<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 26, 1999
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 26, 1999
------------------- -----------------
Common stock, par value
$.01 per share 20,876,063
<PAGE> 2
PART I. FINANCIAL INFORMATION
-----------------------------
ITEM 1. FINANCIAL STATEMENTS
COMPUTER TASK GROUP, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 26, MARCH 27,
1999 1998
------------ ------------
(amounts in thousands,
except per share data)
<S> <C> <C>
Revenue $ 116,618 $ 109,683
Direct costs 78,197 76,074
Selling, general and administrative expenses 30,405 25,220
------------ ------------
Operating income* 8,016 8,389
Interest and other income 432 256
Interest and other expense (252) (40)
------------ ------------
Income before income taxes* 8,196 8,605
Provision for income taxes 3,497 3,528
------------ ------------
Net income* $ 4,699 $ 5,077
============ ============
Net income per share:*
Basic $ 0.29 $ 0.32
============ ============
Diluted $ 0.28 $ 0.30
============ ============
Weighted average shares outstanding:
Basic 16,424 16,104
Diluted 16,827 16,994
</TABLE>
*Includes the expense of a non-recurring arbitration award which lowered
operating income and income before income taxes by approximately $2.5 million,
and net income and net income per share by approximately $1.5 million and
$.09, respectively.
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 26, DECEMBER 31,
1999 1998
-------------- --------------
(Unaudited) (Audited)
(amounts in thousands)
<S> <C> <C>
ASSETS
- ------------------------------------------------------------------------------------------------------
Current Assets:
Cash and temporary cash investments $ 10,367 $ 57,748
Accounts receivable, net of allowances and reserves 93,704 73,932
Prepaids and other 4,180 4,000
Deferred income taxes 2,051 1,654
- ------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 110,302 137,334
Property and equipment, net of
accumulated depreciation and amortization 14,828 13,146
Acquired intangibles, net of accumulated amortization
of $5,055,000 and $6,002,000, respectively 87,087 2,808
Deferred income taxes 2,681 2,801
Other assets 874 720
- ------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 215,772 $ 156,809
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 14,302 $ 14,265
Accrued compensation 31,288 29,258
Short-term borrowings 44,300 --
Income taxes payable 11,436 9,157
Advance billings on contracts 858 384
Other current liabilities 11,869 9,409
- ------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 114,053 62,473
Deferred compensation benefits 10,618 10,300
Other long-term liabilities 833 587
- ------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 125,504 73,360
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 109,388 106,010
Retained earnings 70,871 66,172
Less: Treasury stock of 6,141,761 and 6,269,668 shares, at cost (31,278) (31,850)
Stock Employee Compensation Trust of 4,369,290
and 4,422,500 shares, at cost (52,971) (52,463)
Unearned portion of restricted stock to related parties (63) (69)
Other comprehensive income:
Foreign currency adjustment (3,702) (2,374)
Minimum pension liability adjustment (2,247) (2,247)
- ------------------------------------------------------------------------------------------------------
Accumulated other comprehensive income (5,949) (4,621)
- ------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 90,268 83,449
- ------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 215,772 $ 156,809
============ ============
</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 26, MARCH 27,
1999 1998
------------ ------------
(amounts in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,699 $ 5,077
Adjustments:
Depreciation expense 1,063 981
Amortization expense 434 166
Deferred compensation expense 91 107
Changes in assets and liabilities,
net of assets acquired and liabilities assumed:
Increase in accounts receivable (11,022) (22,179)
Increase in prepaids and other (384) (1,154)
(Increase) decrease in deferred income taxes 6 (42)
(Increase) decrease in other assets 109 (235)
Increase (decrease) in accounts payable (1,230) 2,631
Increase (decrease) in accrued compensation (259) 3,157
Increase in income taxes payable 2,511 2,032
Increase (decrease) in advance billings on contracts 474 (470)
Increase in other current liabilities 819 1,445
Increase (decrease) in other long-term liabilities 6 (75)
------------ ------------
Net cash used in operating activities (2,683) (8,559)
- ---------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition (86,775) -
Additions to property and equipment (1,690) (1,678)
- ---------------------------------------------------------------------------------------------------------
Net cash used in investing activities (88,465) -
- ---------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Short-term borrowings, net 44,300 -
Proceeds from Employee Stock Purchase Plan 279 355
Purchase of stock for treasury (12) (22)
Purchase of stock by Stock Employee Compensation Trust (949) -
Proceeds from other stock plans, inclusive of related tax benefit 930 2,268
------------ ------------
Net cash provided by financing activities 44,548 2,601
- ---------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and temporary cash investments (781) 15
------------ ------------
Net decrease in cash and temporary cash investments (47,381) (7,621)
Cash and temporary cash investments at beginning of year 57,748 25,033
- ---------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at end of quarter $ 10,367 $ 17,412
============ ============
</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
consolidated 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
At March 26, 1999, accumulated other comprehensive income totaled
$5,949,000, including an adjustment of ($1,328,000) related to foreign currency
translation made in the first quarter of 1999.
5
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FOR THE QUARTER ENDED MARCH 26, 1999
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 in 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.
Results of Operations
- ---------------------
To aid in understanding the operating trends of the Company, the
following table is presented to set forth data as contained on the consolidated
statements of income, with the information calculated as a percentage of
consolidated revenues.
<TABLE>
<CAPTION>
Quarter ended: March 26, March 27,
(percentage of revenue) 1999 1998
---- ----
<S> <C> <C>
Revenue 100.0% 100.0%
Direct costs 67.1% 69.4%
Selling, general, and administrative expenses,
less non-recurring charge 23.9% 23.0%
Non-recurring charge 2.1% -
- ------------------------------------------------------------------------------
Operating income 6.9% 7.6%
Interest and other income, net 0.1% 0.2%
- ------------------------------------------------------------------------------
Income before income taxes 7.0% 7.8%
Provision for income taxes 3.0% 3.2%
- ------------------------------------------------------------------------------
Net income 4.0% 4.6%
============ ============
</TABLE>
6
<PAGE> 7
On February 23, 1999, the Company completed the acquisition of Elumen
Solutions, Inc. (Elumen). The transaction was valued at $89 million, of which
$86 million was paid in cash or through the assumption of debt, and the
remainder was satisfied through the issuance of approximately 128,000 shares of
CTG common stock. The acquisition was accounted for as a purchase, with
approximately $85 million of goodwill and other identifiable intangibles, from
the total cost of $89 million, arising from the transaction.
Elumen was one of the largest privately held consulting firm
specializing in information technology services for health care organizations,
generating revenues of approximately $36 million for the year ended December 31,
1998. As the acquisition was completed on February 23, 1999, approximately
one-third of the first quarter operating results for Elumen were included in
CTG's consolidated financial statements for the quarter ended March 26, 1999.
The market for health care IT services was estimated at $3.4 billion
annually in 1997. Several of the factors driving growth in excess of 20%
annually in this sector (Piper Jaffray, 1997 and Dorenfest and Associates, 1997)
include the creation of large integrated health care delivery systems, the
consolidation of health care providers and systems, the impact of managed care,
and the need to invest in information technology to improve patient care and
achieve cost and operating efficiencies. The acquisition of Elumen by CTG is
intended to capitalize on these impressive growth rates which are greater than
the growth rates for the IT services industry as a whole. Additionally, as
Elumen is one of the leading firms in the health care IT sector, its growth rate
exceeded the 20% mentioned above in 1998, and is expected to continue to exceed
this rate in 1999.
CTG recorded first quarter 1999 revenue of $116.6 million, an increase
of 6.3 percent when compared to first quarter 1998 revenue of $109.7 million.
North American revenue increased by $1.9 million or 2 percent in 1999 as
compared to 1998, while revenue from European operations increased by $5
million, or 33.6 percent. The consolidated revenue increase is mainly due to the
Company providing higher-value services to its customers and the acquisition of
Elumen, partially offset by constrained revenues from the Company's oil and
gas customers and International Business Machines, Inc. (IBM).
The 1998 to 1999 quarter-to-quarter revenue growth rate was impacted
slightly by the strengthening of the U.S. dollar as compared to the currencies
of the Netherlands, Belgium, the United Kingdom, and Luxembourg. If there had
been no change in these foreign currency exchanges rates from the first quarter
of 1998 to 1999, total consolidated revenues would have been $0.7 million
higher, resulting in a quarter-to-quarter consolidated revenue growth rate of
6.9 percent. This additional $0.7 million increase in revenue in Europe would
have increased the European revenue growth rate to 38.3 percent.
In January 1999, the Company renewed a contract with IBM for one year
as one of IBM's national technical service providers for the United States. In
the first quarter of 1999, IBM continued to be the Company's largest customer,
accounting for $34.3 million or 29.4 percent of total revenue as compared to $37
million or 33.7 percent of first quarter 1998 revenue. The Company expects to
continue to derive a significant portion of its revenue from IBM throughout 1999
and in future years. 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
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 67.1 percent of
revenue in the first quarter of 1999 as compared to 69.4 percent of first
quarter 1998 revenue. The decrease in direct costs as a percentage of revenue in
1999 as compared to 1998 is also primarily due to the trend toward CTG providing
higher-value services to its clients.
7
<PAGE> 8
Selling, general and administrative expenses, less the non-recurring
charge, were 23.9 percent of revenue in the first quarter of 1999 as compared to
23 percent of revenue in 1998. The increase from 1998 to 1999 is primarily due
to a continued investment in 1999 in sales and marketing, recruiting, and
training programs.
During the first quarter of 1999, CTG recorded a non-recurring charge
of $2.5 million to provide for a preliminary arbitration award related to a
contract dispute between the Company and one of its customers. This charge
lowered operating income and income before taxes by 2.1 percent, net income by
1.3 percent, and diluted earnings per share by $0.09.
Operating income was 6.9 percent of revenue in 1999 compared to 7.6
percent of revenue in 1998. Without the non-recurring charge, operating income
would have been 9 percent of revenue in the first quarter of 1999. The
quarter-to-quarter increase is primarily due to the factors discussed above.
Operating income from North American operations, not including the
non-recurring charge, increased $1.5 million or 20.8 percent from 1998 to 1999.
European operations recorded operating income of $1.8 million in 1999 as
compared to $1.2 million in 1998. The European improvement in profitability is
primarily due to the 33.6 percent increase in revenue discussed above and an
increase in higher-value services performed in 1999.
Interest and other income was $0.2 million in 1999 and 1998. In 1999,
additional interest income was offset by interest expense on indebtedness
related to the acquisition of Elumen.
Income before income taxes was 7 percent of revenue in 1999 as compared
to 7.8 percent of revenue in 1998. Without the non-recurring charge, income
before income taxes would have been 9.1 percent of revenue in the first quarter
of 1999. The provision for income taxes was 42.7 percent in 1999 and 41 percent
in 1998. The increase in the effective income tax rate in 1999 is due to an
increase in non-deductible expenses related to the Elumen acquisition.
Net income for the first quarter of 1999 was 4.0 percent of revenue or
$0.28 per diluted share, compared to $4.6 percent of revenue or $0.30 per
diluted share in 1998. Without the non-recurring charge, net income would have
been 5.3 percent of revenue and $0.37 per diluted share. Diluted earnings per
share was calculated using 16.8 million and 17 million equivalent shares
outstanding in 1999 and 1998, respectively.
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 (non-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 1997, and significant progress has been made
with respect to the contingency planning and systems testing phases. All of the
Company's computer systems and non-IT systems were ready for testing on or
before March 31, 1999, and the Company expects that all of its mission critical
computer systems and mission critical 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 spent in 1998 and 1999, and to be spent
throughout the remainder of 1999 to address year 2000 issues is less than
$500,000.
8
<PAGE> 9
CTG, as part of its year 2000 compliance program, has been, and
continued to be throughout 1998, 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 did not receive reasonable
assurance from its mission critical vendors as to year 2000 compliance by
December 31, 1998, CTG is seeking to establish relationships in 1999 with other
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 after June 30, 1999, and into
the year 2000.
CTG operates in one industry segment, providing IT 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 IT solution. A portion of the IT services the Company provides involves
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 were
less than 15% of CTG's consolidated revenues for the quarter ended March 26,
1999. It is anticipated that year 2000 compliance providers such as CTG will
continue to generate revenues from year 2000 compliance services after the year
2000. 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 CTG's
contingency plans, which the Company intends to complete in the second quarter
of 1999, 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.
Financial Condition
- -------------------
Cash used by operations was $2.7 million for the quarter. Net income
totaled $4.7 million, and non-cash adjustments for depreciation expense,
amortization expense, and deferred compensation expense totaled $1.6 million.
Accounts receivable increased $11 million as compared to December 31, 1998, as a
result of increases in revenue and slower accounts receivable turnover in the
first quarter of 1999. Accounts payable decreased $1.2 million due to the timing
of certain payments. The $2.5 million increase in taxes payable is primarily
attributable to an increase in net income and the timing of required tax
payments.
Net property and equipment increased $1.7 million. Additions to
property and equipment were $1.7 million, assets acquired with the acquisition
of Elumen were $1.1 million, offset by depreciation of $1.1 million. The Company
has no material commitments for capital expenditures at March 26, 1999. Net
acquired intangibles increased $84.3 million, caused primarily by the
acquisition of Elumen.
Financing activities provided $44.5 million of cash in the first
quarter of 1999. Short-term borrowings increased $44.3 million due to the
acquisition of Elumen. The Company received $0.9 million for the exercise of
stock options, inclusive of the related tax benefit. The Company also received
$0.3 million from employees for stock purchased under the Employee Stock
Purchase Plan. The Company's SECT utilized $0.9 million for the purchase of the
Company's stock on the open market.
9
<PAGE> 10
The Company has approximately $102 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 March 26, 1999, approximately 2.6 million
shares have been repurchased under the authorizations, leaving 0.8 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.
10
<PAGE> 11
PART II. OTHER INFORMATION
Item 4. Submission of Matters To A Vote of Security Holders
The annual meeting of shareholders was held on April 28, 1999,
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.
Election of Directors
- Three Class I directors (Gale S. Fitzgerald, Randolph A.
Marks, and R. Keith Elliott) were elected to hold office
for two years until the 2001 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 17,635,386 374,222
Randolph A. Marks 17,640,244 369,364
R. Keith Elliott 17,638,835 370,773
</TABLE>
- The Class II directors of the Company, whose terms of
office extend until the 2000 annual meeting of
shareholders and until their successors are elected and
qualified, are George G. Beitzel, Richard L. Crandall,
and Barbara Z. Shattuck.
11
<PAGE> 12
Item 6. Exhibits And Reports On Form 8-K
<TABLE>
<CAPTION>
Exhibit Description Page
------- ----------- ----
<S> <C> <C>
11. Statement re: computation of earnings per share 13
27. a.) Financial Data Schedule - March 26, 1999 15
b.) Financial Data Schedule - March 27, 1998 16
</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 and
Chief Financial Officer
Date: May 10, 1999
12
<PAGE> 1
EXHIBIT 11
----------
COMPUTER TASK GROUP, INCORPORATED
---------------------------------
Computation of diluted earnings per share under the treasury stock
method set forth in Statement of Financial Accounting Standards No. 128,
"Earnings Per Share."
13
<PAGE> 2
COMPUTATION OF DILUTED EARNINGS PER SHARE
UNDER THE 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
MARCH 26, MARCH 27,
1999 1998
------------ ------------
<S> <C> <C>
Weighted-average number of shares outstanding during period 16,424 16,104
Common Stock equivalents -
Incremental shares under stock options plans 403 890
------------ ------------
Number of shares on which diluted earnings per share is based 16,827 16,994
============ ============
Net income for the period $ 4,699 $ 5,077
============ ============
Diluted earnings per share $ 0.28 $ 0.30
============ ============
Basic earnings per share $ 0.29 $ 0.32
============ ============
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000023111
<NAME> COMPUTER TASK GROUP, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-26-1999
<CASH> 10,367,000
<SECURITIES> 0
<RECEIVABLES> 94,873,000
<ALLOWANCES> 1,169,000
<INVENTORY> 0
<CURRENT-ASSETS> 110,302,000
<PP&E> 43,769,000
<DEPRECIATION> 28,941,000
<TOTAL-ASSETS> 215,772,000
<CURRENT-LIABILITIES> 114,053,000
<BONDS> 0
0
0
<COMMON> 270,000
<OTHER-SE> 89,998,000
<TOTAL-LIABILITY-AND-EQUITY> 215,772,000
<SALES> 0
<TOTAL-REVENUES> 116,618,000
<CGS> 0
<TOTAL-COSTS> 78,197,000
<OTHER-EXPENSES> 30,405,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 243,000
<INCOME-PRETAX> 8,196,000
<INCOME-TAX> 3,497,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,699,000
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.28
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CIK> 0000023111
<NAME> COMPUTER TASK GROUP, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-27-1998
<CASH> 17,412,000
<SECURITIES> 0
<RECEIVABLES> 83,167,000
<ALLOWANCES> 950,000
<INVENTORY> 0
<CURRENT-ASSETS> 104,371,000
<PP&E> 39,198,000
<DEPRECIATION> 26,071,000
<TOTAL-ASSETS> 124,071,000
<CURRENT-LIABILITIES> 50,418,000
<BONDS> 0
0
0
<COMMON> 270,000
<OTHER-SE> 62,708,000
<TOTAL-LIABILITY-AND-EQUITY> 124,071,000
<SALES> 0
<TOTAL-REVENUES> 109,683,000
<CGS> 0
<TOTAL-COSTS> 76,073,000
<OTHER-EXPENSES> 25,221,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,000
<INCOME-PRETAX> 8,605,000
<INCOME-TAX> 3,528,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,077,000
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.30
</TABLE>
