<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 SEPTEMBER 25, 1998
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 September 25, 1998
------------------- ---------------------
Common stock, par value
$.01 per share 20,749,578
<PAGE> 2
PART I. FINANCIAL INFORMATION
-----------------------------
ITEM 1. FINANCIAL STATEMENTS
COMPUTER TASK GROUP, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED THREE QUARTERS ENDED
SEPTEMBER 25, SEPTEMBER 26, SEPTEMBER 25, SEPTEMBER 26,
1998 1997 1998 1997
-------- -------- -------- --------
(amounts in thousands, except per share data)
<S> <C> <C> <C> <C>
Revenue $116,174 $101,132 $343,503 $296,172
Direct costs 79,396 70,911 235,942 209,725
Selling, general and administrative expenses 26,491 22,749 79,070 65,808
-------- -------- -------- --------
Operating income 10,287 7,472 28,491 20,639
Interest and other income 298 649 798 1,597
Interest and other expense (52) (142) (263) (421)
-------- -------- -------- --------
Income before income taxes 10,533 7,979 29,026 21,815
Provision for income taxes 4,317 3,262 11,899 8,944
-------- -------- -------- --------
Net income $ 6,216 $ 4,717 $ 17,127 $ 12,871
======== ======== ======== ========
Net income per share:
Basic $ 0.38 $ 0.28 $ 1.06 $ 0.76
======== ======== ======== ========
Diluted $ 0.37 $ 0.26 $ 1.01 $ 0.73
======== ======== ======== ========
Weighted average shares outstanding:
Basic 16,248 16,880 16,184 16,842
Diluted 16,859 17,843 16,936 17,665
Cash dividend per share $ -- $ -- $ 0.05 $ 0.05
</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>
SEPTEMBER 25, DECEMBER 31,
1998 1997
---------- -----------
(Unaudited) (Audited)
(amounts in thousands)
<S> <C> <C>
ASSETS
- -------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and temporary cash investments $ 37,762 $ 25,033
Accounts receivable, net of allowance for doubtful
accounts of $958,000 and $951,000, respectively 84,819 60,176
Prepaids and other 2,664 2,420
Deferred income taxes 1,143 1,244
- -------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 126,388 88,873
Property and equipment, net of
accumulated depreciation and amortization 13,155 12,445
Acquired intangibles, net of accumulated amortization
of $5,847,000 and $6,124,000, respectively 2,949 3,280
Deferred income taxes 2,735 2,546
Other assets 675 597
- -------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 145,902 $ 107,741
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 12,178 $ 9,207
Accrued compensation 32,338 21,641
Income taxes payable 6,907 4,620
Advance billings on contracts 292 1,158
Other current liabilities 7,114 5,145
- -------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 58,829 41,771
Deferred compensation benefits 10,095 9,752
Other long-term liabilities 663 892
- -------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 69,587 52,415
Shareholders' Equity:
Common stock, par value $.01 per share, 150,000,000
shares authorized; 27,017,824 shares issued 270 270
Capital in excess of par value 182,539 216,028
Retained earnings 59,254 42,939
Less: Treasury stock of 6,268,246 and 6,267,289 shares, at cost (31,809) (31,773)
Stock Employee Compensation Trust of 4,453,620
and 4,693,948 shares, at fair value (129,712) (166,929)
Foreign currency adjustment (2,236) (3,206)
Minimum pension liability adjustment (1,915) (1,915)
Loans to related parties -- (54)
Unearned portion of restricted stock to related parties (76) (34)
- -------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 76,315 55,326
- -------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 145,902 $ 107,741
========== ===========
</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>
THREE QUARTERS ENDED
SEPT. 25, SEPT. 26,
1998 1997
--------- ----------
(amounts in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 17,127 $ 12,871
Adjustments:
Depreciation and amortization expense 3,630 3,904
Deferred compensation expense 343 398
Changes in assets and liabilities:
Increase in accounts receivable (23,671) (9,516)
Increase in prepaids and other (213) (359)
(Increase) decrease in deferred income taxes (88) 123
Increase in other assets (78) (133)
Increase in accounts payable 2,685 4,595
Increase in accrued compensation 10,637 5,855
Increase (decrease) in income taxes payable 2,295 (748)
Decrease in advance billings on contracts (866) (1,379)
Increase in other current liabilities 1,870 1,905
Decrease in other long-term liabilities (228) (237)
-------- --------
Net cash provided by operating activities 13,443 17,279
- ------------------------------------------------------------------------------------------------------------------
Cash flows used in investing activities -
additions to property and equipment (3,806) (2,979)
- ------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from Employee Stock Purchase Plan 1,095 764
Purchase of stock for treasury (36) (118)
Purchase of stock by Stock Employee Compensation Trust (2,455) (10,198)
Proceeds from other stock plans, inclusive of related tax benefit 5,100 3,763
Dividends paid (812) (837)
-------- --------
Net cash provided by (used in) financing activities 2,892 (6,626)
- ------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and temporary cash investments 200 47
-------- --------
Net increase in cash and temporary cash investments 12,729 7,721
Cash and temporary cash investments at beginning of year 25,033 41,516
- ------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at end of quarter $ 37,762 $ 49,237
======== ========
</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 (CTG or 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.
3. Comprehensive Income
During the first quarter of 1998, the Company adopted the Provisions of
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income," as they apply to interim reporting periods. For the first three
quarters of 1998, comprehensive income totaled $18,097,000, including $970,000
related to foreign currency adjustments.
5
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FOR THE QUARTER AND THREE QUARTERS ENDED SEPTEMBER 25, 1998
Forward-Looking Statements
- --------------------------
Statements included in this Management's Discussion and Analysis of
Results of Operations and Financial Condition 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 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 needs of current and prospective customers for the Company's services,
the availability of qualified professional staff, and price and wage inflation.
Results of Operations
- ---------------------
CTG recorded third quarter 1998 revenue of $116.2 million, an increase
of 14.9 percent when compared to third quarter 1997 revenue of $101.1 million.
CTG recorded year-to-date 1998 revenue of $343.5 million, an increase of 16
percent when compared to year-to-date 1997 revenue of $296.2 million. In the
third quarter of 1998, as compared to 1997, North American revenue increased by
$7.5 million, or 8.3 percent, while revenue from European operations increased
by $7.6 million, or 70.2 percent. The year-to-date 1998 consolidated revenue
increase as compared to year-to-date 1997 is mainly due to the Company providing
higher value added services to its customers, billing rate adjustments and
additional billable personnel.
The 1997 to 1998 third quarter-to-quarter revenue growth rate was
positively impacted by the weakening of the U.S. dollar in Holland, Belgium, and
the United Kingdom. If there had been no change in the foreign currency exchange
rates from the third quarter of 1997 to the third quarter of 1998, total
consolidated revenues would have been $0.4 million less, resulting in a
quarter-to-quarter consolidated revenue growth rate of 14.5 percent. This $0.4
million reduction of revenue in Europe would have decreased the European revenue
growth rate to 66.8 percent.
6
<PAGE> 7
In December 1997, CTG renewed a contract with IBM for three additional
years as one of IBM's national technical service providers for the United
States. In the third quarter of 1998, IBM continued to be the Company's largest
customer accounting for $37.4 million or 32.2 percent of total revenue as
compared to $35.8 million or 35.4 percent of third quarter 1997 revenue. The
Company expects to continue to derive a significant portion of its revenue from
IBM throughout the remainder of 1998 and in future years. While a significant
decline in revenue from IBM would have a material adverse effect on CTG's
revenues and profits, the Company believes a simultaneous loss of all IBM
business is unlikely to occur due to the recent renewal of the national
contract, the number of other contracts presently in existence with IBM, the
diversity of the projects performed for IBM, and the number of locations and
divisions involved.
Direct costs, defined as costs for billable staff, were $79.4 million
or 68.3 percent of revenue in the third quarter of 1998 as compared to $70.9
million or 70.1 percent of third quarter 1997 revenue. Direct costs were 68.7
percent of year-to-date 1998 revenue as compared to 70.8 percent of year-to-date
1997 revenue. The decrease in direct costs as a percentage of revenue in 1998 as
compared to 1997 is also primarily due to a trend toward higher value added
services and billing rate adjustments.
Selling, general and administrative (SG&A) expenses were $26.5 million
or 22.8 percent of revenue in the third quarter of 1998 as compared to $22.7
million or 22.5 percent of revenue in the third quarter of 1997. SG&A expenses
were 23 percent of year-to-date 1998 revenue, as compared to 22.2 percent of
year-to-date 1997 revenue. The increase as a percentage of revenue from 1997 to
1998 is primarily due to an investment in 1998 in sales and marketing,
recruiting, and training programs.
Operating income was $10.3 million or 8.9 percent of revenue in the
third quarter of 1998 as compared to $7.5 million or 7.4 percent of revenue in
the third quarter of 1997. Operating income was 8.3 percent of year-to-date 1998
revenue, as compared to 7 percent of year-to-date 1997 revenue. The increase is
primarily due to the factors discussed above. Operating income from North
American operations for the third quarter increased $1.7 million or 25.8 percent
from 1997 to 1998. European operations recorded operating income of $2 million
and $0.9 million in the third quarter of 1998 and 1997, respectively.
Interest and other income decreased $0.8 million from $1.6 million in
1997 to $0.8 million in 1998. The decrease was a result of the Company utilizing
a large portion of its available cash and temporary cash investment balances in
the fourth quarter of 1997 to purchase the Company's stock through the Stock
Employee Compensation Trust (SECT).
Income before income taxes increased by $2.5 million from $8 million or
7.9 percent of revenue in the third quarter of 1997 to $10.5 million or 9
percent of third quarter revenue in 1998, and by $7.2 million from $21.8 million
or 7.4 percent of year-to-date 1997 revenue to $29 million or 8.4 percent of
year-to-date 1998 revenue. The provision for income taxes was 41 percent in both
1998 and 1997.
Net income for the third quarter of 1998 was $6.2 million or $0.37 per
diluted share, compared to $4.7 million or $0.26 per diluted share in 1997. Net
income for the year-to-date 1998 period was $17.1 million or $1.01 per diluted
share, compared to $12.9 million or $0.73 per diluted share. Diluted earnings
per share for the third quarter was calculated using 16.9 million and 17.8
million weighted average shares outstanding in 1998 and 1997, respectively. The
decrease in weighted average shares outstanding is primarily due to the purchase
of the Company's stock in 1997 through the SECT, as mentioned above.
7
<PAGE> 8
In 1996, CTG conducted an assessment of its potential year 2000 issues
by examining all of its internal and third party applications, operating
systems, interfaces, and hardware (collectively referred to hereafter as
computer systems) and its non-information technology (IT) systems. During 1997,
the Company generated a complete inventory of its computer systems and non-IT
systems that may be impacted by year 2000 issues.
To address its year 2000 issues, CTG established a year 2000 committee,
a compliance program, and a budget. The committee meets regularly, and reviews
and updates, as necessary, the compliance program at each meeting. The Company's
year 2000 compliance program consists of six primary phases: assessment, systems
inventory, remediation, contingency planning, systems testing, and systems
evaluation and monitoring. As mentioned above, the systems inventory and
assessment phases were completed in 1996 and 1997, and progress has been made
with respect to the contingency planning and systems testing phases. CTG expects
all of its computer systems and non-IT systems to be ready for testing on or
before March 31, 1999, and that all of its mission critical computer systems and
non-IT systems will be year 2000 compliant prior to December 31, 1999. The
Company has determined that mission critical systems or vendors are those that
are vital to the operations of the Company. CTG estimates the total amount to be
spent in 1998 and 1999 to address year 2000 issues is less than $500,000.
CTG, as part of its year 2000 compliance program, has been, and
continues to be, in communication with vendors providing third-party computer
systems or services to the Company in order to receive assurance that these
computer systems and vendors will be year 2000 compliant on or before December
31, 1998. In the event the Company does not believe it will receive reasonable
assurance from its mission critical vendors as to year 2000 compliance by
December 31, 1998, CTG will seek to establish relationships with vendors that
are year 2000 compliant. With respect to purchases of upgrades of existing
computer systems, and new hardware and software computer systems, it is the
Company's practice to formally request and receive year 2000 certification from
the vendor prior to completion of the purchase. As part of CTG's compliance
program, the Company does not intend to make any changes to its hardware or
software for its mission critical computer systems subsequent to June 30, 1999,
and into the year 2000.
CTG operates in one segment of the computer industry; providing IT
consulting services to its clients. The services provided typically encompass
the IT business solution life cycle, including phases for planning, development,
and managing and maintaining the solution. A portion of the IT consulting
services the Company provides are assessment, planning, remediation, testing,
and contingency planning services for year 2000 compliance. CTG actively manages
the inherent risk in the services it provides to its clients through a thorough
contract review process, and by including contractual provisions in its
contracts that are designed to mitigate risk to the Company. Revenues generated
from year 2000 compliance services are less than 15% of CTG's consolidated
revenues for the three and nine months ended September 25, 1998. It is
anticipated that year 2000 compliance providers such as CTG will continue to
generate revenues from year 2000 compliance services until 2002 or 2003.
Accordingly, the Company does not anticipate an immediate significant decline in
revenues after January 1, 2000.
CTG believes that already completed and planned remediation of its
mission critical computer systems and non-IT systems will allow it to be year
2000 compliant as planned. There can be no guarantee, however, that the
Company's mission critical computer systems and non-IT systems, or those of
mission critical vendors upon which CTG relies, will be year 2000 compliant by
December 31, 1999. Additionally, there can be no guarantee that the Company's
contingency plans, or that of its mission critical vendors, will eliminate the
effects of any year 2000 non-compliance. The failure of CTG's mission critical
systems, non-IT systems, or those of its mission critical vendors, could effect
the operations of the Company and could have a materially adverse effect on the
Company's results of operations.
8
<PAGE> 9
Financial Condition
- -------------------
Cash provided by operations was $13.4 million for the first three
quarters of 1998. Net income totaled $17.1 million, and non-cash adjustments for
depreciation and amortization expense and deferred compensation expense totaled
$4 million. As compared to December 31, 1997, accounts receivable balances
increased $23.7 million as a result of an increase in revenue and slower
accounts receivable turnover. Prepaid and other asset balances increased $0.2
million due to the prepayment of items that will be expensed throughout the
remainder of 1998 and 1999. Accounts payable balances increased $2.7 million due
to the timing of certain payments. Accrued compensation and other current
liability balances increased $12.5 million due to the timing of the U.S.
biweekly payroll and an increase in the number of contractors utilized by the
company. The balance of income taxes payable increased $2.3 million due to an
increase in taxable income. Finally, the advance billings on contract balances
decreased $0.9 million due to the mix of contracts outstanding at September 25,
1998, as compared to December 31, 1997.
Net property and equipment increased $0.7 million. Additions to
property and equipment were $3.8 million offset by depreciation of $3.2 million
and $0.1 million in translation adjustments. The Company has no material
commitments for capital expenditures at September 25, 1998. Net acquired
intangibles decreased $0.3 million, caused by amortization of $0.4 million and
$0.1 in translation adjustments.
Financing activities provided $2.9 million of cash in the first three
quarters of 1998. The Company received $5.1 million for the exercise of stock
options, inclusive of the related tax benefit. The Company also received $1.1
million from employees for 31,600 shares of stock purchased under the Employee
Stock Purchase Plan. The Company's Stock Employee Compensation Trust purchased
80,000 shares of stock for $2.5 million, and the Company paid an annual dividend
of $812,000 to shareholders on a $0.05 per share basis. At September 25, 1998,
the Company's current ratio is 2.1 to 1.
The Company has approximately $53 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 two
million shares and on July 21, 1995 authorized the repurchase of another 1.4
million shares of its Common Stock. At September 25, 1998, approximately 2.5
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.
9
<PAGE> 10
PART II. OTHER INFORMATION
--------------------------
Item 6. Exhibits And Reports On Form 8-K
--------------------------------
<TABLE>
<CAPTION>
Exhibit Description Page
------- ----------- ----
<S> <C> <C> <C>
11. Statement re: computation of earnings per share 12
27. a.) Financial Data Schedule - September 25, 1998 13
b.) Financial Data Schedule - September 26, 1997 - RESTATED 14
</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: November 9, 1998
10
<PAGE> 1
EXHIBIT 11
----------
COMPUTER TASK GROUP, INCORPORATED
---------------------------------
Computation of diluted earnings per share under treasury stock method
set forth in Statement of Financial Accounting Standards No. 128, "Earnings Per
Share."
11
<PAGE> 2
COMPUTATION OF DILUTED EARNINGS PER SHARE
UNDER TREASURY STOCK METHOD SET FORTH IN
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 128,
"EARNINGS PER SHARE"
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDED THREE QUARTERS ENDED
SEPT. 25, SEPT. 26, SEPT. 25, SEPT. 26,
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Weighted-average number of shares
outstanding during period 16,248 16,881 16,184 16,842
Add Common Stock equivalents -
incremental shares under stock option plans 611 962 752 823
------- ------- ------- -------
Number of shares on which diluted
earnings per share is based 16,859 17,843 16,936 17,665
======= ======= ======= =======
Net income for the period $ 6,216 $ 4,717 $17,127 $12,871
======= ======= ======= =======
Diluted earnings per share $ 0.37 $ 0.26 $ 1.01 $ 0.73
======= ======= ======= =======
Basic earnings per share $ 0.38 $ 0.28 $ 1.06 $ 0.76
======= ======= ======= =======
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000023111
<NAME> COMPUTER TASK GROUP. INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-25-1998
<CASH> 37,762,000
<SECURITIES> 0
<RECEIVABLES> 85,777,000
<ALLOWANCES> 958,000
<INVENTORY> 0
<CURRENT-ASSETS> 126,388,000
<PP&E> 40,657,000
<DEPRECIATION> 27,502,000
<TOTAL-ASSETS> 145,902,000
<CURRENT-LIABILITIES> 58,829,000
<BONDS> 0
0
0
<COMMON> 270,000
<OTHER-SE> 76,045,000
<TOTAL-LIABILITY-AND-EQUITY> 145,902,000
<SALES> 0
<TOTAL-REVENUES> 343,503,000
<CGS> 0
<TOTAL-COSTS> 235,942,000
<OTHER-EXPENSES> 79,070,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65,000
<INCOME-PRETAX> 29,026,000
<INCOME-TAX> 11,899,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,127,000
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.01
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000023111
<NAME> COMPUTER TASK GROUP, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-26-1997
<CASH> 49,237,000
<SECURITIES> 0
<RECEIVABLES> 65,164,000
<ALLOWANCES> 953,000
<INVENTORY> 0
<CURRENT-ASSETS> 117,377,000
<PP&E> 40,873,000
<DEPRECIATION> 28,804,000
<TOTAL-ASSETS> 136,098,000
<CURRENT-LIABILITIES> 48,853,00
<BONDS> 0
0
0
<COMMON> 270,000
<OTHER-SE> 76,688,000
<TOTAL-LIABILITY-AND-EQUITY> 136,098,000
<SALES> 0
<TOTAL-REVENUES> 296,122,000
<CGS> 0
<TOTAL-COSTS> 209,725,000
<OTHER-EXPENSES> 65,808,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 262,000
<INCOME-PRETAX> 21,815,000
<INCOME-TAX> 8,944,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,871,000
<EPS-PRIMARY> 0.76
<EPS-DILUTED> 0.73
</TABLE>
