Document and Entity Information
Document and Entity Information Document - shares | 9 Months Ended | |
Sep. 25, 2020 | Oct. 28, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 25, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | CTG | |
Entity Registrant Name | COMPUTER TASK GROUP, INCORPORATED | |
Entity Central Index Key | 0000023111 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity File Number | 1-9410 | |
Entity Tax Identification Number | 16-0912632 | |
Entity Address, Address Line One | 800 Delaware Avenue | |
Entity Address, City or Town | Buffalo | |
Entity Address, State or Province | NY | |
Entity Incorporation, State or Country Code | NY | |
Entity Address, Postal Zip Code | 14209 | |
City Area Code | 716 | |
Local Phone Number | 882-8000 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 15,187,955 | |
Entity Interactive Data Current | Yes | |
Document Quarterly Report | true | |
Document Transition Report | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 88,648 | $ 97,204 | $ 264,743 | $ 294,850 |
Cost of services | 69,101 | 78,462 | 209,412 | 240,056 |
Gross profit | 19,547 | 18,742 | 55,331 | 54,794 |
Selling, general and administrative expenses | 17,723 | 17,218 | 49,526 | 50,290 |
Operating income | 1,824 | 1,524 | 5,805 | 4,504 |
Interest and other income | 87 | 34 | 221 | 110 |
Gain on sale of building | 824 | |||
Non-taxable life insurance gain | 574 | 963 | ||
Interest and other expense | 327 | 236 | 657 | 858 |
Income before income taxes | 2,158 | 1,322 | 7,156 | 3,756 |
Provision (benefit) for income taxes | (673) | 443 | 1,422 | 1,302 |
Net income | $ 2,831 | $ 879 | $ 5,734 | $ 2,454 |
Net income per share: | ||||
Basic | $ 0.21 | $ 0.07 | $ 0.42 | $ 0.18 |
Diluted | $ 0.20 | $ 0.06 | $ 0.40 | $ 0.18 |
Weighted average shares outstanding: | ||||
Basic | 13,655 | 13,470 | 13,603 | 13,429 |
Diluted | 14,401 | 14,045 | 14,334 | 13,916 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net Income | $ 2,831 | $ 879 | $ 5,734 | $ 2,454 |
Foreign currency translation adjustment, net of taxes | 2,117 | (1,540) | 2,061 | (2,019) |
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) |
Comprehensive income (loss) | $ 4,813 | $ (403) | $ 7,721 | $ 791 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Taxes attributable to change in pension loss | $ 2 | $ 0 | $ 1 | $ 0 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 25, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 33,412 | $ 10,781 |
Accounts receivable, net of allowances of $529 and $84 in 2020 and 2019, respectively | 74,907 | 88,772 |
Prepaid and other current assets | 2,684 | 2,064 |
Income taxes receivable | 580 | 231 |
Total current assets | 111,583 | 101,848 |
Property, equipment and capitalized software, net | 5,573 | 6,379 |
Operating lease right-of-use assets | 20,616 | 21,253 |
Deferred income taxes | 258 | 453 |
Acquired intangibles, net | 9,001 | 8,439 |
Goodwill | 20,200 | 16,681 |
Cash surrender value of life insurance, net | 3,533 | 3,133 |
Other assets | 711 | 328 |
Investments | 193 | 192 |
Total assets | 171,668 | 158,706 |
Current Liabilities: | ||
Accounts payable | 15,045 | 18,612 |
Accrued compensation | 24,279 | 23,538 |
Advance billings on contracts | 2,589 | 1,704 |
Short-term operating lease liabilities | 6,030 | 5,904 |
Other current liabilities | 7,696 | 7,096 |
Total current liabilities | 55,639 | 56,854 |
Long-term debt | 6,000 | 5,290 |
Deferred compensation benefits | 12,773 | 12,346 |
Long-term operating lease liabilities | 14,527 | 15,349 |
Deferred payroll taxes | 4,321 | |
Deferred income taxes | 2,203 | 2,101 |
Other long-term liabilities | 501 | 530 |
Total liabilities | 95,964 | 92,470 |
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 |
Capital in excess of par value | 108,867 | 112,096 |
Retained earnings | 92,407 | 86,673 |
Less: Treasury stock of 11,836,143 and 12,311,010 shares at cost, in 2020 and 2019, respectively | (109,285) | (114,261) |
Accumulated other comprehensive loss | (16,555) | (18,542) |
Total shareholders’ equity | 75,704 | 66,236 |
Total liabilities and shareholders’ equity | $ 171,668 | $ 158,706 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 25, 2020 | Dec. 31, 2019 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 529 | $ 84 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 27,017,824 | 27,017,824 |
Treasury stock, shares | 11,836,143 | 12,311,010 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 25, 2020 | Sep. 27, 2019 | |
Cash flow from operating activities: | ||
Net income | $ 5,734 | $ 2,454 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 2,576 | 2,422 |
Equity-based compensation expense | 1,805 | 1,161 |
Deferred income taxes | (113) | (300) |
Deferred compensation benefits | 399 | 66 |
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) |
Prepaid and other current assets | (557) | (1,500) |
Other long-term assets | (383) | (70) |
Cash surrender value of life insurance | 779 | 708 |
Accounts payable | (3,901) | (3,478) |
Accrued compensation | 11 | 9,891 |
Income taxes payable / receivable | (671) | 794 |
Deferred payroll taxes | 4,321 | |
Advance billings on contracts | 839 | (1,763) |
Other current liabilities | (109) | (2,644) |
Other long-term liabilities | (90) | (608) |
Net cash provided by operating activities | 25,459 | 4,229 |
Cash flow from investing activities: | ||
Cash paid for acquisitions, net of cash acquired | (4,324) | (8,457) |
Additions to property and equipment | (1,029) | (838) |
Additions to capitalized software | (832) | (408) |
Proceeds from sale of property & equipment | 2,442 | |
Premiums paid for life insurance | (616) | (586) |
Proceeds from life insurance | 400 | |
Net cash used in investing activities | (3,959) | (10,289) |
Cash flow from financing activities: | ||
Proceeds from long-term debt | 40,845 | 133,455 |
Payments on long-term debt | (40,135) | (128,492) |
Proceeds from stock option plan exercises | 91 | |
Taxes remitted for shares withheld from equity-based compensation transactions | (160) | (153) |
Proceeds from Employee Stock Purchase Plan | 102 | 110 |
Change in cash overdraft, net | (370) | (8) |
Net cash provided by financing activities | 282 | 5,003 |
Effect of exchange rates on cash and cash equivalents | 849 | (681) |
Net increase (decrease) in cash and cash equivalents | 22,631 | (1,738) |
Cash and cash equivalents at beginning of year | 10,781 | 12,431 |
Cash and cash equivalents at end of quarter | $ 33,412 | $ 10,693 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Capital in Excess of Par Value [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income (loss) [Member] |
Balance at Dec. 31, 2018 | $ 64,228 | $ 270 | $ 116,427 | $ 82,548 | $ (120,406) | $ (14,611) |
Balance, shares at Dec. 31, 2018 | 27,018,000 | 12,746,000 | ||||
Employee Stock Purchase Plan share issuance | 110 | $ (126) | $ 236 | |||
Employee Stock Purchase Plan share issuance, shares | (25,000) | |||||
Stock Option Plan share issuance, net | 91 | $ 558 | ||||
Stock Option Plan share issuance, shares | 467,000 | 41,000 | ||||
Restricted stock plan share issuance/forfeiture | (153) | $ (3,237) | $ 3,084 | |||
Restricted stock plan share issuance/forfeiture, shares | (147,000) | |||||
Deferred compensation plan share issuance | (2,034) | $ 2,034 | ||||
Deferred compensation plan share issuance, shares | (215,000) | |||||
Equity-based compensation | 1,161 | 1,161 | ||||
Net Income | 2,454 | 2,454 | ||||
Foreign currency adjustment | (2,019) | (2,019) | ||||
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 | 356 | 356 | ||||
Balance at Sep. 27, 2019 | 66,228 | $ 270 | 111,724 | 85,002 | $ (114,494) | (16,274) |
Balance, shares at Sep. 27, 2019 | 27,018,000 | 12,318,000 | ||||
Balance at Jun. 28, 2019 | 66,041 | $ 270 | 113,684 | 84,123 | $ (117,044) | (14,992) |
Balance, shares at Jun. 28, 2019 | 27,018,000 | 12,565,000 | ||||
Employee Stock Purchase Plan share issuance | 32 | (34) | $ 66 | |||
Employee Stock Purchase Plan share issuance, shares | (7,000) | |||||
Stock Option Plan share issuance, net | 90 | (468) | $ 558 | |||
Stock Option Plan share issuance, shares | 40,000 | |||||
Restricted stock plan share issuance/forfeiture | (1,926) | $ 1,926 | ||||
Restricted stock plan share issuance/forfeiture, shares | (200,000) | |||||
Equity-based compensation | 468 | 468 | ||||
Net Income | 879 | 879 | ||||
Foreign currency adjustment | (1,540) | (1,540) | ||||
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 | 258 | 258 | ||||
Balance at Sep. 27, 2019 | 66,228 | $ 270 | 111,724 | 85,002 | $ (114,494) | (16,274) |
Balance, shares at Sep. 27, 2019 | 27,018,000 | 12,318,000 | ||||
Balance at Dec. 31, 2019 | $ 66,236 | $ 270 | 112,096 | 86,673 | $ (114,261) | (18,542) |
Balance, shares at Dec. 31, 2019 | 27,017,824 | 27,018,000 | 12,311,000 | |||
Employee Stock Purchase Plan share issuance | $ 102 | (104) | $ 206 | |||
Employee Stock Purchase Plan share issuance, shares | (22,000) | |||||
Restricted stock plan share issuance/forfeiture | (160) | (4,930) | $ 4,770 | |||
Restricted stock plan share issuance/forfeiture, shares | (453,000) | |||||
Equity-based compensation | 1,805 | 1,805 | ||||
Net Income | 5,734 | 5,734 | ||||
Foreign currency adjustment | 2,061 | 2,061 | ||||
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 | (74) | (74) | ||||
Balance at Sep. 25, 2020 | $ 75,704 | $ 270 | 108,867 | 92,407 | $ (109,285) | (16,555) |
Balance, shares at Sep. 25, 2020 | 27,017,824 | 27,018,000 | 11,836,000 | |||
Balance at Jun. 26, 2020 | $ 70,196 | $ 270 | 108,207 | 89,576 | $ (109,320) | (18,537) |
Balance, shares at Jun. 26, 2020 | 27,018,000 | 11,835,000 | ||||
Employee Stock Purchase Plan share issuance | 39 | (39) | $ 78 | |||
Employee Stock Purchase Plan share issuance, shares | (8,000) | |||||
Restricted stock plan share issuance/forfeiture | 43 | $ (43) | ||||
Restricted stock plan share issuance/forfeiture, shares | 9,000 | |||||
Equity-based compensation | 656 | 656 | ||||
Net Income | 2,831 | 2,831 | ||||
Foreign currency adjustment | 2,117 | 2,117 | ||||
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) | (135) | ||||
Balance at Sep. 25, 2020 | $ 75,704 | $ 270 | $ 108,867 | $ 92,407 | $ (109,285) | $ (16,555) |
Balance, shares at Sep. 25, 2020 | 27,017,824 | 27,018,000 | 11,836,000 |
Financial Statements
Financial Statements | 9 Months Ended |
Sep. 25, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Financial Statements | 1. 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, cash flows, and shareholders’ equity for the periods presented. 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 ‑ 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 quarter began on June 27, 2020 and ended on September 25, 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 and 2019, and 189 and 190 billable days in the 2020 and 2019 year-to-date periods, respectively. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 25, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Basis of Presentation and Consolidation 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 quarter on September 25, 2020 that require recognition or disclosure in these unaudited interim condensed consolidated financial statements. The Company operates in one 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. A typical c lient is an organization with large, complex 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, 2020 and September 27, 2019 was as follows: For the Quarter Ended For the Three Quarters Ended September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 IT solutions 39.6 % 33.9 % 37.3 % 34.6 % IT and other staffing 60.4 % 66.1 % 62.7 % 65.4 % Total 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, healthcare (which includes services provided to healthcare providers, health insurers (payers), and life sciences companies), financial services, 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. The Company’s revenue by vertical market as a percentage of total revenue for the quarter and three quarters ended September 25, 2020 and September 27, 2019 was as follows: For the Quarter Ended For the Three Quarters Ended September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Technology service providers 33.1 % 32.9 % 33.3 % 32.4 % Financial services 14.8 % 13.0 % 14.6 % 13.6 % Healthcare 14.4 % 16.9 % 13.8 % 16.7 % Manufacturing 13.7 % 17.6 % 14.1 % 17.2 % Energy 5.6 % 5.4 % 6.3 % 5.2 % General markets 18.4 % 14.2 % 17.9 % 14.9 % Total 100.0 % 100.0 % 100.0 % 100.0 % Revenue Recognition 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 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. 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, 2020 and September 27, 2019 was as follows: For the Quarter Ended For the Three Quarters Ended September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Time-and-material 80.5 % 80.7 % 80.7 % 80.2 % Progress billing 14.6 % 10.1 % 14.7 % 10.2 % Percentage-of-completion 4.9 % 9.2 % 4.6 % 9.6 % Total 100.0 % 100.0 % 100.0 % 100.0 % The Company recorded revenue in the quarter and three quarters ended September 25, 2020 and September 27, 2019 as follows: For the Quarter Ended: September 25, 2020 September 27, 2019 Year-over-Year Change (amounts in thousands) North America 54.9 % $ 48,625 63.6 % $ 61,866 (21.4 )% Europe 45.1 % 40,023 36.4 % 35,338 13.3 % Total 100.0 % $ 88,648 100.0 % $ 97,204 (8.8 )% 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 )% Significant Judgments 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. Contract Balances 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. Transaction Price Allocated to Remaining Performance Obligations As of September 25, 2020, the aggregate transaction price allocated to unsatisfied or partially unsatisfied performance obligations for fixed-price and all managed-support contracts was approximately $11.0 million and $34.6 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 million of the transaction price allocated to unsatisfied or partially unsatisfied performance obligations is expected to be earned in 2021 and beyond. As the Company uses the “right to invoice” practical expedient, we do not disclose the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Taxes Collected from Clients In instances where the Company collects taxes from its clients for remittance to governmental authorities, primarily in its international locations, revenue and expenses are not presented on a gross basis in the condensed consolidated financial statements as such taxes are recorded in the Company's accounts on a net basis. Fair Value 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 and December 31, 2019, the carrying amounts of the Company’s cash of $33.4 million and $10.8 million, respectively, approximated fair value. As described in Note 3 of the condensed consolidated financial statements, the Company acquired 100% The Company has 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 of certain 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. There is no payout if the achievements are below the target thresholds. The fair value of these contingent considerations is determined using level 3 inputs. The fair value assigned to the contingent consideration liabilities is determined using the real options method, which requires inputs such as revenue forecasts, EBIT forecasts, discount rate, and other market variables to assess the probability of Tech-IT and Soft Company achieving their respective targets. The Company expects to make the payments for Tech-IT and Soft Company for 2019 in the 2020 fourth quarter. Life Insurance Policies 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, these insurance policies have a gross cash surrender value of $26.7 million, outstanding loans and interest totaling $24.1 million, and a net cash surrender value of $2.6 million. At December 31, 2019, these insurance policies had a gross cash surrender value of $29.7 million, outstanding loans and interest totaling $27.2 million, and a net cash surrender value of $2.5 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 and December 31, 2019, the total death benefit for the remaining policies was approximately $34.7 million and $37.7 million, respectively. Currently, upon the death of all of the remaining plan participants, the Company would expect to receive approximately $10.3 million after the payment of obligations, and, under current tax regulations, record a non-taxable gain of approximately $7.7 million. During both , the 2020 second and third quarter , a participant in th e plan passed away. Upon their death s , the Company r ecorded a non-tax able life insurance gain totaling a pproximately $ 1.0 million for the three quarters ended September 25, 2020 , which it has record ed on its condensed consolidated statement s of income. Cash and Cash Equivalents, and Cash Overdrafts 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 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," line item as presented on the condensed consolidated statements of cash flows represents the increase or decrease in outstanding checks in a given period. Accounts Receivable Factoring 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 million and $43.2 million during the quarter and year-to-date periods ended September 25, 2020. Fees for the factoring arrangement were recorded in cost of services and were less than $0.1 million 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 September 27, 2019. Property, Equipment and Capitalized Software Costs Property, equipment and capitalized software at September 25, 2020 and December 31, 2019 are summarized as follows: (amounts in thousands) September 25, 2020 December 31, 2019 Property, equipment and capitalized software $ 14,468 $ 17,384 Accumulated depreciation and amortization (8,895 ) (11,005 ) Property, equipment and capitalized software, net $ 5,573 $ 6,379 The Company capitalizes software projects developed for commercial use. The Company recorded capitalized software costs during the quarter and three quarters ended September 25, 2020 and September 27, 2019 as follows: For the Quarter Ended For the Three Quarters Ended (amounts in thousands) September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Capitalized software, beginning balance $ 2,741 $ 1,955 $ 2,147 $ 1,864 Additions 200 318 794 409 Capitalized software $ 2,941 $ 2,273 $ 2,941 $ 2,273 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, 2020 and September 27, 2019 are as follows: For the Quarter Ended For the Three Quarters Ended (amounts in thousands) September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Accumulated amortization, beginning balance $ 1,076 $ 1,017 $ 866 $ 745 Amortization expense 91 126 301 398 Accumulated amortization $ 1,167 $ 1,143 $ 1,167 $ 1,143 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. Guarantees 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 million at September 25, 2020 and December 31, 2019, respectively, and generally have expiration dates ranging from September 2020 through October 2034. Goodwill The goodwill recorded on the Company's condensed consolidated balance sheet at September 25, 2020 relates to the acquisition of Soft Company in the 2018 first quarter, Tech-IT in the 2019 first quarter, and StarDust in the 2020 first quarter. 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. T here were no impairment indicators noted in the quarters or three quarters ended and . The changes in the carrying amount of goodwill for the three quarters ended September 25, 2020 are as follows: (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 Acquired Intangible Assets Acquired intangible assets at September 25, 2020 consist of the following: (amounts in thousands) Estimated Economic Life Gross Carrying Amount Accumulated Amortization Foreign Currency Translation Net Carrying Amount Trademarks 2 year $ 1,532 $ 1,282 $ (30 ) $ 220 Technology 10 years 591 36 26 581 Customer relationships 7-13 years 10,496 1,966 (330 ) 8,200 Total $ 12,619 $ 3,284 $ (334 ) $ 9,001 Estimated amortization expense for the remainder of 2020, the five succeeding years, and thereafter is as follows: Year Annual Amortization (amounts in thousands) 2020 $ 364 2021 1,163 2022 1,061 2023 1,052 2024 1,052 2025 1,052 Thereafter 3,257 Total $ 9,001 Recently Issued Accounting Standards 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 collecta bility 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 permitte d. 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 for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which helps entities evaluate 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 is effective for fiscal years 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 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. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 25, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | 3. Acquisitions StarDust SAS (“StarDust”) 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 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 million as of September 25, 2020. As such, the Company recorded $0.1 million in selling, general, and administrative expenses during the first three quarters of 2020 related to this earn-out. Approximately $ 0.1 million of the remaining contingent consideration liability is recorded in both “other current liabilities” and “other long-term liabilities” on the September 25, 2020 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: (amounts in thousands) Cash consideration $ 6,122 Fair value of contingent consideration 111 Fair value of purchase consideration $ 6,233 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 Accounts receivable 1,303 Prepaids & other 71 Property & equipment 327 Acquired intangibles 1,282 Goodwill 2,757 Total assets acquired $ 7,538 Liabilities Assumed: Accounts payable $ 285 Accrued compensation 307 Taxes payable 222 Other liabilities 163 Deferred income taxes 328 Total liabilities assumed 1,305 Net assets acquired $ 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 Trademarks $ 100 2 years Technology $ 591 10 years Customer relationships 591 7 years Fair value of purchase consideration $ 1,282 The Company incurred acquisition-related legal and consulting fees and amortization of intangible assets of approximately $0.2 million and $0.3 million in the 2020 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. The purchase price allocation for this acquisition has been finalized. Tech-IT PSF S.A. (“Tech-IT”) On February 6, 2019, the Company acquired 100% of the equity of Tech-IT for approximately $9.7 million. 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 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 threshold. The fair value as of the acquisition date was determined to be $0.6 million, and was $0.7 million as of . Approximately $0.4 million and $0.3 million of the remaining contingent consideration liability is recorded in “other current liabilities” and “other long-term liabilities,” respectively, on the 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 (amounts in thousands) Cash consideration $ 9,678 Fair value of contingent consideration 569 Fair value of purchase consideration $ 10,247 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 Accounts receivable 4,491 Prepaids & other 1,122 Property & equipment 98 Acquired intangibles 4,099 Goodwill 5,331 Total assets acquired $ 16,358 Liabilities Assumed: Accounts payable $ 2,378 Accrued compensation 172 Other short-term liabilities 2,447 Deferred income taxes 1,114 Total liabilities assumed 6,111 Net assets acquired $ 10,247 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 Trademarks $ 683 2 years Customer relationships 3,416 8 years Fair value of purchase consideration $ 4,099 The Company incurred acquisition-related legal and consulting fees and amortization of intangible assets of approximately $0.2 million and $0.6 million in the 2020 third 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, 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. Soft Company SAS (“Soft Company”) 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. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 25, 2020 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | 4. Net Income Per Share Basic and diluted earnings per share (EPS) for the quarter and three quarters ended September 25, 2020 and September 27, 2019 were as follows: For the Quarter Ended For the Three Quarters Ended (amounts in thousands, except per-share data) September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Weighted-average number of shares outstanding during period 13,655 13,470 13,603 13,429 Common stock equivalents from incremental shares under equity-based compensation plans 746 575 731 487 Number of shares on which diluted earnings per share is based 14,401 14,045 14,334 13,916 Net income $ 2,831 $ 879 $ 5,734 $ 2,454 Net income per share Basic $ 0.21 $ 0.07 $ 0.42 $ 0.18 Diluted $ 0.20 $ 0.06 $ 0.40 $ 0.18 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 million |
Lease Commitments
Lease Commitments | 9 Months Ended |
Sep. 25, 2020 | |
Leases [Abstract] | |
Lease Commitments | 5. Lease Commitments 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 was $1.6 million and $4.7 million for 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. Maturities for the Company’s lease liabilities for all operating leases as of September 25, 2020 are as follows: Total Year Operating Leases (amounts in thousands) 2020 (remaining) $ 1,640 2021 5,752 2022 4,362 2023 3,034 2024 1,788 2025 & thereafter 5,049 Total undiscounted operating lease payments $ 21,625 Less: Interest (1,068 ) Total present value of operating lease liabilities $ 20,557 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, 2020 and September 27, 2019 were as follows: September 25, 2020 September 27, 2019 Weighted average remaining lease term (years) 6.13 3.36 Weighted average remaining discount rate 2.00 % 2.83 % Supplemental cash flow information related to the Company’s operating leases for the first three quarters of 2020 is as follows: (amounts in thousands) September 25, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases $ 4,747 Right-of-use assets obtained in exchange for new operating lease liabilities 3,193 As of December 31, 2019, minimum obligations under operating leases were expected to be: Total Year Operating Leases (amounts in thousands) 2020 $ 5,979 2021 4,696 2022 3,255 2023 2,257 2024 1,485 2025 & thereafter 4,828 Total undiscounted operating lease payments $ 22,500 Less: Interest (1,247 ) Total present value of operating lease liabilities $ 21,253 |
Debt
Debt | 9 Months Ended |
Sep. 25, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 6. Debt The Company has a credit and security agreement (the “Credit and Security Agreement”) with its bank, which provides for a three-year 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. The maximum amounts outstanding under its credit agreement in the 2020 and 2019 third quarters were $12.0 million and $17.0 million, respectively, while borrowings during those quarters averaged $9.5 million and $10.5 million, respectively, and carried weighted average interest rates of 2.1% and 2.7%, respectively. 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, included a fixed charge coverage ratio, which must be 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 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 was approximately $12.4 million. The Company was in compliance with these covenants at September 25, 2020 as the fixed charge ratio was 53.9 to 1, the adjusted EBITDA for the trailing twelve months was $14.5 million, and capital expenditures for property, equipment and capitalized software were $1.9 million in the 2020 year-to-date period. The Company was also in compliance with its covenants at September 27, 2019. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 25, 2020 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | 7. Accumulated Other Comprehensive Loss The components that make up accumulated other comprehensive loss on the condensed consolidated balance sheets at September 25, 2020 and December 31, 2019 are as follows: (amounts in thousands) September 25, 2020 December 31, 2019 Foreign currency $ (7,045 ) $ (9,106 ) Pension loss, net of tax of $257 in 2020 and $265 in 2019 (9,510 ) (9,436 ) Accumulated other comprehensive loss $ (16,555 ) $ (18,542 ) During the 2020 and 2019 third quarter and year-to-date periods, actuarial losses were amortized to expense as follows: For the Quarter Ended For the Three Quarters Ended (amounts in thousands) September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Amortization of actuarial losses $ 76 $ 45 $ 221 $ 138 Income tax (2 ) — (1 ) — Net of tax $ 74 $ 45 $ 220 $ 138 The amortization of both prior service cost and actuarial losses, |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 25, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes 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 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 2020 third quarter 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%, respectively. The ETR was lower in the 2020 third quarter and year-to-date period as compared with the corresponding 2019 periods primarily resulting from the GILTI High Tax Exclusion election and extended net operating loss carryback periods noted above. The combined impact of these items was approximately $1.1 million or $0.08 per diluted share during the 2020 third quarter. The Company elected to use the incremental cash tax savings approach when considering GILTI in its assessment of the realizability of its U.S. deferred tax assets. Based upon the Company’s recent history of U.S. losses for tax purposes, including a cumulative three-year loss in the U.S. as of September 25, 2020, and uncertain profitability in future years, management has determined that it is likely that it will not realize the U.S. deferred tax assets, and a full valuation allowance against these assets continues to be recorded. 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. |
Deferred Compensation and Other
Deferred Compensation and Other Benefits | 9 Months Ended |
Sep. 25, 2020 | |
Compensation And Retirement Disclosure [Abstract] | |
Deferred Compensation and Other Benefits | 9. Deferred Compensation and Other Benefits 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 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. No benefit payments were made in 2019 and none are expected to be paid in 2020. 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 no benefit payments are expected to be paid in 2020. Net periodic pension cost for the quarter and three quarters ended September 25, 2020 and September 27, 2019 for the plans is as follows: For the Quarter Ended For the Three Quarters Ended (amounts in thousands) September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Service cost $ 109 $ 82 $ 314 $ 249 Interest cost 90 145 264 438 Expected return on assets (167 ) (152 ) (484 ) (460 ) Amortization of actuarial loss 76 48 224 144 Net periodic pension cost $ 108 $ 123 $ 318 $ 371 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 and future years. In the 2020 third quarter and year-to-date period, the Company made benefit payments totaling approximately $0.1 million and $0.4 million, respectively, and expects to make payments in 2020 totaling approximately $0.6 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, no contributions were made in 2019 and none are expected to be made in the remainder of 2020. 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 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 usi ng a Level 3 methodology (see N ote 2 for “Fair Value”). In 20 20 , 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 . The BDBP is considered fully funded. The Company made contributions of $0.2 million and $0.5 million in the 2020 third 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 2020 and 2019 third quarters, respectively, and expects to make payments in 2020 of less than $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 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, 2020 and September 27, 2019 was as follows: For the Quarter Ended (amounts in thousands) September 25, 2020 September 27, 2019 Fair value of plan assets at beginning of period $ 18,078 $ 17,403 Return on plan assets 504 460 Contributions 878 829 Benefits paid (624 ) (610 ) Effect of exchange rate changes 690 (798 ) Fair value of plan assets at end of quarter $ 19,526 $ 17,284 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 no cash contributions in either the 2020 or 2019 third quarter or year-to-date periods 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 no stock units purchased in the 2020 or 2019 third quarter or year-to-date periods . The Company maintains the Non-Employee Director Deferred Compensation Plan for its non-employee directors. There were no cash contributions in either the 2020 or 2019 third quarters or year-to-date periods. Contributions to the plan consisted of equity grants from 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. 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. |
Equity-based Compensation
Equity-based Compensation | 9 Months Ended |
Sep. 25, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Equity-based Compensation | 10. Equity-based Compensation During the 2020 third quarter, there were no restricted stock grants issued, but the Company has granted restricted stock totaling Director Board fees are paid exclusively in deferred stock units. Of the shares granted during the 2020 first quarter, 170,848 shares represented restricted stock units that were granted to Board members. The shares vest in four equal quarterly increments 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. Grants of similar units to the Board members totaled 215,326 in the 2019 first quarter, with no additional grants in the 2019 year-to-date period. Of the shares granted in the 2020 first quarter, 209,280 shares were granted to senior management, of which 115,410 shares included a performance condition. The shares will only vest, in part, to senior management if at least 80% of a three-year three-year The remaining shares granted in the 2020 and 2019 third 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 from the 2010 Equity Award Plan. A total of 173,010 stock options were issued 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 zero, and a risk free rate of 0.6%. The options vest ratably over three years, and are being expensed over that period. No stock options were granted during the 2020 third quarter. The Company did not grant any |
Treasury Stock
Treasury Stock | 9 Months Ended |
Sep. 25, 2020 | |
Class Of Stock Disclosures [Abstract] | |
Treasury Stock | 11. Treasury Stock The Company’s Board of Directors has authorized the repurchase of its stock up to a total of The Company did not issue any shares during the 2020 third quarter, but has issued approximately 600,000 The Company did not purchase shares for treasury during the 2019 third quarter or year-to-date period. At September 27, 2019, the Company had approximately $7.7 million remaining in its stock repurchase authorization. During the 2019 third quarter and year-to-date period, the Company issued 217,000 and 636,000 shares, respectively, out of treasury stock primarily to fulfill the share requirements from purchases of stock in the Non-Employee Director Deferred Compensation Plan, stock options exercises, and restricted stock grants. |
Significant Clients
Significant Clients | 9 Months Ended |
Sep. 25, 2020 | |
Risks And Uncertainties [Abstract] | |
Significant Clients | 12. Significant Clients In the 2020 third quarter, International Business Machines Corporation (IBM) was the Company’s largest client and accounted for $18.6 million or 21.0% of consolidated revenue compared with $21.3 million or 21.9% 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 27 , 2020 . The Company’s accounts receivable from IBM at September 25, 2020 and December 31, 2019 totaled $ 13.9 million and $ 23.0 million, respectively. No other client accounted for 10% or more of the Company's revenue during the 2020 or 2019 third quarters or year-to-date periods. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 25, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation | 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 quarter on September 25, 2020 that require recognition or disclosure in these unaudited interim condensed consolidated financial statements. |
Concentration Risk, Credit Risk | The Company operates in one 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. A typical c lient is an organization with large, complex 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, 2020 and September 27, 2019 was as follows: For the Quarter Ended For the Three Quarters Ended September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 IT solutions 39.6 % 33.9 % 37.3 % 34.6 % IT and other staffing 60.4 % 66.1 % 62.7 % 65.4 % Total 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, healthcare (which includes services provided to healthcare providers, health insurers (payers), and life sciences companies), financial services, 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. The Company’s revenue by vertical market as a percentage of total revenue for the quarter and three quarters ended September 25, 2020 and September 27, 2019 was as follows: For the Quarter Ended For the Three Quarters Ended September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Technology service providers 33.1 % 32.9 % 33.3 % 32.4 % Financial services 14.8 % 13.0 % 14.6 % 13.6 % Healthcare 14.4 % 16.9 % 13.8 % 16.7 % Manufacturing 13.7 % 17.6 % 14.1 % 17.2 % Energy 5.6 % 5.4 % 6.3 % 5.2 % General markets 18.4 % 14.2 % 17.9 % 14.9 % Total 100.0 % 100.0 % 100.0 % 100.0 % |
Revenue Recognition | Revenue Recognition 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 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. 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, 2020 and September 27, 2019 was as follows: For the Quarter Ended For the Three Quarters Ended September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Time-and-material 80.5 % 80.7 % 80.7 % 80.2 % Progress billing 14.6 % 10.1 % 14.7 % 10.2 % Percentage-of-completion 4.9 % 9.2 % 4.6 % 9.6 % Total 100.0 % 100.0 % 100.0 % 100.0 % The Company recorded revenue in the quarter and three quarters ended September 25, 2020 and September 27, 2019 as follows: For the Quarter Ended: September 25, 2020 September 27, 2019 Year-over-Year Change (amounts in thousands) North America 54.9 % $ 48,625 63.6 % $ 61,866 (21.4 )% Europe 45.1 % 40,023 36.4 % 35,338 13.3 % Total 100.0 % $ 88,648 100.0 % $ 97,204 (8.8 )% 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 )% |
Significant Judgments | Significant Judgments 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. |
Contract Balances | Contract Balances 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. |
Transaction Price Allocated to Remaining Performance Obligations | Transaction Price Allocated to Remaining Performance Obligations As of September 25, 2020, the aggregate transaction price allocated to unsatisfied or partially unsatisfied performance obligations for fixed-price and all managed-support contracts was approximately $11.0 million and $34.6 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 million of the transaction price allocated to unsatisfied or partially unsatisfied performance obligations is expected to be earned in 2021 and beyond. As the Company uses the “right to invoice” practical expedient, we do not disclose the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. |
Taxes Collected from Clients | Taxes Collected from Clients In instances where the Company collects taxes from its clients for remittance to governmental authorities, primarily in its international locations, revenue and expenses are not presented on a gross basis in the condensed consolidated financial statements as such taxes are recorded in the Company's accounts on a net basis. |
Fair Value | 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 and December 31, 2019, the carrying amounts of the Company’s cash of $33.4 million and $10.8 million, respectively, approximated fair value. As described in Note 3 of the condensed consolidated financial statements, the Company acquired 100% The Company has 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 of certain 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. There is no payout if the achievements are below the target thresholds. The fair value of these contingent considerations is determined using level 3 inputs. The fair value assigned to the contingent consideration liabilities is determined using the real options method, which requires inputs such as revenue forecasts, EBIT forecasts, discount rate, and other market variables to assess the probability of Tech-IT and Soft Company achieving their respective targets. The Company expects to make the payments for Tech-IT and Soft Company for 2019 in the 2020 fourth quarter. |
Life Insurance Policies | Life Insurance Policies 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, these insurance policies have a gross cash surrender value of $26.7 million, outstanding loans and interest totaling $24.1 million, and a net cash surrender value of $2.6 million. At December 31, 2019, these insurance policies had a gross cash surrender value of $29.7 million, outstanding loans and interest totaling $27.2 million, and a net cash surrender value of $2.5 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 and December 31, 2019, the total death benefit for the remaining policies was approximately $34.7 million and $37.7 million, respectively. Currently, upon the death of all of the remaining plan participants, the Company would expect to receive approximately $10.3 million after the payment of obligations, and, under current tax regulations, record a non-taxable gain of approximately $7.7 million. During both , the 2020 second and third quarter , a participant in th e plan passed away. Upon their death s , the Company r ecorded a non-tax able life insurance gain totaling a pproximately $ 1.0 million for the three quarters ended September 25, 2020 , which it has record ed on its condensed consolidated statement s of income. |
Cash and Cash Equivalents, and Cash Overdrafts | Cash and Cash Equivalents, and Cash Overdrafts 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 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," line item as presented on the condensed consolidated statements of cash flows represents the increase or decrease in outstanding checks in a given period. |
Accounts Receivable Factoring | Accounts Receivable Factoring 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 million and $43.2 million during the quarter and year-to-date periods ended September 25, 2020. Fees for the factoring arrangement were recorded in cost of services and were less than $0.1 million 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 September 27, 2019. |
Property, Equipment and Capitalized Software Costs | Property, Equipment and Capitalized Software Costs Property, equipment and capitalized software at September 25, 2020 and December 31, 2019 are summarized as follows: (amounts in thousands) September 25, 2020 December 31, 2019 Property, equipment and capitalized software $ 14,468 $ 17,384 Accumulated depreciation and amortization (8,895 ) (11,005 ) Property, equipment and capitalized software, net $ 5,573 $ 6,379 The Company capitalizes software projects developed for commercial use. The Company recorded capitalized software costs during the quarter and three quarters ended September 25, 2020 and September 27, 2019 as follows: For the Quarter Ended For the Three Quarters Ended (amounts in thousands) September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Capitalized software, beginning balance $ 2,741 $ 1,955 $ 2,147 $ 1,864 Additions 200 318 794 409 Capitalized software $ 2,941 $ 2,273 $ 2,941 $ 2,273 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, 2020 and September 27, 2019 are as follows: For the Quarter Ended For the Three Quarters Ended (amounts in thousands) September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Accumulated amortization, beginning balance $ 1,076 $ 1,017 $ 866 $ 745 Amortization expense 91 126 301 398 Accumulated amortization $ 1,167 $ 1,143 $ 1,167 $ 1,143 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. |
Guarantees | Guarantees 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 million at September 25, 2020 and December 31, 2019, respectively, and generally have expiration dates ranging from September 2020 through October 2034. |
Goodwill | Goodwill The goodwill recorded on the Company's condensed consolidated balance sheet at September 25, 2020 relates to the acquisition of Soft Company in the 2018 first quarter, Tech-IT in the 2019 first quarter, and StarDust in the 2020 first quarter. 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. T here were no impairment indicators noted in the quarters or three quarters ended and . The changes in the carrying amount of goodwill for the three quarters ended September 25, 2020 are as follows: (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 |
Acquired Intangible Assets | Acquired Intangible Assets Acquired intangible assets at September 25, 2020 consist of the following: (amounts in thousands) Estimated Economic Life Gross Carrying Amount Accumulated Amortization Foreign Currency Translation Net Carrying Amount Trademarks 2 year $ 1,532 $ 1,282 $ (30 ) $ 220 Technology 10 years 591 36 26 581 Customer relationships 7-13 years 10,496 1,966 (330 ) 8,200 Total $ 12,619 $ 3,284 $ (334 ) $ 9,001 Estimated amortization expense for the remainder of 2020, the five succeeding years, and thereafter is as follows: Year Annual Amortization (amounts in thousands) 2020 $ 364 2021 1,163 2022 1,061 2023 1,052 2024 1,052 2025 1,052 Thereafter 3,257 Total $ 9,001 |
Recently Issued Accounting Standards | Recently Issued Accounting Standards 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 collecta bility 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 permitte d. 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 for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which helps entities evaluate 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 is effective for fiscal years 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 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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 25, 2020 | |
Accounting Policies [Abstract] | |
Summary of IT Solutions and IT and Other Staffing Revenue as Percentage of Total Revenue | IT solutions and IT and other staffing revenue as a percentage of total revenue for the quarter and three quarters ended September 25, 2020 and September 27, 2019 was as follows: For the Quarter Ended For the Three Quarters Ended September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 IT solutions 39.6 % 33.9 % 37.3 % 34.6 % IT and other staffing 60.4 % 66.1 % 62.7 % 65.4 % Total 100.0 % 100.0 % 100.0 % 100.0 % |
Revenue by Vertical Market as Percentage of Total Revenue | The Company’s revenue by vertical market as a percentage of total revenue for the quarter and three quarters ended September 25, 2020 and September 27, 2019 was as follows: For the Quarter Ended For the Three Quarters Ended September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Technology service providers 33.1 % 32.9 % 33.3 % 32.4 % Financial services 14.8 % 13.0 % 14.6 % 13.6 % Healthcare 14.4 % 16.9 % 13.8 % 16.7 % Manufacturing 13.7 % 17.6 % 14.1 % 17.2 % Energy 5.6 % 5.4 % 6.3 % 5.2 % General markets 18.4 % 14.2 % 17.9 % 14.9 % Total 100.0 % 100.0 % 100.0 % 100.0 % |
Revenue by Contract Type | 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, 2020 and September 27, 2019 was as follows: For the Quarter Ended For the Three Quarters Ended September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Time-and-material 80.5 % 80.7 % 80.7 % 80.2 % Progress billing 14.6 % 10.1 % 14.7 % 10.2 % Percentage-of-completion 4.9 % 9.2 % 4.6 % 9.6 % Total 100.0 % 100.0 % 100.0 % 100.0 % |
Schedule of Revenue by Geographic Location | The Company recorded revenue in the quarter and three quarters ended September 25, 2020 and September 27, 2019 as follows: For the Quarter Ended: September 25, 2020 September 27, 2019 Year-over-Year Change (amounts in thousands) North America 54.9 % $ 48,625 63.6 % $ 61,866 (21.4 )% Europe 45.1 % 40,023 36.4 % 35,338 13.3 % Total 100.0 % $ 88,648 100.0 % $ 97,204 (8.8 )% 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 )% |
Schedule of Property, Equipment and Capitalized Software | Property, equipment and capitalized software at September 25, 2020 and December 31, 2019 are summarized as follows: (amounts in thousands) September 25, 2020 December 31, 2019 Property, equipment and capitalized software $ 14,468 $ 17,384 Accumulated depreciation and amortization (8,895 ) (11,005 ) Property, equipment and capitalized software, net $ 5,573 $ 6,379 |
Schedule of Capitalized Software Costs | The Company capitalizes software projects developed for commercial use. The Company recorded capitalized software costs during the quarter and three quarters ended September 25, 2020 and September 27, 2019 as follows For the Quarter Ended For the Three Quarters Ended (amounts in thousands) September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Capitalized software, beginning balance $ 2,741 $ 1,955 $ 2,147 $ 1,864 Additions 200 318 794 409 Capitalized software $ 2,941 $ 2,273 $ 2,941 $ 2,273 |
Schedule of Amortization Expense and Accumulated Amortization | Amortization expense and accumulated amortization for these projects for the quarter and three quarters ended September 25, 2020 and September 27, 2019 are as follows: For the Quarter Ended For the Three Quarters Ended (amounts in thousands) September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Accumulated amortization, beginning balance $ 1,076 $ 1,017 $ 866 $ 745 Amortization expense 91 126 301 398 Accumulated amortization $ 1,167 $ 1,143 $ 1,167 $ 1,143 |
Summary of Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the three quarters ended September 25, 2020 are as follows: (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 |
Summary of Acquired Intangible Assets | Acquired intangible assets at September 25, 2020 consist of the following: (amounts in thousands) Estimated Economic Life Gross Carrying Amount Accumulated Amortization Foreign Currency Translation Net Carrying Amount Trademarks 2 year $ 1,532 $ 1,282 $ (30 ) $ 220 Technology 10 years 591 36 26 581 Customer relationships 7-13 years 10,496 1,966 (330 ) 8,200 Total $ 12,619 $ 3,284 $ (334 ) $ 9,001 |
Summary of Estimated Amortization Expense | Estimated amortization expense for the remainder of 2020, the five succeeding years, and thereafter is as follows: Year Annual Amortization (amounts in thousands) 2020 $ 364 2021 1,163 2022 1,061 2023 1,052 2024 1,052 2025 1,052 Thereafter 3,257 Total $ 9,001 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 25, 2020 | |
Stardust SAS (StarDust) [Member] | |
Business Acquisition [Line Items] | |
Summary of Acquisition Date Fair Value of Consideration | The acquisition date fair value of the consideration for the acquisition of StarDust consisted of the following as of March 3, 2020: (amounts in thousands) Cash consideration $ 6,122 Fair value of contingent consideration 111 Fair value of purchase consideration $ 6,233 |
Summary of Allocation of Aggregate Purchase Consideration to Fair Values of Assets Acquired and Liabilities Assumed | 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 Accounts receivable 1,303 Prepaids & other 71 Property & equipment 327 Acquired intangibles 1,282 Goodwill 2,757 Total assets acquired $ 7,538 Liabilities Assumed: Accounts payable $ 285 Accrued compensation 307 Taxes payable 222 Other liabilities 163 Deferred income taxes 328 Total liabilities assumed 1,305 Net assets acquired $ 6,233 |
Summary of Intangible Assets Acquired | . The excess consideration was recorded as goodwill, which is not deductible for income tax purposes. (amounts in thousands) Fair Value Estimated Useful Life Trademarks $ 100 2 years Technology $ 591 10 years Customer relationships 591 7 years Fair value of purchase consideration $ 1,282 |
Tech-IT PSF S.A. [Member] | |
Business Acquisition [Line Items] | |
Summary of Acquisition Date Fair Value of Consideration | The acquisition date fair value of the consideration for the acquisition of Tech-IT consisted of the following as of February 6, 2019 (amounts in thousands) Cash consideration $ 9,678 Fair value of contingent consideration 569 Fair value of purchase consideration $ 10,247 |
Summary of Allocation of Aggregate Purchase Consideration to Fair Values of Assets Acquired and Liabilities Assumed | 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 Accounts receivable 4,491 Prepaids & other 1,122 Property & equipment 98 Acquired intangibles 4,099 Goodwill 5,331 Total assets acquired $ 16,358 Liabilities Assumed: Accounts payable $ 2,378 Accrued compensation 172 Other short-term liabilities 2,447 Deferred income taxes 1,114 Total liabilities assumed 6,111 Net assets acquired $ 10,247 |
Summary of Intangible Assets Acquired | 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 Trademarks $ 683 2 years Customer relationships 3,416 8 years Fair value of purchase consideration $ 4,099 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 25, 2020 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earning Per Share (EPS) | Basic and diluted earnings per share (EPS) for the quarter and three quarters ended September 25, 2020 and September 27, 2019 were as follows: For the Quarter Ended For the Three Quarters Ended (amounts in thousands, except per-share data) September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Weighted-average number of shares outstanding during period 13,655 13,470 13,603 13,429 Common stock equivalents from incremental shares under equity-based compensation plans 746 575 731 487 Number of shares on which diluted earnings per share is based 14,401 14,045 14,334 13,916 Net income $ 2,831 $ 879 $ 5,734 $ 2,454 Net income per share Basic $ 0.21 $ 0.07 $ 0.42 $ 0.18 Diluted $ 0.20 $ 0.06 $ 0.40 $ 0.18 |
Lease Commitments (Tables)
Lease Commitments (Tables) | 9 Months Ended |
Sep. 25, 2020 | |
Leases [Abstract] | |
Summary of Maturities of Lease Liabilities for Operating Liabilities | Maturities for the Company’s lease liabilities for all operating leases as of September 25, 2020 are as follows: Total Year Operating Leases (amounts in thousands) 2020 (remaining) $ 1,640 2021 5,752 2022 4,362 2023 3,034 2024 1,788 2025 & thereafter 5,049 Total undiscounted operating lease payments $ 21,625 Less: Interest (1,068 ) Total present value of operating lease liabilities $ 20,557 |
Summary of Weighted Average Remaining Lease Terms, Discount Rates and Supplemental Cash Flow Information for All Operating Leases | 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, 2020 and September 27, 2019 were as follows: September 25, 2020 September 27, 2019 Weighted average remaining lease term (years) 6.13 3.36 Weighted average remaining discount rate 2.00 % 2.83 % Supplemental cash flow information related to the Company’s operating leases for the first three quarters of 2020 is as follows: (amounts in thousands) September 25, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases $ 4,747 Right-of-use assets obtained in exchange for new operating lease liabilities 3,193 |
Summary of Minimum Obligations under Operating Leases | As of December 31, 2019, minimum obligations under operating leases were expected to be: Total Year Operating Leases (amounts in thousands) 2020 $ 5,979 2021 4,696 2022 3,255 2023 2,257 2024 1,485 2025 & thereafter 4,828 Total undiscounted operating lease payments $ 22,500 Less: Interest (1,247 ) Total present value of operating lease liabilities $ 21,253 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 25, 2020 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | The components that make up accumulated other comprehensive loss on the condensed consolidated balance sheets at September 25, 2020 and December 31, 2019 are as follows: (amounts in thousands) September 25, 2020 December 31, 2019 Foreign currency $ (7,045 ) $ (9,106 ) Pension loss, net of tax of $257 in 2020 and $265 in 2019 (9,510 ) (9,436 ) Accumulated other comprehensive loss $ (16,555 ) $ (18,542 ) |
Schedule of Net Benefit Costs | During the 2020 and 2019 third quarter and year-to-date periods, actuarial losses were amortized to expense as follows: For the Quarter Ended For the Three Quarters Ended (amounts in thousands) September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Amortization of actuarial losses $ 76 $ 45 $ 221 $ 138 Income tax (2 ) — (1 ) — Net of tax $ 74 $ 45 $ 220 $ 138 |
Deferred Compensation and Oth_2
Deferred Compensation and Other Benefits (Tables) | 9 Months Ended |
Sep. 25, 2020 | |
Compensation And Retirement Disclosure [Abstract] | |
Schedule of Net Periodic Pension Cost | Net periodic pension cost for the quarter and three quarters ended September 25, 2020 and September 27, 2019 for the plans is as follows: For the Quarter Ended For the Three Quarters Ended (amounts in thousands) September 25, 2020 September 27, 2019 September 25, 2020 September 27, 2019 Service cost $ 109 $ 82 $ 314 $ 249 Interest cost 90 145 264 438 Expected return on assets (167 ) (152 ) (484 ) (460 ) Amortization of actuarial loss 76 48 224 144 Net periodic pension cost $ 108 $ 123 $ 318 $ 371 |
Schedule of Change in Fair Value of Plan Assets | The change in the fair value of plan assets for the plans for the quarters ended September 25, 2020 and September 27, 2019 was as follows: For the Quarter Ended (amounts in thousands) September 25, 2020 September 27, 2019 Fair value of plan assets at beginning of period $ 18,078 $ 17,403 Return on plan assets 504 460 Contributions 878 829 Benefits paid (624 ) (610 ) Effect of exchange rate changes 690 (798 ) Fair value of plan assets at end of quarter $ 19,526 $ 17,284 |
Financial Statements - Addition
Financial Statements - Additional Information (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||||
Billable days | 63 days | 63 days | 189 days | 190 days |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Basis of Presentation and Consolidation (Details) | 6 Months Ended | 9 Months Ended |
Sep. 27, 2020 | Sep. 25, 2020segmentMarket | |
Accounting Policies [Abstract] | ||
Description of the nature of an event or transaction | 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. | |
Number of operating segments | segment | 1 | |
Number of vertical market focus areas | Market | 5 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of IT Solutions and IT and Other Staffing Revenue as Percentage of Total Revenue (Details) - Product Concentration Risk [Member] - Sales Revenue, Services, Net [Member] | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Product Information [Line Items] | ||||
Revenue, percent | 100.00% | 100.00% | 100.00% | 100.00% |
IT Solutions [Member] | ||||
Product Information [Line Items] | ||||
Revenue, percent | 39.60% | 33.90% | 37.30% | 34.60% |
IT and Other Staffing [Member] | ||||
Product Information [Line Items] | ||||
Revenue, percent | 60.40% | 66.10% | 62.70% | 65.40% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Revenue by Vertical Market as Percentage of Total Revenue (Details) - Customer Concentration Risk [Member] - Sales Revenue, Services, Net [Member] | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Concentration Risk [Line Items] | ||||
Total revenue | 100.00% | 100.00% | 100.00% | 100.00% |
Technology Service Providers [Member] | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 33.10% | 32.90% | 33.30% | 32.40% |
Manufacturing [Member] | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 13.70% | 17.60% | 14.10% | 17.20% |
Financial Services [Member] | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 14.80% | 13.00% | 14.60% | 13.60% |
Energy [Member] | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 5.60% | 5.40% | 6.30% | 5.20% |
General Markets [Member] | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 18.40% | 14.20% | 17.90% | 14.90% |
Healthcare [Member] | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 14.40% | 16.90% | 13.80% | 16.70% |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Revenue by Contract Type (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Schedule Of Revenue By Contract Type [Line Items] | ||||
Revenue percent | 100.00% | 100.00% | 100.00% | 100.00% |
Time-and-material [Member] | ||||
Schedule Of Revenue By Contract Type [Line Items] | ||||
Revenue percent | 80.50% | 80.70% | 80.70% | 80.20% |
Progress Billing [Member] | ||||
Schedule Of Revenue By Contract Type [Line Items] | ||||
Revenue percent | 14.60% | 10.10% | 14.70% | 10.20% |
Percentage-of-completion [Member] | ||||
Schedule Of Revenue By Contract Type [Line Items] | ||||
Revenue percent | 4.90% | 9.20% | 4.60% | 9.60% |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Schedule of Revenue by Geographic Location (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Revenues [Line Items] | ||||
Revenue | $ 88,648 | $ 97,204 | $ 264,743 | $ 294,850 |
Sales Revenue, Services, Net [Member] | Geographic Concentration Risk | ||||
Revenues [Line Items] | ||||
Revenue, percent | 100.00% | 100.00% | 100.00% | 100.00% |
Revenue | $ 88,648 | $ 97,204 | $ 264,743 | $ 294,850 |
Year-over-Year Change | (8.80%) | (10.20%) | ||
North America [Member] | Sales Revenue, Services, Net [Member] | Geographic Concentration Risk | ||||
Revenues [Line Items] | ||||
Revenue, percent | 54.90% | 63.60% | 56.00% | 62.40% |
Revenue | $ 48,625 | $ 61,866 | $ 148,289 | $ 183,953 |
Year-over-Year Change | (21.40%) | (19.40%) | ||
Europe [Member] | Sales Revenue, Services, Net [Member] | Geographic Concentration Risk | ||||
Revenues [Line Items] | ||||
Revenue, percent | 45.10% | 36.40% | 44.00% | 37.60% |
Revenue | $ 40,023 | $ 35,338 | $ 116,454 | $ 110,897 |
Year-over-Year Change | 13.30% | 5.00% |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Transaction Price Allocated to Remaining Performance Obligations (Details 1) $ in Millions | Sep. 25, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 13 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 32.6 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Transaction Price Allocated to Remaining Performance Obligations (Details) $ in Millions | Sep. 25, 2020USD ($) |
Fixed-price [Member] | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 11 |
Managed-support Contracts [Member] | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 34.6 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Fair Value (Details) - USD ($) $ in Thousands | Sep. 25, 2020 | Mar. 27, 2020 | Mar. 03, 2020 | Dec. 31, 2019 | Mar. 29, 2019 | Feb. 06, 2019 | Mar. 30, 2018 | Feb. 15, 2018 |
Business Acquisition [Line Items] | ||||||||
Cash and cash equivalents | $ 33,412 | $ 10,781 | ||||||
Stardust SAS (StarDust) [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Business acquisition, percentage acquired | 100.00% | 100.00% | ||||||
Tech-IT PSF S.A. [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Business acquisition, percentage acquired | 100.00% | 100.00% | ||||||
Soft Company [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Business acquisition, percentage acquired | 100.00% | 100.00% |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Life Insurance Policies (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 25, 2020USD ($)Individual | Sep. 25, 2020USD ($)Individual | Dec. 31, 2019USD ($) | |
Supplementary Information For Corporate Owned Life Insurance [Line Items] | |||
Number of former employees covered under insurance policies | Individual | 16 | 16 | |
Average age of former employees covered under insurance policies | 77 years | ||
Gross cash surrender values of life insurance | $ 26,700 | $ 26,700 | $ 29,700 |
Loans on cash surrender value | 24,100 | 24,100 | 27,200 |
Net cash surrender values of life insurance | 3,533 | 3,533 | 3,133 |
Gross death benefit of life insurance contracts | 34,700 | 34,700 | 37,700 |
Life insurance proceeds to be received upon the death of participants | 10,300 | 10,300 | |
Life insurance gain to be recognized upon death of participants | 7,700 | 7,700 | |
Non-taxable life insurance gain | 574 | 963 | |
Casualty Events [Member] | |||
Supplementary Information For Corporate Owned Life Insurance [Line Items] | |||
Non-taxable life insurance gain | 1,000 | ||
Non-Qualified Defined Benefit Executive Supplemental Benefit Plan [Member] | |||
Supplementary Information For Corporate Owned Life Insurance [Line Items] | |||
Net cash surrender values of life insurance | $ 2,600 | $ 2,600 | $ 2,500 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Accounts Receivable Factoring (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Accounts Notes And Loans Receivable [Line Items] | ||||
Cost of services | $ 69,101 | $ 78,462 | $ 209,412 | $ 240,056 |
Trade Accounts Receivable [Member] | ||||
Accounts Notes And Loans Receivable [Line Items] | ||||
Accounts Receivable, Sold | 17,800 | 43,200 | ||
Cost of services | $ 100 | $ 100 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Schedule of Property, Equipment and Capitalized Software (Details) - USD ($) $ in Thousands | Sep. 25, 2020 | Dec. 31, 2019 |
Property Plant And Equipment Net By Type [Abstract] | ||
Property, equipment, and capitalized software | $ 14,468 | $ 17,384 |
Accumulated depreciation and amortization | (8,895) | (11,005) |
Property, equipment and capitalized software, net | $ 5,573 | $ 6,379 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Schedule of Capitalized Software Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Capitalized Software Cost [Abstract] | ||||
Capitalized software, beginning balance | $ 2,741 | $ 1,955 | $ 2,147 | $ 1,864 |
Additions | 200 | 318 | 794 | 409 |
Capitalized software, ending balance | $ 2,941 | $ 2,273 | $ 2,941 | $ 2,273 |
Summary of Significant Accou_16
Summary of Significant Accounting Policies - Property, Equipment and Capitalized Software Costs - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Jun. 26, 2020 | Sep. 25, 2020 | |
Software Development | Minimum [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property, equipment and capitalized software, useful life | 3 years | |
Software Development | Maximum [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property, equipment and capitalized software, useful life | 5 years | |
Building | Buffalo, NY [Member] | ||
Property Plant And Equipment [Line Items] | ||
Book value of building | $ 1.6 | |
Proceeds from sale of building | 2.5 | |
Gain on sale of building | $ 0.8 |
Summary of Significant Accou_17
Summary of Significant Accounting Policies - Schedule of Amortization Expense and Accumulated Amortization (Details) - Software Development - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Property Plant And Equipment [Line Items] | ||||
Accumulated amortization, beginning balance | $ 1,076 | $ 1,017 | $ 866 | $ 745 |
Amortization expense | 91 | 126 | 301 | 398 |
Accumulated amortization, ending balance | $ 1,167 | $ 1,143 | $ 1,167 | $ 1,143 |
Summary of Significant Accou_18
Summary of Significant Accounting Policies - Guarantees (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 25, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Current carrying value of guarantees | $ 3.1 | $ 3 |
Guarantor obligations, term | September 2020 through October 2034 |
Summary of Significant Accou_19
Summary of Significant Accounting Policies - Goodwill (Details) - Indicator | 9 Months Ended | |
Sep. 25, 2020 | Sep. 27, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Goodwill impairment indicators | 0 | 0 |
Summary of Significant Accou_20
Summary of Significant Accounting Policies - Summary of Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 25, 2020USD ($) | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Balance at December 31, 2019 | $ 16,681 |
Acquired goodwill | 2,757 |
Foreign currency translation | 762 |
Balance at September 25, 2020 | $ 20,200 |
Summary of Significant Accou_21
Summary of Significant Accounting Policies - Summary of Acquired Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 25, 2020 | Dec. 31, 2019 | |
Acquired Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 12,619 | |
Accumulated Amortization | 3,284 | |
Foreign Currency Translation | (334) | |
Net Carrying Amount | $ 9,001 | $ 8,439 |
Trademarks [Member] | ||
Acquired Finite Lived Intangible Assets [Line Items] | ||
Estimated Economic Life | 2 years | |
Gross Carrying Amount | $ 1,532 | |
Accumulated Amortization | 1,282 | |
Foreign Currency Translation | (30) | |
Net Carrying Amount | $ 220 | |
Technology | ||
Acquired Finite Lived Intangible Assets [Line Items] | ||
Estimated Economic Life | 10 years | |
Gross Carrying Amount | $ 591 | |
Accumulated Amortization | 36 | |
Foreign Currency Translation | 26 | |
Net Carrying Amount | 581 | |
Customer Relationships [Member] | ||
Acquired Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 10,496 | |
Accumulated Amortization | 1,966 | |
Foreign Currency Translation | (330) | |
Net Carrying Amount | $ 8,200 | |
Customer Relationships [Member] | Minimum [Member] | ||
Acquired Finite Lived Intangible Assets [Line Items] | ||
Estimated Economic Life | 7 years | |
Customer Relationships [Member] | Maximum [Member] | ||
Acquired Finite Lived Intangible Assets [Line Items] | ||
Estimated Economic Life | 13 years |
Summary of Significant Accou_22
Summary of Significant Accounting Policies - Summary of Estimated Amortization Expense (Details) - USD ($) $ in Thousands | Sep. 25, 2020 | Dec. 31, 2019 |
Finite Lived Intangible Assets Future Amortization Expense [Abstract] | ||
2020 | $ 364 | |
2021 | 1,163 | |
2022 | 1,061 | |
2023 | 1,052 | |
2024 | 1,052 | |
2025 | 1,052 | |
Thereafter | 3,257 | |
Total | $ 9,001 | $ 8,439 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) $ in Thousands | Mar. 03, 2020USD ($) | Mar. 03, 2020EUR (€) | Feb. 06, 2019USD ($) | Feb. 15, 2018USD ($) | Feb. 15, 2018EUR (€) | Sep. 25, 2020USD ($) | Mar. 27, 2020USD ($) | Sep. 27, 2019USD ($) | Sep. 25, 2020USD ($) | Sep. 27, 2019USD ($) | Mar. 03, 2020EUR (€) | Mar. 29, 2019 | Feb. 06, 2019EUR (€) | Mar. 30, 2018 |
Stardust SAS (StarDust) [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Business acquisition, percentage acquired | 100.00% | 100.00% | 100.00% | |||||||||||
Payments to acquire business | $ 6,122 | € 5,500,000 | ||||||||||||
Foreign currency exchange rate | 1.1145 | 1.1145 | ||||||||||||
Earn-out contingency liability, basis for amount | 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. | |||||||||||||
Threshold limit of consolidated direct profit achieved above target | € | 10,000 | |||||||||||||
Earn-out contingency liability | € | € 1,000 | |||||||||||||
Fair value of the remaining contingent consideration liability | $ 100 | $ 200 | ||||||||||||
Stardust SAS (StarDust) [Member] | Selling, General and Administrative Expenses | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Business combination acquisition related costs including fair value adjustment of earn out liability and amortization of intangible assets | $ 200 | $ 100 | 300 | |||||||||||
Stardust SAS (StarDust) [Member] | Other Current Liabilities [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Fair value of the remaining contingent consideration liability | 100 | 100 | ||||||||||||
Stardust SAS (StarDust) [Member] | Other Long-Term Liabilities [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Fair value of the remaining contingent consideration liability | 100 | $ 100 | ||||||||||||
Stardust SAS (StarDust) [Member] | Maximum [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Earn-out contingency liability | $ 1,100 | € 1,000,000 | ||||||||||||
Tech-IT PSF S.A. [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Business acquisition, percentage acquired | 100.00% | 100.00% | 100.00% | |||||||||||
Payments to acquire business | $ 9,678 | |||||||||||||
Foreign currency exchange rate | 1.1386 | 1.1386 | ||||||||||||
Earn-out contingency liability, basis for amount | 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 threshold. | |||||||||||||
Fair value of the remaining contingent consideration liability | $ 600 | $ 700 | ||||||||||||
Tech-IT PSF S.A. [Member] | Selling, General and Administrative Expenses | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Business combination acquisition related costs including fair value adjustment of earn out liability and amortization of intangible assets | 200 | 600 | ||||||||||||
Tech-IT PSF S.A. [Member] | Other Current Liabilities [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Fair value of the remaining contingent consideration liability | 400 | 400 | ||||||||||||
Tech-IT PSF S.A. [Member] | Other Long-Term Liabilities [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Fair value of the remaining contingent consideration liability | 300 | 300 | ||||||||||||
Tech-IT PSF S.A. [Member] | Maximum [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Earn-out contingency liability | $ 1,700 | € 1,500,000 | ||||||||||||
Tech-IT PSF S.A. [Member] | Maximum [Member] | Selling, General and Administrative Expenses | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Business combination acquisition related costs including fair value adjustment of earn out liability and amortization of intangible assets | $ 400 | $ 500 | ||||||||||||
Soft Company [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Business acquisition, percentage acquired | 100.00% | 100.00% | ||||||||||||
Payments to acquire business | $ 16,900 | € 13,600,000 | ||||||||||||
Foreign currency exchange rate | 1.2392 | |||||||||||||
Fair value of the remaining contingent consideration liability | 900 | 900 | ||||||||||||
Fair value of acquisition | $ 2,000 | |||||||||||||
Soft Company [Member] | Selling, General and Administrative Expenses | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Business combination acquisition related costs including fair value adjustment of earn out liability and amortization of intangible assets | $ 100 | $ 400 | $ 400 | $ 1,200 |
Acquisitions - Summary of Acqui
Acquisitions - Summary of Acquisition Date Fair Value of Consideration (Details) $ in Thousands, € in Millions | Mar. 03, 2020USD ($) | Mar. 03, 2020EUR (€) | Feb. 06, 2019USD ($) |
Stardust SAS (StarDust) [Member] | |||
Business Acquisition [Line Items] | |||
Cash consideration | $ 6,122 | € 5.5 | |
Fair value of contingent consideration | 111 | ||
Fair value of purchase consideration | $ 6,233 | ||
Tech-IT PSF S.A. [Member] | |||
Business Acquisition [Line Items] | |||
Cash consideration | $ 9,678 | ||
Fair value of contingent consideration | 569 | ||
Fair value of purchase consideration | $ 10,247 |
Acquisitions - Summary of Alloc
Acquisitions - Summary of Allocation of Aggregate Purchase Consideration to Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Sep. 25, 2020 | Mar. 03, 2020 | Dec. 31, 2019 | Feb. 06, 2019 |
Assets Acquired: | ||||
Goodwill | $ 20,200 | $ 16,681 | ||
Liabilities Assumed: | ||||
Goodwill | $ 20,200 | $ 16,681 | ||
Stardust SAS (StarDust) [Member] | ||||
Assets Acquired: | ||||
Cash | $ 1,798 | |||
Accounts receivable | 1,303 | |||
Prepaids & other | 71 | |||
Property & equipment | 327 | |||
Acquired intangibles | 1,282 | |||
Goodwill | 2,757 | |||
Total assets acquired | 7,538 | |||
Liabilities Assumed: | ||||
Accounts payable | 285 | |||
Accrued compensation | 307 | |||
Taxes payable | 222 | |||
Other liabilities | 163 | |||
Deferred income taxes | 328 | |||
Total liabilities assumed | 1,305 | |||
Net assets acquired | 6,233 | |||
Cash | 1,798 | |||
Accounts receivable | 1,303 | |||
Prepaids & other | 71 | |||
Property & equipment | 327 | |||
Acquired intangibles | 1,282 | |||
Goodwill | 2,757 | |||
Total assets acquired | 7,538 | |||
Accounts payable | 285 | |||
Accrued compensation | 307 | |||
Other liabilities | 163 | |||
Total liabilities assumed | $ 1,305 | |||
Tech-IT PSF S.A. [Member] | ||||
Assets Acquired: | ||||
Cash | $ 1,217 | |||
Accounts receivable | 4,491 | |||
Prepaids & other | 1,122 | |||
Property & equipment | 98 | |||
Acquired intangibles | 4,099 | |||
Goodwill | 5,331 | |||
Total assets acquired | 16,358 | |||
Liabilities Assumed: | ||||
Accounts payable | 2,378 | |||
Accrued compensation | 172 | |||
Other liabilities | 2,447 | |||
Total liabilities assumed | 6,111 | |||
Net assets acquired | 10,247 | |||
Cash | 1,217 | |||
Accounts receivable | 4,491 | |||
Prepaids & other | 1,122 | |||
Property & equipment | 98 | |||
Acquired intangibles | 4,099 | |||
Goodwill | 5,331 | |||
Total assets acquired | 16,358 | |||
Accounts payable | 2,378 | |||
Accrued compensation | 172 | |||
Other liabilities | 2,447 | |||
Deferred income taxes | 1,114 | |||
Total liabilities assumed | $ 6,111 |
Acquisitions - Summary of Intan
Acquisitions - Summary of Intangible Assets Acquired (Details) - USD ($) $ in Thousands | Mar. 03, 2020 | Feb. 06, 2019 |
Stardust SAS (StarDust) [Member] | ||
Business Acquisition [Line Items] | ||
Fair value of purchase consideration | $ 1,282 | |
Stardust SAS (StarDust) [Member] | Trademarks [Member] | ||
Business Acquisition [Line Items] | ||
Fair value of purchase consideration | $ 100 | |
Estimated Useful Life | 2 years | |
Stardust SAS (StarDust) [Member] | Technology | ||
Business Acquisition [Line Items] | ||
Fair value of purchase consideration | $ 591 | |
Estimated Useful Life | 10 years | |
Stardust SAS (StarDust) [Member] | Customer Relationships [Member] | ||
Business Acquisition [Line Items] | ||
Fair value of purchase consideration | $ 591 | |
Estimated Useful Life | 7 years | |
Tech-IT PSF S.A. [Member] | ||
Business Acquisition [Line Items] | ||
Fair value of purchase consideration | $ 4,099 | |
Tech-IT PSF S.A. [Member] | Trademarks [Member] | ||
Business Acquisition [Line Items] | ||
Fair value of purchase consideration | $ 683 | |
Estimated Useful Life | 2 years | |
Tech-IT PSF S.A. [Member] | Customer Relationships [Member] | ||
Business Acquisition [Line Items] | ||
Fair value of purchase consideration | $ 3,416 | |
Estimated Useful Life | 8 years |
Net Income Per Share - Schedule
Net Income Per Share - Schedule of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Earnings Per Share [Abstract] | ||||
Weighted-average number of shares outstanding during period | 13,655 | 13,470 | 13,603 | 13,429 |
Common stock equivalents from incremental shares under equity-based compensation plans | 746 | 575 | 731 | 487 |
Number of shares on which diluted earnings per share is based | 14,401 | 14,045 | 14,334 | 13,916 |
Net income | $ 2,831 | $ 879 | $ 5,734 | $ 2,454 |
Net income per share, basic | $ 0.21 | $ 0.07 | $ 0.42 | $ 0.18 |
Net income per share, diluted | $ 0.20 | $ 0.06 | $ 0.40 | $ 0.18 |
Net Income Per Share - Addition
Net Income Per Share - Additional Information (Details) - shares shares in Millions | 9 Months Ended | |
Sep. 25, 2020 | Sep. 27, 2019 | |
Employee Stock Option [Member] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive securities not included in the computation of earnings per share | 1.1 | 1.1 |
Lease Commitments - Additional
Lease Commitments - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Leases [Abstract] | ||||
Maximum potential payment increase | 5.00% | |||
Operating lease cost | $ 1.6 | $ 1.7 | $ 4.7 | $ 5.1 |
Short-term lease cost | 0.2 | 0.1 | 0.4 | 0.4 |
Variable lease cost | $ 0.1 | $ 0.1 | 0.4 | $ 0.4 |
Lessee operating, lease lease not yet commenced, lease payments | $ 3.9 |
Lease Commitments - Summary of
Lease Commitments - Summary of Maturities of Lease Liabilities for Operating Liabilities (Details) - USD ($) $ in Thousands | Sep. 25, 2020 | Dec. 31, 2019 |
Operating Lease Liabilities Payments Due [Abstract] | ||
2020 (remaining) | $ 1,640 | $ 5,979 |
2021 | 5,752 | 4,696 |
2022 | 4,362 | 3,255 |
2023 | 3,034 | 2,257 |
2024 | 1,788 | 1,485 |
2025 & thereafter | 5,049 | 4,828 |
Total undiscounted operating lease payments | 21,625 | 22,500 |
Less: Interest | (1,068) | (1,247) |
Total present value of operating lease liabilities | $ 20,557 | $ 21,253 |
Lease Commitments - Summary o_2
Lease Commitments - Summary of Weighted Average Remaining Lease Terms, Discount Rates and Supplemental Cash Flow Information for All Operating Leases (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 25, 2020 | Sep. 27, 2019 | |
Lease Cost [Abstract] | ||
Weighted average remaining lease term (years) | 6 years 1 month 17 days | 3 years 4 months 9 days |
Weighted average remaining discount rate | 2.00% | 2.83% |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash outflow from operating leases | $ 4,747 | |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 3,193 |
Lease Commitments - Summary o_3
Lease Commitments - Summary of Minimum Obligations under Operating Leases (Details) - USD ($) $ in Thousands | Sep. 25, 2020 | Dec. 31, 2019 |
Operating Lease Liabilities Payments Due [Abstract] | ||
2020 (remaining) | $ 1,640 | $ 5,979 |
2021 | 5,752 | 4,696 |
2022 | 4,362 | 3,255 |
2023 | 3,034 | 2,257 |
2024 | 1,788 | 1,485 |
2025 & thereafter | 5,049 | 4,828 |
Total undiscounted operating lease payments | 21,625 | 22,500 |
Less: Interest | (1,068) | (1,247) |
Total present value of operating lease liabilities | $ 20,557 | $ 21,253 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Dec. 31, 2019 | |
Line of Credit Facility [Line Items] | ||||
Long-term debt | $ 6,000,000 | $ 6,000,000 | $ 5,290,000 | |
Maximum amount outstanding | 12,000,000 | $ 17,000,000 | ||
Average amount outstanding | $ 9,500,000 | $ 10,500,000 | ||
Weighted-average interest rate | 2.10% | 2.70% | 2.10% | |
Debt covenants, Maximum leverage ratio | 1.10% | |||
Debt covenants, Minimum tangible net worth | $ 5,000,000 | |||
Debt covenants, Maximum capital expenditures | 5,000,000 | |||
Debt covenants threshold limit to test fixed charge coverage ratio | $ 5,625,000 | 5,625,000 | ||
Total available borrowings | 12,400,000 | 12,400,000 | ||
Debt covenants, EBITDA | $ 14,500,000 | |||
Fixed charge coverage ratio | 53.9 | |||
Capital expenditures | $ 1,900,000 | |||
Federal Funds Effective Swap Rate | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 0.50% | |||
Minimum [Member] | London Interbank Offered Rate (LIBOR) | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 1.50% | |||
Minimum [Member] | Adjusted London Interbank Offered Rate L I B O R | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 0.50% | |||
Maximum [Member] | London Interbank Offered Rate (LIBOR) | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 2.00% | |||
Maximum [Member] | Adjusted London Interbank Offered Rate L I B O R | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 1.00% | |||
Credit and Security Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Revolving credit facility, term | 3 years | |||
Line of Credit Facility, Maximum Borrowing Capacity | 45,000,000 | $ 45,000,000 | ||
Line of credit facility, expiration date | 2022-12 | |||
Letters of Credit [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 10,000,000 | $ 10,000,000 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss - Schedule of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | Sep. 25, 2020 | Dec. 31, 2019 |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | ||
Foreign currency | $ (7,045) | $ (9,106) |
Pension loss, net of tax of $257 in 2020 and $265 in 2019 | (9,510) | (9,436) |
Accumulated other comprehensive loss | $ (16,555) | $ (18,542) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Loss - Schedule of Accumulated Other Comprehensive Loss (Parenthetical) (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 25, 2020 | Dec. 31, 2019 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | ||
Tax on pension loss | $ 257 | $ 265 |
Accumulated Other Comprehensi_5
Accumulated Other Comprehensive Loss - Schedule of Net Benefit Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Postemployment Benefits [Abstract] | ||||
Amortization of actuarial losses | $ 76 | $ 45 | $ 221 | $ 138 |
Income tax | (2) | (1) | ||
Net of tax | $ 74 | $ 45 | $ 220 | $ 138 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | (31.20%) | 33.50% | 19.90% | 34.70% |
Effective tax rate reconciliation, combined impact | $ 1.1 | |||
Effective tax rate reconciliation, impact on diluted earnings per share | 0.08 |
Deferred Compensation and Oth_3
Deferred Compensation and Other Benefits - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | Dec. 31, 2019 | |
Deferred Compensation Text Details [Line Items] | |||||
Employer contributions | $ 878,000 | $ 829,000 | |||
FDBP [Member] | |||||
Deferred Compensation Text Details [Line Items] | |||||
Benefit payments | $ 0 | ||||
Estimated future employer contributions, next year | 0 | $ 0 | |||
SDBP [Member] | |||||
Deferred Compensation Text Details [Line Items] | |||||
Benefit payments | 0 | ||||
Estimated future employer contributions, next year | 0 | 0 | |||
ESBP [Member] | |||||
Deferred Compensation Text Details [Line Items] | |||||
Benefit payments | 100,000 | 100,000 | 400,000 | $ 400,000 | |
Estimated future employer contributions, next year | 600,000 | 600,000 | |||
NDBP [Member] | |||||
Deferred Compensation Text Details [Line Items] | |||||
Benefit payments | $ 0 | ||||
Estimated future employer contributions, next year | 0 | $ 0 | |||
Targeted minimum return | 4.00% | ||||
Guaranteed return | 4.00% | ||||
BDBP [Member] | |||||
Deferred Compensation Text Details [Line Items] | |||||
Benefit plan, employer contributions | 200,000 | 200,000 | $ 500,000 | 400,000 | |
BDBP [Member] | Maximum [Member] | |||||
Deferred Compensation Text Details [Line Items] | |||||
Benefit payments | 100,000 | 100,000 | |||
Estimated future employer contributions, next year | 100,000 | 100,000 | |||
Key Employee Non Qualified Deferred Compensation Plan [Member] | |||||
Deferred Compensation Text Details [Line Items] | |||||
Employer contributions | $ 0 | $ 0 | $ 0 | $ 0 | |
Number of stock units purchased | 0 | 0 | 0 | 0 | |
Non Employee Director Deferred Compensation Plan [Member] | |||||
Deferred Compensation Text Details [Line Items] | |||||
Employer contributions | $ 0 | $ 0 | $ 0 | $ 0 |
Deferred Compensation and Oth_4
Deferred Compensation and Other Benefits - Schedule of Net Periodic Pension Cost (Details) - Deferred Compensation and Other Benefits [Member] - Executive Officer [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 109 | $ 82 | $ 314 | $ 249 |
Interest cost | 90 | 145 | 264 | 438 |
Expected return on assets | (167) | (152) | (484) | (460) |
Amortization of actuarial loss | 76 | 48 | 224 | 144 |
Net periodic pension cost | $ 108 | $ 123 | $ 318 | $ 371 |
Deferred Compensation and Oth_5
Deferred Compensation and Other Benefits - Schedule of Change in Fair Value of Plan Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 25, 2020 | Sep. 27, 2019 | |
Reconciliation of Fair Value of Plan Assets | ||
Fair value of plan assets at beginning of period | $ 18,078 | $ 17,403 |
Return on plan assets | 504 | 460 |
Employer contributions | 878 | 829 |
Benefits paid | (624) | (610) |
Effect of exchange rate changes | 690 | (798) |
Fair value of plan assets at end of quarter | $ 19,526 | $ 17,284 |
Equity-based Compensation - Add
Equity-based Compensation - Additional Information (Details) - $ / shares | Mar. 06, 2020 | May 31, 2019 | Sep. 25, 2020 | Mar. 27, 2020 | Sep. 27, 2019 | Mar. 29, 2019 | Sep. 25, 2020 | Sep. 27, 2019 |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Restricted stock and stock units, granted | 0 | 217,542 | 599,928 | 636,268 | ||||
Employee Stock Option [Member] | 2010 Equity Award Plan [Member] | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Award vesting period | 3 years | |||||||
Stock options granted | 173,010 | 26,500 | 0 | 0 | ||||
Stock options granted, fair value | $ 1.96 | $ 1.26 | ||||||
Stock option vest, fair value | $ 5.88 | $ 4.20 | ||||||
Expected term | 5 years 2 months 12 days | 3 years 8 months 12 days | ||||||
Expected volatility | 36.70% | 36.10% | ||||||
Expected dividend yield | 0.00% | 0.00% | ||||||
Risk-free rate of return | 0.60% | 2.20% | ||||||
Performance Shares [Member] | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Restricted stock and stock units, granted | 115,410 | 217,542 | ||||||
Percentage of performance conditions need to be met in order for the shares to vest | 80.00% | 80.00% | ||||||
Award vesting period | 3 years | 3 years | ||||||
Award vesting period expiration date | Dec. 31, 2022 | Dec. 31, 2021 | ||||||
Performance Conditions | 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 shares granted in the 2019 third quarter were granted to senior management with 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. | ||||||
Non Performance Shares [Member] | Stock Vesting, One Year From Grant Date [Member] | Vesting Period Of Three Years | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Award vesting period | 3 years | 3 years | 3 years | 3 years | ||||
Non Performance Shares [Member] | Stock Vesting, One Year From Grant Date [Member] | Vesting Period of 4 Years [Member] | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Award vesting period | 4 years | 4 years | 4 years | 4 years | ||||
Director Members [Member] | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Restricted stock and stock units, granted | 170,848 | 215,326 | ||||||
Vesting period description | The shares vest in four equal quarterly increments | |||||||
Senior Management [Member] | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Restricted stock and stock units, granted | 209,280 |
Treasury Stock - Additional Inf
Treasury Stock - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2020 | Sep. 27, 2019 | Sep. 25, 2020 | Sep. 27, 2019 | |
Class Of Stock Disclosures [Abstract] | ||||
Stock repurchase program, authorized amount | $ 30,000,000 | $ 30,000,000 | ||
Treasury stock purchase, shares | 0 | 0 | 0 | 0 |
Treasury stock repurchased, shares | 3,200,000 | 3,200,000 | ||
Shares authorized to repurchase, remaining amount | $ 7,700,000 | $ 7,700,000 | $ 7,700,000 | $ 7,700,000 |
Issued treasury stock, shares | 0 | 217,000 | 600,000 | 636,000 |
Significant Clients - Additiona
Significant Clients - Additional Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 25, 2020USD ($)Client | Sep. 27, 2019USD ($)Client | Sep. 25, 2020USD ($)Client | Sep. 27, 2019USD ($)Client | Dec. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | |||||
Accounts receivable, net | $ 74,907 | $ 74,907 | $ 88,772 | ||
Number of major client | Client | 1 | 1 | 1 | 1 | |
Number of other major client | Client | 0 | 0 | 0 | 0 | |
Customer Concentration Risk [Member] | Sales Revenue, Services, Net [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue, percent | 100.00% | 100.00% | 100.00% | 100.00% | |
IBM [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | $ 18,600 | $ 21,300 | $ 57,400 | $ 63,400 | |
Services agreement expiration date | Nov. 27, 2020 | ||||
Accounts receivable, net | $ 13,900 | $ 13,900 | $ 23,000 | ||
IBM [Member] | Customer Concentration Risk [Member] | Sales Revenue, Services, Net [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue, percent | 21.00% | 21.90% | 21.70% | 21.50% |