depreciation and amortization (EBITDA) to estimate the fair value of the reporting unit. The market multiples used for our reporting units were based on competitor industry data, along with the market multiples for the Company and other factors.

Finally, we compared our estimates of fair value to the consolidated Company’s October 2020 month-end total public market capitalization, which included factoring in the business operations that do not have goodwill, and assessed implied control premiums. The Company’s public market capitalization has significantly increased from October 2020 to April 2, 2021 given an increase in the Company’s stock price of approximately 80% during that time period. Based on the results of this analysis, we concluded that the estimated fair value determined under our approach for the annual goodwill impairment test for our France and Luxembourg reporting units was reasonable.

We concluded that the goodwill assigned to the France and Luxembourg reporting units as of October 2020 were not impaired, and that they continue to not be impaired as of April 2, 2021. However, the estimates and assumptions on which the Company’s evaluations are based involve judgments and are based on current available information, any of which could prove wrong or inaccurate when made, or become wrong or inaccurate as a result of subsequent events. In the event the business significantly under achieves its goals for revenue and profit growth in the future, the carrying value for this business unit may not be supportable using a discounted cash flow projection, and an impairment charge may exist.

The Company has also made a number of estimates and assumptions relating to the reporting of its assets and liabilities and the disclosure of contingent assets and liabilities to prepare the condensed consolidated financial statements pursuant to the rules and regulations of the SEC, the FASB, and other regulatory authorities. Such estimates primarily relate to the recognition of revenue, leased assets and liabilities, the purchase accounting for acquisitions and the valuation of goodwill, the valuation allowance for deferred tax assets, actuarial assumptions including discount rates and expected rates of return on assets, as applicable, for the Company’s defined benefit plans, the valuation of stock options and restricted stock for recording equity-based compensation expense, the allowance for doubtful accounts receivable, investment valuation, legal matters, other contingencies, and estimates of progress toward completion and direct profit or loss on contracts, as applicable. As future events and their effect on the Company's operating results cannot be determined with precision, actual results could differ from these estimates. Changes in the economic climates in which the Company operates may affect these estimates and will be reflected in the Company’s financial statements in the event they occur.

Cash provided by operating activities was ~~$25.5~~$2.3 million in the 2021 first quarter compared with $19.2 million in the 2020 ~~year-to-date period compared with $4.2 million in the 2019~~ corresponding period. In ~~2020,~~2021, net income was ~~$5.7~~$1.5 million, while other non-cash adjustments, primarily consisting of depreciation and amortization expense, equity-based compensation, deferred income taxes, and deferred compensation ~~the gain on sale of property, and the non-taxable gain from life insurance~~ totaled ~~$2.9~~$1.5 million. In ~~2019,~~2020, net income was ~~$2.5~~$1.1 million, while the corresponding non-cash adjustments totaled ~~$3.3~~$1.3 million.

The accounts receivable balance decreased ~~$16.6~~$1.0 million in ~~2020~~2021 and ~~increased $2.9~~decreased $18.2 million in ~~2019.~~2020. The decrease in the accounts receivable balance in ~~2020~~2021 primarily resulted from an advance payment (factoring) program that the Company entered into with its largest client during the 2020 first quarter, where approximately ~~$17.8~~$15.5 million was paid in the ~~2020 third~~2021 first quarter before the normal due date. ~~Additionally,~~There was no change in days sales outstanding (DSO) from period to period, as DSO was 71 days at both April 2, 2021 and March 27, 2020. The decrease in the ~~decrease was due to~~accounts receivable balance in 2020 primarily resulted from a decrease in revenue of ~~8.8%~~10.6% in the 2020 first quarter as compared with the corresponding 2019 ~~period. Days sales outstanding (DSO)~~quarter. Additionally, the decrease was 77 days at September 25, 2020 as compared with 81 at September 27, 2019. The increase in the accounts receivable balance in 2019 primarily resulted from an increase in revenue of 7.7% in the 2019 third quarter as compared with the corresponding 2018 quarter. This was partially offsetdriven by a decrease in DSO of ~~one day~~14 days in ~~2019~~2020 to 8171 days from 8285 days at December 31, ~~2018.~~2019, and also due to the factoring arrangement.

Prepaid and other current assets increased $0.6 million and ~~$1.5~~$1.0 million in the ~~2020~~2021 and ~~2019~~2020 periods, respectively, due to payments made early in each respective year that are then expensed throughout the year.

The accounts payable balance decreased ~~$3.9~~$4.1 million and ~~$3.5~~decreased $2.5 million in the ~~2020~~2021 and ~~2019~~2020 periods, respectively, primarily due to the timing of certain payments near the end of the quarter of each year as compared with the prior year-end. Accrued compensation increased ~~less than $0.1~~$2.3 million and ~~$9.9~~$1.0 million in the ~~2020~~2021 and ~~2019~~2020 periods, respectively. The ~~2020~~2021 increase is ~~lower~~ primarily due to a change in the pay cycle in the U.S. where the ~~third~~first quarter ~~ended on a pay date, but~~ did not end on a pay date in ~~2019.~~2021. The ~~2019~~2020 increase was driven by higher headcount compared with the corresponding prior ~~periods due to increasing revenue. Income taxes payable/receivable~~period. Advance billings on contracts increased ~~$0.7 million and decreased $0.8~~$1.1 million in ~~the 2020~~2021 and ~~2019 periods, respectively. The increase in 2020 reflected higher taxable income. Advance billings decreased $0.8~~increased $0.4 million in ~~2020 and increased $1.8 million in 2019.~~2020. The change in advance billings in any given period is determined by the nature and type of existing projects, and the advance payments, if any, associated with those projects. Deferred payroll taxes in 2020 represents a U.S. government program in which the Company participates in that allows Company’s under the CARES Act to defer the payment of payroll taxes until 2021 and 2022.

Investing activities used ~~$4.0~~$0.9 million and ~~$10.3~~$4.7 million of cash in the ~~2020~~2021 and ~~2019~~2020 periods, respectively. Cash paid for the acquisition of StarDust, net of cash acquired, was approximately ~~$4.3 million. Cash paid for~~$4.0 million in 2020, and no acquisitions were made in the ~~acquisition of Tech-IT, net of cash acquired, was approximately $8.5 million.~~2021 first quarter. The Company used cash for additions to property, equipment, and capitalized software of ~~$1.9~~$0.9 million and ~~$1.2~~$0.7 million in the ~~2020~~2021 and ~~2019~~2020 periods, respectively. The Company has no significant commitments for the purchase of property and equipment at September 25, 2020. During the 2020 second quarter, the Company entered into an agreement to sell its owned real estate for $2.5 million. As the book value of the building was approximately $1.6 million, the Company recorded a gain of about $0.8 million, after fees, from the sale in the 2020 second quarter. The Company received life insurance proceeds totaling $0.4 million in 2020 from the death of a former executive. Additionally, the Company expects to receive approximately $0.6 million in the 2020 fourth quarter from a death of a former executive in the 2020 third quarter.April 2, 2021.

Financing activities provided ~~$0.3~~$0.2 million of cash in ~~2020~~2021 and ~~$5.0~~$6.3 million in ~~2019.~~2020. Cash received from the exercise of stock options and from an employee stock purchase plan totaled approximately $0.3 million in 2021. There were no borrowing or repayments on the Company’s revolving credit line in 2021, while cash borrowed under the ~~Company’s revolving~~ line of credit to

fund the acquisition of StarDust and working capital obligations netted to ~~$0.7~~$6.7 million in the 2020 ~~year-to-date period, while cash borrowed primarily to fund the acquisition of Tech-IT netted to $5.0 million in the 2019 year-to-date~~ period. Payments made to taxing authorities that represent the value of shares withheld for taxes in employee equity-based compensation transactions totaled ~~$0.2~~less than $0.1 million in both the ~~2020~~2021 and ~~2019~~2020 periods. Cash overdrafts relate to the amount of outstanding checks at a point in time, and netted to $0.0 million and approximately $0.4 million in 2021 and ~~less than $0.1 million in~~ 2020, ~~and 2019,~~ respectively. The Company did not repurchase shares for treasury under its buyback program in either of the 2021 or 2020 ~~or 2019 year-to-date periods.~~first quarters. As of ~~September 25, 2020,~~April 2, 2021, $7.7 million was available under the Company's authorization to purchase shares in future periods.

The Company’s Credit and Security Agreement provides for a three-year revolving credit facility in an aggregate principal amount of $45.0 million, including a sublimit of $10.0 million for letters of credit.

outstanding under the Credit and Security Agreement. The Company can borrow under the agreement with either rate at its discretion. At ~~September 25, 2020~~both April 2, 2021 and December 31, ~~2019,~~2020, there was ~~$6.0 million and $5.3~~$0.0 million outstanding under the Credit and Security Agreement, respectively.

Generally, the Company borrows or repays its debt as needed based upon its working capital obligations, including the timing of the U.S. bi-weekly payroll. However, during the 2020 first quarter, given the potential negative financial implications of the COVID-19 pandemic, the Company drew down $12.0 million under its revolving credit agreement to improve its cash position at quarter-end, and provide working capital in the event of a significant financial downturn in the ~~2020 third quarter, or~~ remainder of the ~~year.~~2020. The Company paid down ~~$6.0 million~~the debt during 2020, and had no balance outstanding as of April 2, 2021.

There were no borrowings during the 2020 third quarter, leaving $6.0 million outstanding under its revolving credit agreement at September 25, 2020. This borrowing and the Company’s factoring arrangement resulted in a consolidated cash balance of $33.4 million at the end of the 2020 third2021 first quarter.

The maximum ~~amounts~~amount outstanding under its credit agreement in the 2020 ~~and 2019 third~~first ~~quarters were~~quarter was $12.0 million, ~~and $17.0 million, respectively,~~ while borrowings during ~~those quarters~~that quarter averaged ~~$9.5~~$3.1 million, and ~~$10.5 million, respectively, and~~ carried a weighted average interest ~~rates~~rate of ~~2.1% and 2.7%, respectively.~~2.5%.

Under the Credit and Security Agreement, the Company is required to meet certain financial covenants in order to maintain borrowings under its revolving credit line, pay dividends, and make acquisitions. The covenants are measured quarterly, and at ~~September 25, 2020,~~April 2, 2021, included a fixed charge coverage ratio, which must be ~~less~~greater than 1.10 ~~times~~ consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) adjusted for equity-based compensation and severance expenses, must be no less than $5.0 million for the trailing twelve months, and capital expenditures for property, plant, equipment, and capitalized software must be no more than $5.0 million in any annual period. The fixed charge coverage ratio is only tested if availability on a measurement date is less than ~~$5.625~~approximately $5.6 million. Actual borrowings by CTG under the Credit and Security Agreement are subject to a borrowing base, which is a formula based on certain eligible receivables and reserves. Receivable balances from our largest client, IBM, have been removed from the credit facility as collateral as the Company had entered into a factoring arrangement for those receivables. Total availability as of ~~September 25, 2020~~April 2, 2021 was approximately ~~$12.4~~$14.4 million. The Company was in compliance with these covenants at ~~September 25, 2020~~April 2, 2021 as the fixed charge ratio was ~~53.9~~56 to 1, the adjusted EBITDA for the trailing twelve months was ~~$14.5~~$15.6 million, and capital expenditures for property, equipment and capitalized software were ~~$1.9~~$0.9 million in the ~~2020 year-to-date period.~~2021 first quarter. The Company was also in compliance with its covenants at ~~September~~March 27, ~~2019.~~2020.

Of the total cash and cash equivalents reported on the condensed consolidated balance sheet at ~~September 25, 2020~~April 2, 2021 of ~~$33.4~~$33.5 million, approximately ~~$21.7~~$21.8 million was held by the Company’s foreign operations. Earnings are considered to be indefinitely reinvested in those operations. The Company has not repatriated any of its cash and cash equivalents from its foreign operations in the past five years, and does not intend to do so in the foreseeable future as the funds are required to meet the working capital needs of its foreign operations.

The Company believes existing internally available funds, cash potentially generated from future operations, and funds available under the Company's Credit and Security Agreement (subject to collateral limits) totaling ~~$38.8~~$44.8 million will be sufficient to meet foreseeable working capital and capital expenditure needs, fund stock repurchases, pay a dividend (if any are declared), fund acquisitions, and allow for future internal growth and expansion.

The Company did not have off-balance sheet arrangements or transactions in the 2021 or 2020 ~~or 2019 third~~first quarters other than guarantees in our European operations that support office leases and the performance under government contracts. These guarantees totaled approximately ~~$3.1~~$3.2 million at ~~September 25, 2020.~~April 2, 2021.

The Company did not enter into any significant contractual obligations during the quarter ~~or year-to-date period~~ ended ~~September 25, 2020.~~April 2, 2021.

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” which requires the immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, including trade receivables, and replaces the existing incurred loss model. The new standard requires an

estimate of expected credit losses, measured over the contractual life of an asset, which considers relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. It requires entities to consider the risk of loss even if it is remote, which will result in the recognition of credit losses on assets that do not have evidence of deterioration. The allowance for credit losses will be the difference between the amortized cost balance of a financial asset and the amount of amortized cost expected to be collected over the remaining contractual life. This guidance is effective for reporting periods beginning after December 15, 2019; however, early adoption is permitted.

The Company adopted the new credit loss standard on January 1, 2020. The Company estimated its allowance for credit losses by pooling assets with similar risk characteristics, reviewing historical losses within the last five years and taking into consideration any reasonable supportable forecasts of future economic conditions. The Company cannot guarantee that the rate of future credit losses will be similar to past experience, but considers all available information when assessing the adequacy of its allowance for credit losses each quarter. As the impact from this standard on the Company was immaterial, no adjustment was made to the beginning retained earnings balance.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. This guidance is effective for reporting periods beginning after December 15, 2019; however, early adoption is permitted. The Company adopted the new standard on January 1, 2020 for the year ending December 31, 2020 on a prospective basis and the adoption did not have a significant impact on the Company’s operations.

In August 2018, the FASB issued ASU ~~2018-15, “Customer’s Accounting~~2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20)". The amendments in this update modify the disclosure requirements for ~~Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which helps entities evaluate~~employers that sponsor defined benefit pension or other post-retirement plans by removing disclosures that no longer are considered cost beneficial, clarifying the ~~accounting for fees paid in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. This guidance~~specific requirements of disclosures, and adding disclosure requirements identified as relevant. The new ASU is effective for fiscal years ~~beginning~~ending after December 15, ~~2019; however,~~2020, and early adoption is permitted. The Company adopted ~~the~~this new standard ~~on January 1, 2020~~retrospectively for the year ending December 31, 2020, ~~on a prospective basis~~ and the adoption did not have a ~~significant~~material impact on its consolidated financial statements and associated disclosures.

In December 2019, the ~~Company’s operations.~~FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” Among other clarifications and simplifications related to income tax accounting, the new standard simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted this new standard for the quarter ended April 2, 2021, and the adoption did not have a material impact on its condensed consolidated financial statements and associated disclosures.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides optional expedients and exceptions for accounting contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships and other transactions that reference the London Interbank Offering Rate (“LIBOR”) or another reference rate expected to be discontinued due to the reference rate reform. It is effective for all entities between March 12, 2020 and December 31, 2022. The Company does not expect a significant impact from the adoption of this standard as provisions have been made in our Credit and Security Agreement to use an alternate benchmark interest rate when the use of LIBOR is ~~discontinued~~discontinued.

The Company’s primary market risk exposure consists of foreign currency exchange risk associated with the Company’s European operations.

The revenue increase in Europe in the countries in which the Company operates (Belgium, France, Luxembourg, and the United Kingdom) was impacted in the ~~2020 third~~2021 first quarter ~~and year-to-date~~ period by the weakness of the U.S. dollar as compared with the value of the Euro, the currency used in Belgium, France, and Luxembourg, and the British pound, the currency used in the United Kingdom. If there had been no change in these exchange rates from the ~~2019 third~~2020 first quarter to the ~~2020 third~~2021 first quarter, total European revenue would have been approximately ~~$1.8~~$4.0 million lower, and operating income would have been lower by less than $0.1 million. If there had been no change in the rates from the 2019 year-to-date period to the corresponding 2020 period, total European revenue would have been approximately $0.1 million higher, and operating income would have been higher by less than $0.1$0.3 million.

The Company has historically not used any market risk sensitive instruments to hedge its foreign currency exchange risk. The Company believes the market risk related to intercompany balances in future periods will not have a material effect on its results of operations.

The Company’s management has evaluated, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operations of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act, as amended) as of the end of the period covered by this quarterly report. Based on that evaluation, the Company’s Chief Executive Officer and Chief

Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this periodic report.

The Company reviews the effectiveness of its internal controls on a continuous basis, and makes changes as necessary. There were no changes in the Company’s internal control over financial reporting that occurred during the period covered by this report, which ended on ~~September 25, 2020,~~April 2, 2021, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to spread and impact the U.S., Western Europe, and India, which primarily includes all of our operations. The impact from the rapidly changing market, and economic and regulatory conditions due to the COVID-19 outbreak is uncertain, disrupting the business of our clients, and will impact our business and consolidated results of operations, and could impact our financial condition in the future. As of October 28, 2020, approximately 10% of our billable resources have been idled by the pandemic, and the Company has taken measures, including part-time and full-time furloughs, to offset the potential impact of this reduction in revenue. While we have not incurred significant disruptions or financial impacts thus far from the COVID-19 outbreak, we are unable to accurately predict the impact that COVID-19 will have due to numerous uncertainties. These include the severity of the disease, the duration of the outbreak, actions that may be taken by governmental authorities, the impact to the business of our clients, the demand for IT services overall, and other factors. We will continue to evaluate the nature and extent of the impact to our business, consolidated results of operations, and financial condition.

There were no ~~other~~ material changes in the Company's risk factors from those previously disclosed in the Company's Form 10-K for the period ended December 31, ~~2019.~~

The Company’s Board of Directors has approved a total authorization for stock repurchases of $30.0 million. The information below does not include shares withheld by or surrendered to the Company either to satisfy the exercise cost for the cashless exercise of employee stock options, or to satisfy tax withholding obligations associated with equity awards as the number of shares is minor.

Period

Total
Number of
Shares Purchased

Average
Price Paid
Per Share **

Total Number
of Shares Purchased
as Part of
Publicly Announced
Plans or Programs

Maximum Dollar
Amount that May
Yet be Purchased
under the
Plan or Program

June 27 - July 31

$
—

—

$
7,727,724

August 1 - August 31

—

$
—

—

$
7,727,724

September 1 - September 25

—

$
—

—

$
7,727,724

Total

—

—

Period	Total Number of Shares Purchased		Average Price Paid Per Share **		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Dollar Amount that May Yet be Purchased under the Plan or Program
January 1 - January 31		—	$	—		—	$	7,727,724
February 1 - February 28		—	$	—		—	$	7,727,724
March 1 - April 2		—	$	—		—	$	7,727,724
Total		—				—

~~On October 2, 2020, the Board of Directors set September 16, 2021 as the date of the Company’s 2021 annual meeting of shareholders.~~

In accordance with Rule 14a-5(f) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company has determined that proposals to be considered for inclusion in the Company’s proxy statement for the annual meeting pursuant to Rule 14a-8 of the Exchange Act must be received at the Company’s principal executive offices not

later than April 15, 2021. For all shareholder proposals made outside of Rule 14a-8 of the Exchange Act and for all shareholder nominations for director, our Restated By-laws require shareholders to give the Company advance notice of any proposal or director nomination to be submitted at an annual meeting of shareholders. The Restated By-laws prescribe the information to be contained in any such notice. To be timely, a shareholder’s notice with respect to a proposal made outside of Rule 14a-8 or director nomination for the annual meeting must be given, either by personal delivery or by United States mail, postage prepaid, to and received by the Secretary of the Company at the principal executive offices of the Company no earlier than May 20, 2021 and no later than 5:30 p.m., Buffalo time, on June 19, 2021.None

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.

New York		16-0912632
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
~~800 Delaware Avenue, Buffalo,~~300 Corporate Parkway, Suite 214N, Amherst, New York		~~14209~~14226
(Address of principal executive offices)		(Zip Code)

Title of Each Class of Stock		Trading Symbol		Name of each exchange on which registered
Common Stock, par value $0.01 per share		CTG		The NASDAQ Stock Market, LLC

APPLICABLE ONLY TO CORPORATE ISSUERS:

		Shares outstanding at
Title of each class		~~October 28, 2020~~May 4, 2021
Common stock, par value $.01 per share		~~15,187,955~~15,378,069

Section		Page
Part I Financial Information
Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2421
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3228
Item 4.	Controls and Procedures	3328

Part II Other Information
Item 1.	Legal Proceedings	3430
Item 1A.	Risk Factors	3430
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3430
Item 3.	Defaults Upon Senior Securities	3430
Item 4.	Mine Safety Disclosures	3430
Item 5.	Other Information	3430
Item 6.	Exhibits	3631

(amounts in thousands)
Cash consideration	$	9,678
Fair value of contingent consideration		569
Fair value of purchase consideration	$	10,247

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☒

Emerging growth company	☐

(amounts in thousands)
Balance at December 31, 2019	$	16,681
Acquired goodwill		2,757
Foreign currency translation		762
Balance at September 25, 2020	$	20,200

(amounts in thousands)
Balance at December 31, 2020	$	21,275
Foreign currency translation		(860	)
Balance at April 2, 2021	$	20,415

(amounts in thousands)
Cash consideration	$	6,122
Fair value of contingent consideration		111
Fair value of purchase consideration	$	6,233

Exhibit	Description	Reference

31. (a)	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	#

31. (b)	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	#

32.	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	##

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COMPUTER TASK GROUP, INCORPORATED

By		/s/ John M. Laubacker
		John M. Laubacker
Title:		Chief Financial Officer