<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 28, 1997
Commission file number 1-9410
------
COMPUTER TASK GROUP, INCORPORATED
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
New York 16-0912632
- ---------------------------------------- ---------------------------------
(State of incorporation) (IRS Employer Identification No.)
800 Delaware Avenue, Buffalo, New York 14209
- ---------------------------------------- ---------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (716) 882-8000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Number of shares of common stock outstanding:
Shares outstanding
Title Of Each Class at March 28, 1997
------------------- -----------------
Common stock, par value
$.01 per share 10,340,972
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COMPUTER TASK GROUP, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 28, MARCH 29,
1997 1996
(amounts in thousands,
except per share data)
<S> <C> <C>
Revenue $ 94,935 $ 90,005
Direct costs 68,235 65,160
Selling, general and administrative expenses 20,876 21,147
-------- ---------
Operating income 5,824 3,698
Interest and other income 479 268
Interest and other expense (187) (278)
- ---------------------------------------------------------------------------------------------
Income before income taxes 6,116 3,688
Provision for income taxes 2,447 1,475
- ---------------------------------------------------------------------------------------------
Net income $ 3,669 $ 2,213
======== =========
Net income per share $ 0.41 $ 0.25
======== =========
Common equivalent shares outstanding 8,974 8,736
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 3
COMPUTER TASK GROUP, INCORPORATED
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 29, DECEMBER 31,
1997 1996
-----------------------------
(Unaudited) (Audited)
(amounts in thousands)
<S> <C> <C>
ASSETS
- -------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and temporary cash investments $ 33,386 $ 41,516
Accounts receivable, net of allowance for doubtful
accounts of $966,000 and $975,000, respectively 69,657 55,948
Prepaids and other 3,145 2,630
Deferred income taxes 1,101 1,088
- -------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 107,289 101,182
Property and equipment, net of
accumulated depreciation and amortization 12,280 12,380
Acquired intangibles, net of accumulated amortization
of $6,275,000 and $6,236,000, respectively 4,135 4,533
Deferred income taxes 2,556 2,608
Other assets 332 578
- -------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 126,592 $ 121,281
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 12,661 $ 9,491
Accrued compensation 20,340 17,572
Income taxes payable 7,298 5,180
Advance billings on contracts 1,822 2,484
Other current liabilities 5,740 4,924
- -------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 47,861 39,651
Deferred compensation benefits 9,056 8,889
Other long-term liabilities 1,237 1,237
- -------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 58,154 49,777
Shareholders' Equity:
Common stock, par value $.01 per share, 25,000,000
shares authorized; 13,472,637 and 13,467,449 shares issued 135 135
Capital in excess of par value 145,927 159,512
Retained earnings 29,583 25,914
Less: Treasury stock of 3,131,665 and 3,131,418 shares, at cost (31,667) (31,655)
Stock Employee Compensation Trust of 1,992,929
and 1,825,272 shares, at market (71,247) (78,715)
Foreign currency adjustment (2,603) (2,039)
Minimum pension liability adjustment (1,594) (1,594)
Loans to employees (54) (54)
Unearned portion of restricted stock (42) -
- -------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 68,438 71,504
- -------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 126,592 $ 121,281
========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
COMPUTER TASK GROUP, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 28, MARCH 29,
1997 1996
--------- ---------
(amounts in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,669 $ 2,213
Adjustments:
Depreciation and amortization expense 1,316 1,505
Deferred compensation expense 167 79
Changes in assets and liabilities:
Increase in accounts receivable (14,485) (7,142)
Increase in prepaids and other (621) (854)
(Increase) decrease in deferred income taxes 39 (42)
Increase in income taxes payable 2,114 1,303
Decrease in other assets 246 53
Increase in accounts payable 3,504 3,307
Increase in accrued compensation 3,006 6,431
Decrease in advance billings on contracts (662) (555)
Increase in other current liabilities 919 132
---------- -----------
Net cash provided by (used in) operating activities (788) 6,430
- -------------------------------------------------------------------------------------------------------------------
Cash flows used in investing activities -
additions to property and equipment (1,097) (691)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments on long-term debt - (541)
Proceeds from Employee Stock Purchase Plan 200 134
Purchase of treasury stock (12) (649)
Purchase of stock by Stock Employee Compensation Trust (6,553) -
Issuance of stock from Stock Employee Compensation Trust 111 -
Proceeds from other stock plans 83 674
---------- -----------
Net cash used in financing activities (6,171) (382)
- -------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and temporary cash investments (74) 23
---------- -----------
Net increase (decrease) in cash and temporary cash investments (8,130) 5,380
Cash and temporary cash investments at beginning of year 41,516 16,545
- -------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at end of quarter $ 33,386 $ 21,925
========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
COMPUTER TASK GROUP, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Financial Statements
The consolidated financial statements included herein reflect, in the
opinion of the management of Computer Task Group, Incorporated (the Company),
all normal recurring adjustments necessary to present fairly the financial
position, results of operations and cash flows for the periods presented.
2. Basis of Presentation
The consolidated financial statements have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange Commission
(the SEC). Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the SEC rules and
regulations. Management believes that the information and disclosures provided
herein are adequate to present fairly the financial position, results of
operations and cash flows of the Company. It is suggested that these financial
statements be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's latest Annual Report on Form 10-K filed
with the SEC.
5
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE QUARTER ENDED MARCH 28, 1997
Results Of Operations
- ---------------------
Statements included in this Management's Discussion and Analysis and
elsewhere in this document that do not relate to present or historical
conditions are "forward-looking statements" within the meaning of that term in
Section 27A of the Securities Act of 1933, as amended, and of Section 21F of the
Securities Exchange Act of 1934, as amended. Additional oral or written
forward-looking statements may be made by the Company from time to time, and
such statements may be included in documents that are filed with the Securities
and Exchange Commission. Such forward-looking statements involve risks and
uncertainties that could cause results or outcomes to differ materially from
those expressed in such forward-looking statements. Forward-looking statements
may include, without limitation, statements relating to the Company's plans,
strategies, objectives, expectations and intentions and are intended to be made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Words such as "believes," "forecasts," "intends,"
"possible," "expects," "estimates," "anticipates," or "plans" and similar
expressions are intended to identify forward-looking statements. Among the
important factors on which such statements are based are assumptions concerning
the anticipated growth of the information technology industry, the continued
need of current and prospective customers for the Company's services, the
availability of qualified professional staff, and price and wage inflation.
CTG recorded first quarter 1997 revenue of $94.9 million, the highest
in the Company's history, and an increase of 5.5 percent when compared to first
quarter 1996 revenue of $90 million. North American revenue increased by $2.9
million or 3.6 percent in 1997 as compared to 1996, while revenue from European
operations increased by $2 million, or 22.9 percent. The increase in revenue
from the European operations is due to a significant increase in billable
personnel.
During the first quarter of 1997, the Company continued the
implementation of its Key Client strategy. As a result, quarterly revenue from
IBM, the Company's largest customer, increased by $9.9 million from 1996 to
1997. Revenue from the Company's Key Clients, which includes revenue from IBM,
grew at a rate in excess of 20% during the first quarter of 1997 as compared to
the first quarter of 1996. As part of the strategy, the Company continued to
disengage from non-strategic customers, causing those not designated as Key
Clients to post a negative revenue growth rate during the quarter. The continued
implementation of CTG's Key Client strategy in the first quarter of 1997
resulted in negative revenue growth for non-Key Clients, positive growth for Key
Clients, and higher overall profitability.
In the third quarter of 1995, CTG was awarded a two-year contract as
one of IBM's nine national technical service providers for the United States.
This contract expires in July 1997, and the Company anticipates renewal of the
contract for two additional years. IBM continues to be the Company's largest
customer, accounting for $33.9 million or 35.7 percent of first quarter 1997
total revenue as compared to $24 million or 26.7 percent of first quarter 1996
revenue. The Company expects to continue to derive a significant portion of its
revenue from IBM throughout the remainder of 1997. While a significant decline
in revenue from IBM would have a material adverse effect on the Company's
revenues and profits, the Company believes a simultaneous loss of all IBM
business is unlikely to occur due to the diversity of the projects performed for
IBM and the number of locations and divisions involved.
6
<PAGE> 7
Direct costs, defined as costs for billable staff, were $68.2 million
or 71.9 percent of revenue in the first quarter of 1997 as compared to $65.2
million or 72.4 percent of first quarter 1996 revenue. The decrease in direct
costs as a percentage of revenue in 1997 as compared to 1996 is primarily due to
a trend toward higher value added services and an increase in billing rates.
Selling, general and administrative expenses were $20.9 million or 22
percent of revenue in 1997 as compared to $21.1 million or 23.5 percent of
revenue in 1996. The decrease from 1996 to 1997 is primarily due to a
concentrated effort to reduce overhead costs as a percentage of revenue.
Operating income was $5.8 million or 6.1 percent of revenue in 1997
compared to $3.7 million or 4.1 percent of revenue in 1996. The increase is
primarily due to the factors discussed above. Operating income from North
American operations increased $1.5 million or 47.1 percent from 1996 to 1997.
European operations recorded operating income of $1 million in 1997 as compared
to $0.4 million in 1996. The European improvement in profitability is primarily
due to the 22.9 percent increase in revenue discussed above and an increase in
higher value-added services performed in 1997.
Interest and other income increased $0.2 million to $0.5 in 1997 from
$0.3 million in 1996. The increase was a result of an increase in cash and
temporary cash investments during the first quarter of 1997 as compared to the
first quarter of 1996.
Income before income taxes increased by $2.4 million from $3.7 million
or 4.1 percent of revenue in 1996 to $6.1 million or 6.4 percent of revenue in
1997. The provision for income taxes was 40 percent in both 1997 and 1996.
Net income for the first quarter of 1997 was $3.7 million or $0.41 per
share, compared to $2.2 million or $0.25 per share in 1996. Earnings per share
was calculated using 9 million and 8.7 million equivalent shares outstanding in
1997 and 1996, respectively. The increase in equivalent shares outstanding is
primarily due to the dilutive effect of outstanding stock options on the
earnings per share calculation and shares issued under the Employee Stock
Purchase Plan, offset by stock purchased by the Stock Employee Compensation
Trust.
Financial Condition
- -------------------
Cash used by operations was $0.8 million for the quarter. Net income
totaled $3.7 million, and non-cash adjustments for depreciation and amortization
expense and deferred compensation expense totaled $1.5 million. Accounts
receivable increased $14.5 million as compared to December 31, 1996, as a result
of increases in revenue and slower accounts receivable turnover in the first
quarter of 1997. Prepaid assets increased $0.6 million due to the prepayment of
items that will be expensed throughout the remainder of 1997. The $2.1 million
increase in taxes payable is primarily attributable to an increase in net
income. Accounts payable increased $3.5 million due to the timing of certain
payments. Accrued compensation and other current liabilities increased $3.9
million due to the timing of the company's U.S. biweekly payroll.
Net property and equipment decreased $0.1 million. Additions to
property and equipment were $1.1 million offset by depreciation of $1.2 million.
The Company has no material commitments for capital expenditures at March 28,
1997. Net acquired intangibles decreased $0.4 million, caused by amortization of
$0.1 million and $0.3 million in translation adjustments.
7
<PAGE> 8
Financing activities used $6.2 million of cash in the first quarter of
1997. The Company's Stock Employee Compensation Trust purchased 176,800 shares
of stock for $6.6 million. During the first quarter of 1997, the Company
received $0.2 million from employees for 5,000 shares of stock purchased under
the Employee Stock Purchase Plan. The Company also received $0.2 million for the
exercise of stock options. At March 28, 1997, the Company's current ratio is 2.2
to 1.
The Company has approximately $53.5 million in aggregate lines of
credit, which are renewable annually at various times throughout the year.
On October 26, 1994, the Company authorized the repurchase of one
million shares and on July 21, 1995 authorized the repurchase of another 0.7
million shares of its Common Stock. At March 28, 1997, approximately 0.8 million
shares have been repurchased under the authorizations, leaving 0.9 million
shares authorized for future purchases.
The Company believes existing internally available funds, cash
generated by operations, and borrowings will be sufficient to meet foreseeable
working capital, stock repurchase and capital expenditure requirements and to
allow for future internal growth and expansion.
8
<PAGE> 9
PART II. OTHER INFORMATION
--------------------------
Item 4. Submission of Matters To A Vote of Security Holders
---------------------------------------------------
The annual meeting of shareholders was held on April 30, 1997
at the Company's Headquarters, 800 Delaware Avenue, Buffalo,
New York at 10:00 a.m.
The Company submitted for shareholder approval the election of
Class I directors and two amendments of the Company's
Certificate of Incorporation.
Election of Directors
- Three Class I directors (Gale S. Fitzgerald, Paul W. Joy
and Randolph A. Marks) were elected to hold office for two
years until the 1999 annual meeting of shareholders and
until their successors are elected and qualified. The
results of the voting are as follows:
<TABLE>
<CAPTION>
Total Vote Total Vote
For Against
---------- ----------
<S> <C> <C>
Gale S. Fitzgerald 8,666,910 170,268
Paul W. Joy 8,665,480 171,698
Randolph A. Marks 8,667,121 170,057
</TABLE>
- The Class II directors of the Company, whose terms of
office extend until the 1998 annual meeting of
shareholders and until their successors are elected and
qualified, are George B. Beitzel, Richard L. Crandall
and Barbara Z. Shattuck.
Amendments to the Company's Certificate of Incorporation
- An amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares of the
Company's Common Stock from 25,000,000 to 150,000,000
shares. The total vote for the amendment was 6,517,025,
the total vote against was 2,300,479, and abstaining votes
totaled 19,674.
- An amendment to the Company's Certificate of Incorporation
to remove the authorization for 2,300,000 shares of a
series of Preferred Stock designated as Series B Preferred
Stock. The total vote for the amendment was 7,342,245, the
total vote against was 730,263, broker non-votes totaled
731,990, and abstaining votes totaled 32,680.
- The total number of the Company's common shares issued and
outstanding and entitled to vote at the annual meeting of
shareholders was 10,341,804. The total number of shares
voted at the annual meeting was 8,837,178 or 85.5 percent
of the total issued and outstanding.
9
<PAGE> 10
Item 6. Exhibits And Reports On Form 8-K
--------------------------------
<TABLE>
<CAPTION>
Exhibit Description Page
------- ----------- ----
<S> <C> <C>
10. Executive Supplemental Benefit Plan 1997 Restatement 10
11. Statement re: computation of earnings per share 40
27. Financial Data Schedule 42
</TABLE>
* * * * * * *
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMPUTER TASK GROUP, INCORPORATED
By: /s/ James R. Boldt
--------------------------
James R. Boldt
Principal Accounting and
Financial Officer
Title: Vice President - Finance
Date: May 9, 1997
10
<PAGE> 1
EXHIBIT 10
----------
COMPUTER TASK GROUP, INCORPORATED
---------------------------------
Executive Supplemental Benefit Plan 1997 Restatement
11
<PAGE> 2
COMPUTER TASK GROUP, INCORPORATED
EXECUTIVE SUPPLEMENTAL BENEFIT PLAN
1997 RESTATEMENT
12
<PAGE> 3
COMPUTER TASK GROUP, INCORPORATED
EXECUTIVE SUPPLEMENTAL BENEFIT PLAN
TABLE OF CONTENTS
PAGE
----
ARTICLE I TITLE AND EFFECTIVE DATE............................. 15
ARTICLE II DEFINITIONS.......................................... 16
ARTICLE III ELIGIBILITY AND MEMBERSHIP........................... 20
ARTICLE IV PRE-RETIREMENT DEATH BENEFIT......................... 21
ARTICLE V VOLUNTARY TERMINATION BENEFIT........................ 22
ARTICLE VI NORMAL RETIREMENT BENEFIT............................ 23
ARTICLE VII POST-RETIREMENT DEATH BENEFIT........................ 24
ARTICLE VIII DISABILITY BENEFIT................................... 25
ARTICLE IX CONDITIONS PRECEDENT TO BENEFITS..................... 26
ARTICLE X MODIFICATION OF PAYOUT PERIOD........................ 27
ARTICLE XI BENEFICIARY.......................................... 29
ARTICLE XII NATURE OF COMPANY'S OBLIGATION....................... 30
ARTICLE XIII EMPLOYEE RIGHT TO ASSETS............................. 31
ARTICLE XIV EMPLOYMENT RIGHTS.................................... 32
ARTICLE XV TERMINATION, AMENDMENT, MODIFICATION OR
SUPPLEMENTATION OF PLAN.............................. 33
ARTICLE XVI RESTRICTIONS ON ALIENATION OF BENEFITS............... 34
ARTICLE XVII ADMINISTRATION OF THE PLAN........................... 35
ARTICLE XVIII MISCELLANEOUS........................................ 37
ARTICLE XIX CASHOUT OF BENEFITS.................................. 38
13
<PAGE> 4
COMPUTER TASK GROUP, INCORPORATED
EXECUTIVE SUPPLEMENTAL BENEFIT PLAN
PURPOSE
The purpose of the Executive Supplemental Benefit Plan of
Computer Task Group, Incorporated is to provide specified benefits to a select
group of management and highly-compensated Employees who contribute materially
to the continued growth, development and future business success of the Company.
14
<PAGE> 5
I
TITLE AND EFFECTIVE DATE
------------------------
TITLE. This Plan shall be known as the Computer Task
Group, Incorporated Executive Supplemental Benefit Plan, (hereinafter referred
as the "Plan").
EFFECTIVE DATE. The effective date of this Plan was
March 3, 1984. The effective date of this Plan as restated by this instrument is
January 31, 1997.
PLAN YEAR. The Plan Year of this Plan is the calendar
year, except that the first Plan Year began March 3, 1984 and ended December 31,
1984.
15
<PAGE> 6
II
DEFINITIONS
-----------
For purposes hereof, unless otherwise clearly apparent from
the context, the following phrases or terms shall have the indicated meanings:
"BASIC COMPENSATION" shall mean the annual base
salary of the Employee, exclusive of bonus, incentive payments or other
extraordinary compensation, at the date of death, Total and Permanent
Disability, Retirement or Voluntary Termination, divided by twelve (12).
"BENEFICIARY" shall mean the person or entity
entitled to receive any benefits under this Plan, as determined under Article
XI.
"COMMITTEE" shall mean the Compensation Committee of
the Board, which Committee shall manage and administer the Plan in accordance
with the provisions of Article XVII hereof.
"COMPANY" shall mean Computer Task Group,
Incorporated.
"PRE-RETIREMENT DEATH BENEFIT" shall mean a monthly
benefit equal to 50% of a Member's Basic Compensation. This benefit shall be
paid for a period of 180 months.
"DISABILITY BENEFIT" shall mean a monthly benefit
equal to 50% of a Member's Basic Compensation, reduced by disability benefits
paid under the Company-provided portion of the Company's basic and supplemental
disability plans.
"EMPLOYEE" shall mean any person who is in the
regular full-time employment of the Company, as determined by the personnel
rules and practices of the Company.
"MEMBER" shall mean an Employee who is selected and
elects to participate in the Plan as provided in Article III hereof.
"PLAN" shall mean the Computer Task Group,
Incorporated Executive Supplemental Benefit Plan.
16
<PAGE> 7
"PLAN PARTICIPATION AGREEMENT" shall mean the form of written
acceptance which is executed by an Employee selected to become a Member as a
condition to membership in the Plan.
"NORMAL RETIREMENT AGE" shall mean the later of (a) the
completion of five years of service from the date the Employee becomes a Member
of the Plan, or, (b) (i) in the case of a Member whose benefits become
nonforfeitable under Section 2.13 prior to December 1, 1994 and who does not
participate in any plan that is a successor to this Plan, age 60, or, (ii) in
the case of any other Member, age 65.
"RETIREMENT BENEFIT PERCENTAGE" shall mean that portion of the
Basic Compensation expressed in the form of a percentage, that a Member is
entitled to receive at Normal Retirement. The percentage shall be based upon the
yearly percentage credits earned for past and future services indicated in each
Member's Plan Participation Agreement. A Member shall not earn credits for
services during the period the Member is Totally and Permanently Disabled. The
maximum retirement benefit for any one Member shall not exceed 50% of Basic
Compensation.
"LEVEL CLASSIFICATION" shall mean the classifications
indicated by the following schedule designating the percentage credits earned by
a Member for each year of Prior Service or Future Service and their
forfeitability. The Level Classification assignments shall be determined on an
individual basis by the Committee and are specified in Exhibit 1.
17
<PAGE> 8
<TABLE>
<CAPTION>
Prior Future
Level Service Service Forfeitability
========= ==================== ==================== ====================================================================
<S> <C> <C> <C>
I 3%/yr. 3%/yr. All retirement benefits shall be nonforfeitable at the later of
the inception of the Plan, or the date an Employee becomes a
Member of the Plan.
II 2-1/4%/yr. 3%/yr. All retirement benefits representing prior service shall be
nonforfeitable at the later of the inception of the Plan or the
date an Employee becomes a Member of the Plan. Benefits
attributable to future service become nonforfeitable after five
years of service from the date an Employee becomes a Member of the
Plan.
III 1%/yr. 2-1/2%/yr. All retirement benefits, whether based upon past service or
service rendered after admission to the Plan, shall become
nonforfeitable after five years of service from the date an
Employee becomes a Member of the Plan, or if earlier, the date the
Member is Totally and Permanently Disabled. Notwithstanding the
preceding, all retirement benefits of any Member who is actively
employed by the Company on December 1, 1994 shall become
nonforfeitable on December 1, 1994 if the Member has at least
three years of service on such date.
</TABLE>
Notwithstanding the preceding, all benefits in the Plan shall be frozen as
of December 1, 1994; that is, no benefits that have not accrued as of close
of business on November 30, 1994 shall accrue on or after that date and any
compensation taken into account for any purpose under this Plan shall not
be increased after November 30, 1994.
"NORMAL RETIREMENT" shall mean severance from
employment with the Company at or after attaining Normal Retirement Age,
or, in the case of a Member who is receiving Disability Benefits
immediately prior to Normal Retirement Age, Normal Retirement Age.
"NORMAL RETIREMENT BENEFIT" shall mean a monthly
benefit beginning at Normal Retirement and continuing for 180 months or the
life of the Member, whichever is the greater. The monthly benefit is an
amount calculated by multiplying the Retirement Benefit Percentage times
the Member's Basic Compensation at the Member's date of retirement and is
not offset by benefits in the Company's qualified thrift plan or Section
401(k) plan, nor by a Member's primary Social Security benefits. However,
in the event a defined benefit pension plan is implemented by the Company,
the monthly benefits payable under this Plan to those Members who are
eligible for benefits under a defined benefit pension plan shall be reduced
by the Member's monthly benefits under such pension plan.
"BOARD" shall mean the Company's Board of Directors.
"TOTAL AND PERMANENT DISABILITY" or "TOTALLY AND
PERMANENTLY DISABLED" shall mean a physical or mental condition arising
after the Effective Date that prevents the Member from engaging in any
gainful occupation in which the Member might reasonably be expected to
engage, with due regard for the Member's education, training, experience,
and prior economic status. The determination shall be made on medical
evidence by a licensed physician assigned by the Committee. Total and
Permanent Disability shall exclude disabilities arising from: (a)
intentionally self-inflicted
18
<PAGE> 9
injury or intentionally self-induced sickness, (b) a proven unlawful act or
enterprise on the part of the Member, or (c) military service where the
Member is eligible to receive a government military disability pension. In
all cases, the Committee shall make the final determination whether a
Member is Totally and Permanently Disabled for purposes of this Plan.
"PRIOR SERVICE" shall mean the actual years and
fractions thereof (rounded up to the nearest year) for which the Member is
employed by the Company prior to becoming a Member.
"FUTURE SERVICE" shall mean the number of years
(rounded up to the nearest year) an Employee is a Member, beginning with
the date on which an Employee becomes a Member and ending no later than the
Member's Normal Retirement Age.
"POST-RETIREMENT DEATH BENEFIT" shall mean that
benefit payable to a Member's Beneficiary if the Member dies prior to
separation from service with the Company but after Normal Retirement Age,
or if the Member dies after Normal Retirement and the Member has not
received any or all of the Retirement Benefit payments provided for under
this Plan.
"VOLUNTARY TERMINATION" shall mean severance from
employment with the Company before attaining the Normal Retirement Age for
reasons other than cause, as defined in Section 9.3.
19
<PAGE> 10
III
ELIGIBILITY AND MEMBERSHIP
--------------------------
To be eligible for membership in the Plan, an
Employee must be recommended by the Chairman of the Board and the Chief
Executive Officer, and approved by the Committee. The Committee, in its sole
discretion, shall determine eligibility for membership in accordance with the
purposes of the Plan.
An Employee, after having been approved for
membership by the Committee, shall, as a condition to membership, complete and
return to the Committee a duly-executed Plan Participation Agreement.
20
<PAGE> 11
IV
PRE-RETIREMENT DEATH BENEFIT
----------------------------
Except as provided in Article VII, in the event a
Member dies before Normal Retirement while employed by the Company, the Company
will pay or cause to be paid a Pre-retirement Death Benefit to such Member's
Beneficiary, commencing within 60 days following the date of the death of the
Member.
If a Member is receiving a Disability Benefit at the
date of death, the Member's Disability Benefit shall cease, the Member shall be
considered employed by the Company at death for purposes of Section 4.1, and the
Beneficiary shall receive the Pre-retirement Death Benefit based on the Member's
Basic Compensation immediately preceding the date of disability. This monthly
benefit shall continue until a total of 180 payments (including both Disability
Benefits and Pre-retirement Death Benefits) have been made.
Notwithstanding the foregoing, if a Member dies as a
result of suicide during the first two years of the Member's membership in the
Plan, the Member and the Beneficiary will forfeit all interest in the Plan.
Any payments of the Pre-retirement Death Benefit
shall be made in the form and manner such payments would have been paid to the
Member had the Member survived.
Notwithstanding the foregoing, a Pre-retirement
Death Benefit payable to a Member's Beneficiary under this Article shall be
subject to the cashout provisions of Article XIX.
21
<PAGE> 12
V
VOLUNTARY TERMINATION BENEFIT
-----------------------------
Subject to the forfeitability rules of Article IX
and Section 2.13, for a Member whose benefits first become nonforfeitable under
Section 2.13 prior to December 1, 1994, and who does not participate in any plan
that is a successor to this Plan, if the Member separates from service before
Normal Retirement Age, the Company will pay or cause to be paid to the Member
the Member's Normal Retirement Benefit, commencing within 60 days after the
Member's attainment of age 60.
Subject to the forfeitability rules of Article IX
and Section 2.13, for a Member whose benefits first become nonforfeitable under
Section 2.13 after November 30, 1994 or a Member who participates in any plan
that is a successor to this Plan, if the Member separates from service before
age 65, the Company will pay or cause to be paid to the Member the Member's
Normal Retirement Benefit, commencing within 60 days after the Member's
attainment of age 65.
Notwithstanding Sections 5.1 and 5.2, benefits
accrued under the Plan for a Member who separates from service and is entitled
to benefit payments under this Article shall be subject to the cashout
provisions of Article XIX.
22
<PAGE> 13
VI
NORMAL RETIREMENT BENEFIT
-------------------------
Subject to the forfeitability rules of Article IX
and Section 2.13, the Company will pay or cause to be paid to the Member a
Normal Retirement Benefit, commencing within 60 days after the date of the
Member's separation from service at or after Normal Retirement Age. This benefit
will not be increased as a result of continued employment beyond Normal
Retirement Age.
Notwithstanding Section 6.1, a Normal Retirement
Benefit payable under this Article to a Member who is not presently in the
employ of the Company shall be subject to the cashout provisions of Article XIX.
23
<PAGE> 14
VII
POST-RETIREMENT DEATH BENEFIT
-----------------------------
If a Member shall die after the commencement of
Normal Retirement Benefit payments, but before 180 payments have been made, the
Normal Retirement Benefit payments then remaining unpaid to a Member shall
continue to be paid to the Member's Beneficiary as a Post-retirement Death
Benefit in the form and manner such payments would have continued to be paid to
the Member.
If a Member shall die prior to separation from
service with the Company but after attaining Normal Retirement Age, 180
Retirement Benefit payments shall be paid to a Member's Beneficiary as a
Post-retirement Death Benefit in the form and manner such payments would have
been paid to the Member. The benefit shall commence within 60 days following the
date of death of such Member and continue for 180 months.
If a Member shall die under the circumstances set
forth in Sections 7.1 or 7.2 above, a Member's Beneficiary shall not receive a
Pre-retirement Death Benefit as provided for in Article IV.
Notwithstanding the foregoing, a post-retirement
Death Benefit payable to a Member's Beneficiary under this Article shall be
subject to the cashout provisions of Article XIX.
24
<PAGE> 15
VIII
DISABILITY BENEFIT
------------------
If a Member becomes Totally and Permanently Disabled
while employed by the Company and before Normal Retirement, the Company shall
pay, or cause to be paid, a Disability Benefit. This benefit shall commence on
the later of (a) the date immediately following the expiration of the Member's
Company-provided short-term disability benefit or (b) within 60 days following
the date upon which the Committee determines a Member to be Totally and
Permanently Disabled.
The Disability Benefit shall be paid until the
Member's Normal Retirement Age or, if earlier, until the Total and Permanent
Disability shall cease to exist. If Total and Permanent Disability continues to
the Member's Normal Retirement Age, a Normal Retirement Benefit shall commence
as of the first day of the month following the month in which the Member attains
Normal Retirement Age. This monthly benefit shall continue until a total of 180
payments (including both Disability Benefits and Normal Retirement Benefits)
have been made, or for the life of the Member, if greater.
If a Member is not an Employee and becomes Totally
and Permanently Disabled, there shall be no Disability Benefit payable hereunder
to any person.
Notwithstanding the foregoing, a Disability Benefit
payable to a Member under this Article shall be subject to the cashout
provisions of Article XIX.
25
<PAGE> 16
IX
CONDITIONS PRECEDENT TO BENEFITS
--------------------------------
A Member's right to a Normal Retirement Benefit
shall be forfeitable in accordance with the Level Classification assigned to the
Member by the Committee. All forfeitable benefits will be forfeited upon Normal
Retirement, Voluntary Termination or termination of employment for cause or for
other reasons, as provided in this Article IX.
A Member or Beneficiary shall not be entitled to any
duplication of benefits under this Plan under any circumstances.
Notwithstanding any other provisions of the Plan, a
Member shall forfeit all benefits from the Plan if the Committee determines that
the Member's employment with the Company is terminated for cause. Cause is
defined as:
Embezzlement from the Company
Theft from the Company
Defrauding the Company
Drug addiction
Habitual intoxication
Use or disclosure of Company or client confidential or
proprietary information
Engaging in activities or businesses which are substantially
in competition with the Company
Any other action, activity or course of conduct which is
substantially detrimental to the Company's business
or business reputation
9. Violation of the provision of the terms of any
nondisclosure and nonsolicitation, noncompetition, or
other contractual agreement between the Member and
the Company.
Notwithstanding any other provision of the Plan, a
Member shall forfeit all future benefits under the Plan if the Committee
determines the Member to be engaged in any of the following activities:
Use or disclosure of Company or client confidential or
proprietary information
Engaging in activities or businesses which are substantially
in competition with the Company
Any other action, activity or course of conduct which is
substantially detrimental to the Company's business
or business reputation
4. Violation of the provision of the terms of any
nondisclosure and nonsolicitation, noncompetition, or
other contractual agreement between the Member and
the Company.
26
<PAGE> 17
X
MODIFICATION OF PAYOUT PERIOD
-----------------------------
The Committee may shorten the time period over which
any benefit provided for under this Plan is to be paid. However, any
modification of the time period over which a benefit is to be paid must result
in a benefit which is the actuarial equivalent of that benefit when paid over
the time periods specifically detailed in the benefit provisions of this Plan.
(a) Upon a Change of Control, as defined in Section
10.3, the benefit of a Member who is actively employed by the Company
immediately prior to the Change of Control shall be increased by treating the
Member as though he or she had earned the maximum Prior Service and Future
Service credits under the Plan at his or her level, taking into account Basic
Compensation immediately prior to the Change of Control. The benefit of a member
who is actively employed by the Company immediately prior to the Change of
Control shall be paid in cash on or immediately following the Change of Control
in a single lump sum, actuarially equivalent to the benefit otherwise payable on
the Change of Control. Such lump sum shall be determined based on (i) an
interest rate equal to the lesser of (A) 5% or (B) the rate that would be used
by the Pension Benefit Guaranty Corporation for purposes of valuing a lump sum
distribution on a plan termination on the January 1 of the calendar year in
which the single lump sum is paid and (ii) the mortality assumptions of the
Unisex Pension 1984 Mortality Table.
(b) After a Change of Control, in the event any
Member, whether active or inactive, and the Company shall disagree as to his,
her or its respective rights and obligations under this Plan, and the Member is
successful in establishing, privately or otherwise, that his or her position is
substantially correct, or that the Company's position is substantially wrong or
unreasonable, or in the event that the disagreement is resolved by settlement,
the Company shall pay all costs and expenses, including counsel fees, which the
Member may incur in connection therewith. The Company shall not delay or reduce
the amount of any payment provided for hereunder or set off or counterclaim
against any such amount for any reason whatever; it is the intention of the
Company and the Member that the amounts payable to the Member hereunder shall
continue to be paid in all events in the manner and at the times herein
provided. All payments made by the Company hereunder shall be final and the
Company shall not seek to recover all or any part of any such payments for any
reason whatsoever.
A "Change of Control" shall be deemed to have
occurred if:
(i) any Person, which shall mean a "person" as such term is
used in Sections 13(d) and 24(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any company owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
30% or more of the combined voting power of the Company's then outstanding
voting securities;
(ii) during any period of 24 consecutive months, individuals
who at the beginning of such period constitute the Board, and any new director
whose election by the Board, or whose nomination for election by the Company's
stockholders, was approved by a vote of at least two-thirds (2/3) of the
directors (other than in connection with a contested election) before the
beginning of the period cease, for any reason, to constitute at least a majority
thereof;
(iii) the stockholders of the Company approve (1) a plan of
complete liquidation of the Company or (2) the sale or disposition by the
Company of all or substantially all of the Company's assets unless the acquirer
of the assets or its directors shall meet the conditions for a merger or
consolidation in subparagraphs (iv)(a) or (iv)(b); or
27
<PAGE> 18
(iv) the stockholders of the Company approve a merger or
consolidation of the Company with any other company other than:
(a) such a merger or consolidation which would result
in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than 70% of the
combined voting power of the Company's or such surviving
entity's outstanding voting securities immediately after such
merger of consolidation; or
(b) such a merger or consolidation which would result
in the directors of the Company who were directors immediately
prior thereto continuing to constitute more than 50% of the
directors of the surviving entity immediately after such
merger or consolidation.
In this paragraph (iv), "surviving entity" shall mean only an entity in which
all of the Company's stockholders immediately before such merger or
consolidation become stockholders by the terms of such merger or consolidation,
and the phrase "directors of the Company who were directors immediately prior
thereto" shall include only individuals who were directors of the Company at the
beginning of the 24 consecutive month period preceding the date of such merger
or consolidation, or who were new directors (other than any director nominated
in connection with a contested election or designated by a Person who has
entered into an agreement with the Company to effect a transaction described in
paragraph (i), (iii)(2), (iv)(a) or (iv)(b) of this Section) whose election by
the Board, or whose nomination for election by the Company's stockholders, was
approved by a vote of at least two-thirds (2/3) of the directors before the
beginning of such period.
Except as otherwise provided in Section 10.2, for
purposes of determining actuarial equivalents, factors published by the Pension
Benefit Guaranty Corporation for determining sufficiency of defined benefit
plans in effect on the date of such modification shall be used.
28
<PAGE> 19
XI
BENEFICIARY
-----------
A Member may designate the beneficiary or
beneficiaries ("Beneficiary") for the death benefits provided under this Plan.
Such designation may be changed from time to time. All designations shall be
filed with the Company on forms provided by it.
In the absence of an effective designation, death benefits
shall be payable under this Plan in the following order or priority:
to the Member's surviving spouse, as hereinafter
defined, if any; or
to the Member's estate.
For purposes of this Article XI, the term "surviving spouse"
shall mean the spouse to whom the Member was married throughout the one-year
period ending on the date of the Member's death.
If the Company has any doubt as to the proper
Beneficiary to receive payments hereunder, the Company shall have the right to
withhold such payments until the matter is finally adjudicated.
Any payment made by the Company, in good faith and in
accordance with this Plan, shall fully discharge the Company from all further
obligations with respect to that payment.
29
<PAGE> 20
XII
NATURE OF COMPANY'S OBLIGATION
------------------------------
The Company's obligations under this Plan shall be an
unfunded and unsecured promise to pay. The Company shall not be obligated under
any circumstances to fund its financial obligations under this Plan.
Any assets which the Company may acquire to help
cover its financial liabilities are and remain general assets of the Company
subject to the claims of its creditors. The Company does not give, and the Plan
does not give, any beneficial ownership interest in any asset of the Company to
a Member or Beneficiary. All rights of ownership in any assets are and remain in
the Company.
The Company's liability for payment of benefits shall
be determined only under the provisions of this Plan, as they may be amended
from time to time, and each Plan Participation Agreement entered into between
the Company and a Member.
30
<PAGE> 21
XIII
EMPLOYEE RIGHT TO ASSETS
------------------------
The rights of a Member, any Beneficiary of the
Member, or any other person claiming through the Member under this Plan, shall
be solely those of an unsecured general creditor of the Company. A Member, the
Beneficiary of the Member, or any other person claiming through the Member,
shall have the right to receive those payments specified under this Plan only
from the Company. The parties have no right to look to any specific or special
property separate from the Company to satisfy a claim for benefit payments.
A Member agrees that the Member, the Member's
Beneficiary, or any other person claiming through the Member shall have no
right, claim, security interest, or any beneficial ownership interest whatsoever
in any general asset that the Company may acquire or use to help support its
financial obligations under this Plan. Any general asset used or acquired by the
Company in connection with the liabilities it has assumed under this Plan shall
not be deemed to be held under any trust for the benefit of the Member or the
Member's Beneficiary. Nor shall any such general asset be considered security
for the performance of the obligations of the Company. Any such asset shall
remain a general, unpledged, and unrestricted asset of the Company.
A Member also understands and agrees that the
Member's participation in the acquisition of any general asset for the Company
shall not constitute a representation to the Member, the Member's Beneficiary,
or any person claiming through the Member that any of them has a special or
beneficial interest in any general asset.
31
<PAGE> 22
XIV
EMPLOYMENT RIGHTS
-----------------
Neither the Plan nor the Plan Participation
Agreement, either singly or collectively, obligate the Company in any way to
continue the employment of a Member with the Company or prohibit the Company
from terminating a Member's employment. Nor does this Plan or the Plan
Participation Agreement prohibit or restrict the right of a Member to terminate
employment with the Company. Termination of a Member's employment with the
Company, whether by action of the Company or by the Member, shall immediately
terminate the Member's future participation in the Plan. All further obligations
of either party shall be determined under the provisions of this Plan according
to the nature of the termination.
32
<PAGE> 23
XV
TERMINATION, AMENDMENT, MODIFICATION OR
---------------------------------------
SUPPLEMENTATION OF PLAN
-----------------------
The Committee retains the sole and unilateral right
to terminate, amend, modify or supplement this Plan, in whole or in part, at any
time. This right includes the right to make retroactive amendments. However, no
Company action under this right shall reduce or diminish the benefits of any
disabled, retired, or deceased Member or the Member's Beneficiary, or those
benefits which are nonforfeitable under the provisions of the Plan.
33
<PAGE> 24
XVI
RESTRICTIONS ON ALIENATION OF BENEFITS
--------------------------------------
No right or benefit under the Plan or a Plan
Participation Agreement shall be subject to anticipation, alienation, sale,
assignment, pledge, encumbrance or charge, and any attempt to anticipate,
alienate, sell, assign, pledge, encumber or charge the same shall be void. No
right or benefit hereunder shall in any manner be liable for or subject to the
debts, contracts, liabilities, or torts of the person entitled to such benefit.
If any Member or Beneficiary under the Plan should become bankrupt or attempt to
anticipate, alienate, sell, assign, pledge, encumber or charge any right to a
benefit under this Plan, then such right or benefit, in the discretion of the
Committee, shall cease. In these circumstances, the Committee may hold or apply
the benefit or any part thereof for the benefit of the Member or Beneficiary,
the Member's spouse, children, or other dependents, or any of them, in such
manner and in such portion as the Committee may deem proper.
34
<PAGE> 25
XVII
ADMINISTRATION OF THE PLAN
--------------------------
The named fiduciary of the Plan is the Company.
The general administration of this Plan, as well as
construction and interpretation thereof, shall be vested in the Committee, the
number and members of which shall be designated and appointed from time to time
by, and shall serve at the pleasure of the Board. Any such member of the
Committee may resign by notice in writing filed with the Secretary of the Board.
Vacancies shall be filled promptly by the Board.
The Board may designate one of the members of the
Committee as Chairman and may appoint a Secretary who need not be a member of
the Committee and may be a Member of the Plan. The Secretary shall keep minutes
of the Committee's proceedings and all data, records and documents relating to
the Committee's administration of the Plan. The Committee may appoint from its
number such subcommittees with such powers as the Committee shall determine and
may authorize one or more members of the Committee or any agent to execute or
deliver any instrument or make any payment on behalf of the Committee.
All resolutions or other actions taken by the
Committee shall be by vote of a majority of those present at a meeting at which
a majority of the members are present, or in writing by all the members at the
time in office if they act without a meeting.
Subject to the Plan, the Committee shall, from time
to time, establish rules, forms and procedures for the administration of the
Plan. Except as herein otherwise expressly provided, the Committee shall have
the exclusive right to interpret the Plan and to decide any and all matters
arising thereunder or in connection with the administration of the Plan, and it
shall endeavor to act, whether by general rules or by particular decisions, so
as not to discriminate in favor of or against any person. The decisions, actions
and records of the Committee shall be conclusive and binding upon the Company
and all persons having or claiming to have any right or interest in or under the
Plan.
The members of the Committee and the officers and
directors of the Company shall be entitled to rely on all certificates and
reports made by any duly appointed accountants, and on all opinions given by any
duly appointed legal counsel, which legal counsel may be counsel for the
Company.
No member of the Committee shall be liable for any
act or omission of any other member of the Committee, nor for any act or
omission on his own part. The Company shall indemnify and save harmless each
member of the Committee against any and all expenses and liabilities arising out
of his membership on the Committee. Expenses against which a member of the
Committee shall be indemnified hereunder shall include, without limitation, the
amount of any settlement or judgment, costs, counsel fees, and related charges
reasonably incurred in connection with a claim asserted, or a proceeding brought
or settlement thereof. The foregoing right of indemnification shall be in
addition to any other rights to which any such member on the Committee may be
entitled as a matter of law.
In addition to the powers specified above, the
Committee shall have the power to compute and certify under the Plan the amount
and kind of benefits from time to time payable to Members and their
Beneficiaries and to authorize all disbursements for such purposes.
To enable the Committee to perform its functions, the
Company shall supply full and timely information to the Committee on all matters
relating to the compensation of all Members,
35
<PAGE> 26
their retirement, death or other termination of employment, and such other
pertinent facts as the Committee may require.
36
<PAGE> 27
XVIII
MISCELLANEOUS
-------------
All notices, distributions and payments (to the
extent feasible), and other communications under this Agreement shall be in
writing and shall be deemed given when (a) delivered by hand, (b) transmitted by
telex or telecopier (provided that a copy is sent at about the same time as in
(c)), (c) received by the addressee, if sent by registered or certified mail,
return receipt requested, or by Express Mail, Federal Express, or other express
delivery service, to the addressee at the addresses, telex numbers or telecopier
numbers as a party may specify by notice given to the other party pursuant to
this provision. No communication shall be binding until received. If no address
shall have been furnished, the Company shall make distribution to the Member or
Beneficiary in care of the Company.
Any party may, from time to time, change the address
to which notices shall be mailed by giving written notice of such new address.
In making any payments to or for the benefit of any
minor or an incompetent Beneficiary or Member, the Committee, in its sole and
absolute discretion, may make a distribution to a legal or natural guardian or
other relative of a minor or court appointed committee of such incompetent. Or,
it may make a payment to any adult with whom the minor or incompetent
temporarily or permanently resides. The receipt by a guardian, committee,
relative or other person shall be a complete discharge to the Employer. Neither
the Committee nor the Company shall have any responsibility to see to the proper
application of any payments so made.
The Company may, in its sole discretion, permit the
Member to take a leave of absence for a period not to exceed one year. During
such leave, the Member will still be considered to be in the continuous
employment of this Company for purposes of benefit service credits under this
Plan.
The Plan shall be binding upon the Company and any
successor company through merger, acquisition or consolidation, and upon a
Member, the Member's Beneficiary, assigns, heirs, executors and administrators.
This Plan shall be governed by the laws of the State
of New York without regard to principles of conflicts of law.
Any controversy arising out of or relating to this
Agreement shall be adjudicated in a court of competent jurisdiction located in
the State of New York. A Member or Beneficiary hereby submits to the personal
jurisdiction of any court of competent jurisdiction located in the State of New
York
Any provision of this Plan prohibited by law shall be
ineffective to the extent of any such prohibition without invalidating the
remaining provisions hereof.
Titles to the Sections of this of this Plan are
included for convenience only and shall not control the meaning or
interpretation of any provision of this Plan.
Simultaneous Death. If the Member and the Member's
Beneficiary shall die in a common accident or disaster or under such
circumstances that it is difficult to determine who died first, then for all
purposes of this Plan such Beneficiary shall be treated as having predeceased
the Member.
37
<PAGE> 28
XIX
CASHOUT OF BENEFITS
-------------------
BENEFITS ELIGIBLE FOR CASHOUT. Benefits accrued under
the Plan with respect to a Member not presently in the employ of the Company, in
the sole discretion of the Committee, may be paid out to a Member or the
Member's Beneficiary on a lump sum distribution basis.
PRESENT VALUE. The determination of the lump sum
present value of a Member's or Beneficiary's remaining benefits under the Plan
shall be made by the Committee in its sole discretion, using for all purposes
interest rates and mortality factors as selected by the Committee in its sole
discretion. Such factors may include, but are not limited to, the factors used
by the accountants regularly employed by the Company to determine the balance
sheet entries for such benefits.
NO FURTHER BENEFITS. Upon receipt of the lump sum
cashout described in this Article, neither the Member nor his Beneficiary shall
have any further rights to benefits or obligations under this Plan.
WITHHOLDING. The Company may withhold from any
payment under the Plan any federal, state or local taxes required by laws to be
withheld with respect to the payment and any sum the Company may reasonably
estimate as necessary to cover any taxes for which the Company may be liable and
that may be assessed with regard to the payment.
38
<PAGE> 29
EXHIBIT 1
Level I: David Baer - Active
Randolph A. Marks - Inactive
Level II: David N. Campbell - Inactive
John P. Courtney - Inactive
Level III:
<TABLE>
<CAPTION>
Benefits Nonforfeitable Prior TO Benefits Nonforfeitable AFTER Participating in Successor
12/1/94 11/30/94 PLAN
- ------- -------- ----
<S> <C> <C>
ACTIVE: ACTIVE:
Joseph Makowski Gale Fitzgerald
INACTIVE: INACTIVE:
Clifford Baer Stephen Hoffman
David Ehlke James Joyce
Paul Fjelsted John Nale
Paul Hessinger
Samuel Horgan
Vincent Lamb
John Lozan
Craig Newbold
Philip Paul
Thomas Peca
Gerald Selzer
Richard Trautman
Maureen Waindle
</TABLE>
39
<PAGE> 1
EXHIBIT 11
----------
COMPUTER TASK GROUP, INCORPORATED
---------------------------------
Computation of fully diluted earnings per share under treasury stock
method set forth in Accounting Principles Board Opinion No. 15.
40
<PAGE> 2
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
UNDER TREASURY STOCK METHOD SET FORTH IN
ACCOUNTING PRINCIPLES BOARD OPINION NO. 15
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 28, MARCH 29,
1997 1996
------------ --------
<S> <C> <C>
Weighted-average number of shares outstanding during period 10,340 10,308
Add Common Stock equivalents -
Incremental shares under stock options plans 472 259
Weighted-average number of shares held
by Stock Employee Compensation Trust (1,838) (1,831)
-------- ---------
Number of shares on which fully diluted earnings per share is based 8,974 8,736
======== =========
Net income for the period $ 3,669 $ 2,213
Fully diluted earnings per share $ 0.41 $ 0.25
Primary earnings per share $ 0.41 $ 0.25
</TABLE>
41
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000023111
<NAME> COMPUTER TASK GROUP, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-28-1997
<CASH> 33,386,000
<SECURITIES> 0
<RECEIVABLES> 70,623,000
<ALLOWANCES> 966,000
<INVENTORY> 0
<CURRENT-ASSETS> 107,289,000
<PP&E> 39,709,000
<DEPRECIATION> 27,429,000
<TOTAL-ASSETS> 126,592,000
<CURRENT-LIABILITIES> 47,861,000
<BONDS> 0
<COMMON> 0
0
135,000
<OTHER-SE> 68,303,000
<TOTAL-LIABILITY-AND-EQUITY> 126,592,000
<SALES> 0
<TOTAL-REVENUES> 94,935,000
<CGS> 0
<TOTAL-COSTS> 68,235,000
<OTHER-EXPENSES> 20,876,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69,000
<INCOME-PRETAX> 6,116,000
<INCOME-TAX> 2,447,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,669,000
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
