<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 24, 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 September 24, 1999
------------------- ----------------------
Common stock, par value
$.01 per share 20,876,001
<PAGE> 2
ITEM 1. PART I. FINANCIAL INFORMATION
------------------------------
FINANCIAL STATEMENTS
COMPUTER TASK GROUP, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED THREE QUARTERS ENDED
SEPT. 24, SEPT. 25, SEPT. 24, SEPT. 25,
1999 1998 1999 1998
--------- --------- --------- ---------
(amounts in thousands, except per share data)
<S> <C> <C> <C> <C>
Revenue $ 114,526 $ 116,174 $ 356,608 $ 343,503
Direct costs 75,429 79,396 236,298 235,942
Selling, general and administrative expenses 31,969 26,491 93,426 79,070
--------- --------- --------- ---------
Operating income* 7,128 10,287 26,884 28,491
Interest and other income 18 298 499 798
Interest and other expense (602) (52) (1,547) (263)
--------- --------- --------- ---------
Income before income taxes* 6,544 10,533 25,836 29,026
Provision for income taxes 3,014 4,317 11,290 11,899
--------- --------- --------- ---------
Net income* $ 3,530 $ 6,216 $ 14,546 $ 17,127
========= ========= ========= =========
Net income per share:*
Basic $ 0.21 $ 0.38 $ 0.88 $ 1.06
========= ========= ========= =========
Diluted $ 0.21 $ 0.37 $ 0.87 $ 1.01
========= ========= ========= =========
Weighted average shares outstanding:
Basic 16,474 16,248 16,473 16,184
Diluted 16,721 16,859 16,783 16,936
Cash dividend per share $ -- $ -- $ 0.05 $ 0.05
</TABLE>
* The three quarters ended September 24, 1999 include 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 $0.09, 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>
SEPT. 24, DECEMBER 31,
1999 1998
----------- ------------
(Unaudited) (Audited)
(amounts in thousands)
<S> <C> <C>
ASSETS
- ------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and temporary cash investments $ 13,195 $ 57,748
Accounts receivable, net of allowances and reserves 92,154 73,932
Prepaids and other 1,898 4,000
Deferred income taxes 1,868 1,654
- ------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 109,115 137,334
Property and equipment, net of
accumulated depreciation and amortization 13,884 13,146
Acquired intangibles, net of accumulated amortization
of $8,085,000 and $6,002,000, respectively 85,072 2,808
Deferred income taxes 2,835 2,801
Other assets 695 720
- ------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 211,601 $ 156,809
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 10,107 $ 14,265
Accrued compensation 31,101 29,258
Income taxes payable 9,667 9,157
Advance billings on contracts 914 384
Other current liabilities 13,571 9,409
- ------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 65,360 62,473
Long-term debt 38,250 -
Deferred compensation benefits 10,779 10,300
Other long-term liabilities 520 587
- ------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 114,909 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 110,556 106,010
Retained earnings 79,891 66,172
Less: Treasury stock of 6,141,823 and 6,269,668 shares, at cost (31,279) (31,850)
Stock Trusts of 4,498,244 and 4,422,500 shares, at cost (56,378) (52,463)
Unearned portion of restricted stock to related parties (50) (69)
Other comprehensive income:
Foreign currency adjustment (4,071) (2,374)
Minimum pension liability adjustment (2,247) (2,247)
- ------------------------------------------------------------------------------------------------------------------
Accumulated other comprehensive income (6,318) (4,621)
- ------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 96,692 83,449
- ------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 211,601 $ 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>
THREE QUARTERS ENDED
SEPT. 24, SEPT. 25,
1999 1998
----------- ------------
(amounts in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 14,546 $ 17,127
Adjustments:
Depreciation expense 3,686 3,182
Amortization expense 2,457 448
Deferred compensation expense 252 343
Changes in assets and liabilities, net of assets acquired and liabilities
assumed:
Increase in accounts receivable (9,861) (23,671)
(Increase) decrease in prepaids and other 1,915 (213)
(Increase) decrease in deferred income taxes 35 (88)
(Increase) decrease in other assets 288 (78)
Increase (decrease) in accounts payable (5,253) 2,685
Increase (decrease) in accrued compensation (314) 10,637
Increase in income taxes payable 735 2,295
Increase (decrease) in advance billings on contracts 530 (866)
Increase in other current liabilities 2,610 1,870
Decrease in other long-term liabilities (307) (228)
----------- ------------
Net cash provided by operating activities 11,319 13,443
- -------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition (86,775) -
Additions to property and equipment (3,464) (3,806)
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (90,239) (3,806)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Long-term debt 38,250 -
Proceeds from Employee Stock Purchase Plan 831 1,095
Purchase of stock for treasury (13) (36)
Purchase of stock by Stock Trusts (4,858) (2,455)
Proceeds from other stock plans, inclusive of related tax benefit 2,061 5,100
Dividends paid (827) (812)
----------- ------------
Net cash provided by financing activities 35,444 2,892
- -------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and temporary cash investments (1,077) 200
----------- -----------
Net increase (decrease) in cash and temporary cash investments (44,553) 12,729
Cash and temporary cash investments at beginning of year 57,748 25,033
- -------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at end of quarter $ 13,195 $ 37,762
========== ===========
</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 September 24, 1999, accumulated other comprehensive income totaled
$(6,318,000), including an adjustment of $189,000 related to foreign currency
translation made in the third quarter of 1999.
4. Indebtedness
During the quarter ended September 24, 1999, the Company entered into a
$100 million, five-year revolving line of credit with a bank group. The Company
may borrow from time to time for periods ranging up to five years. At the
Company's discretion, interest may be based on the LIBOR rate, the prime rate,
or other rates as quoted by the agent bank. Current borrowings under the
revolving line of credit resulted from the acquisition of Elumen Solutions,
Inc., and replaced amounts outstanding under unsecured lines of credit.
Subsequent to entering into this agreement, total amounts available under
unsecured lines of credit were reduced to $32 million.
5
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FOR THE THREE QUARTERS ENDED SEPTEMBER 24, 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 better understand the financial 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 Three Quarters Ended
Sept. 24, Sept. 25, Sept. 24, Sept. 25,
(percentage of revenue) 1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue 100.0% 100.0% 100.0% 100.0%
Direct costs 65.9% 68.3% 66.3% 68.7%
Selling, general, and administrative expenses,
less non-recurring charge 27.9% 22.8% 25.5% 23.0%
Non-recurring charge - - 0.7% -
- -------------------------------------------------------------------------------------------------------------------
Operating income 6.2% 8.9% 7.5% 8.3%
Interest and other income (expense) (0.5)% 0.2% (0.3)% 0.1%
- -----------------------------------------------------------------------------------------------------------------
Income before income taxes 5.7% 9.1% 7.2% 8.4%
Provision for income taxes 2.6% 3.7% 3.1% 3.4%
- -----------------------------------------------------------------------------------------------------------------
Net income 3.1% 5.4% 4.1% 5.0%
========= ========= ========= =========
</TABLE>
6
<PAGE> 7
CTG recorded third quarter 1999 revenue of $114.5 million, a decrease
of 1.4 percent when compared to third quarter 1998 revenue of $116.2 million.
Revenue from North American operations decreased by $2.0 million or 2.0 percent
in 1999 as compared to 1998, while revenue from European operations increased by
$0.3 million, or 1.6 percent. Revenues for the three quarters ended September
24, 1999 increased $13.1 million, or 3.8 percent, over the comparable 1998
period.
The year-to-date revenue increase is mainly due to the Company providing
higher-value services to its customers and the acquisition of Elumen Solutions,
Inc. (Elumen), offset by constrained revenues attributable to an industry-wide
reduction in both Year 2000 and non-Year 2000 information technology (IT)
spending. Similar to other companies in the IT services industry, CTG is
experiencing a decline in revenues as companies are deferring new systems
development and integration work until the actual impact of Year 2000 on their
systems can be assessed and resolved. CTG believes that this industry-wide
slowdown is a short-term phenomenon and that the long-term growth prospects for
its business remain very strong for 2000 and beyond.
The 1998 to 1999 third 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
third quarter of 1998 to 1999, total consolidated revenues would have been $1.0
million higher, resulting in a quarter-to-quarter consolidated revenue decrease
of 0.6 percent. This additional $1.0 million increase in revenue in Europe would
have increased the European revenue growth rate to 7.1 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 third quarter of 1999, IBM continued to be the Company's largest customer,
accounting for $30.3 million or 26.5 percent of total revenue as compared to
$37.4 million or 32.2 percent of third quarter 1998 revenue. Although revenues
from IBM have been constrained in 1999, CTG expects to continue to derive a
significant portion of its revenue from IBM throughout the remainder of 1999 and
in future years. While the decline in revenue from IBM has had an 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 existence 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 65.9 percent of
revenue in the third quarter of 1999 as compared to 68.3 percent of revenue in
the third quarter of 1998. Direct costs for the three quarters ended September
24, 1999 were 66.3 percent of revenue as compared to 68.7 percent of revenue in
the comparable 1998 period. 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.
Selling, general and administrative expenses were 27.9 percent of
revenue in the third quarter of 1999 as compared to 22.8 percent of revenue in
the third quarter of 1998. Selling, general and administrative expenses for the
three quarters ended September 24, 1999, less the non-recurring charge taken in
the first quarter of 1999, were 25.5 percent of revenue as compared to 23.0
percent of revenue in the comparable 1998 period. The increase from 1998 to 1999
is primarily due to a continued strategic investment in 1999 in sales and
marketing, recruiting, and training programs to prepare the Company for
post-1999 business activities. Additionally, goodwill amortization expense
related to the acquisition of Elumen increased selling, general and
administrative expense year over year.
7
<PAGE> 8
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. As a percentage
of consolidated revenue, this charge lowered operating income and income before
taxes for the year-to-date 1999 period by 0.7 percent, net income by 0.4
percent, and diluted earnings per share by $0.09.
Operating income was 6.2 percent of revenue in the third quarter of
1999 compared to 8.9 percent of revenue in the third quarter of 1998. Operating
income for the three quarters ended September 24, 1999 was 7.5 percent of
revenue as compared to 8.3 percent of revenue in the comparable 1998 period.
Without the non-recurring charge, operating income would have been 8.2 percent
of revenue for the three quarters ended September 24, 1999. The
quarter-to-quarter decrease is primarily due to the strategic investments and
revenue shortfall discussed above. Operating income from North American
operations in the third quarter decreased $2.9 million or 34.9 percent from 1998
to 1999. European operations recorded operating income of $1.7 million in 1999
as compared to $2.0 million in 1998. The European decrease in profitability is
also primarily due to the factors discussed above.
Interest and other income (expense) was (0.3) percent of revenue for
the three quarters ended September 24, 1999, and 0.1 percent in the comparable
1998 period. In 1999, interest expense on indebtedness related to the
acquisition of Elumen was partially offset by interest income on available cash
and temporary cash investments.
Income before income taxes was 5.7 percent of revenue in the third
quarter of 1999 as compared to 9.1 percent of revenue in the third quarter of
1998. Without the non-recurring charge, income before income taxes would have
been 7.9 percent of revenue for the three quarters ended September 24, 1999. The
provision for income taxes was 43.7 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 third quarter of 1999 was 3.1 percent of revenue or
$0.21 per diluted share, compared to 5.4 percent of revenue or $0.37 per diluted
share in 1998. Without the non-recurring charge, net income would have been 4.5
percent of revenue and $0.96 per diluted share for the three quarters ended
September 24, 1999. Diluted earnings per share was calculated using 16.8 million
and 16.9 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, and further refined the
inventory into mission critical and non-mission critical categories.
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. The systems inventory, assessment and systems testing
phases are complete as of the end of the third quarter of 1999, and significant
progress has been made with respect to the contingency planning phase.
8
<PAGE> 9
The Company has determined that mission critical systems or vendors are
those that are vital to the operations of the Company. The Company has completed
all of its remediation and systems testing with respect to its mission critical
computer systems and mission critical non-IT systems. 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 into the year
2000. The total amount spent in 1998 and through September 24, 1999, and
estimated to be spent throughout the remainder of 1999 to address year 2000
issues totals less than $500,000.
CTG, as part of its year 2000 compliance program, has been, and
continues to be throughout 1999, 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, 1999. In the event the Company did not receive reasonable
assurance from its mission critical vendors as to year 2000 compliance, CTG has
established relationships 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.
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
approximately 8 percent of CTG's consolidated revenues for the quarter ended
September 24, 1999.
CTG believes that already completed 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 by December 31, 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 provided by operations was $11.3 million in 1999. Net income
totaled $14.5 million, and non-cash adjustments for depreciation expense,
amortization expense, and deferred compensation expense totaled $6.4 million.
Accounts receivable increased $9.9 million as compared to December 31, 1998, as
a result of increases in revenue and slower accounts receivable turnover in
1999. Accounts payable decreased $5.3 million, and other current liabilities
increased $2.6 million, primarily due to the timing of certain payments.
Net property and equipment increased $0.7 million. Additions to
property and equipment were $3.5 million, and assets acquired with the
acquisition of Elumen were $1.1 million, offset by depreciation of $3.7 million
and foreign currency translation adjustments of $0.2 million. The Company has no
material commitments for capital expenditures at September 24, 1999. Net
acquired intangibles increased $82.3 million, caused primarily by the
acquisition of Elumen.
9
<PAGE> 10
Financing activities provided $35.4 million of cash in 1999. Long-term
debt increased $38.3 million due to the acquisition of Elumen. The Company had
no long-term debt prior to the acquisition. The Company received $2.1 million
for the exercise of stock options, inclusive of the related tax benefit. The
Company also received $0.8 million from employees for stock purchased under the
Employee Stock Purchase Plan. The Company's Stock Trusts utilized approximately
$4.9 million for the purchase of the Company's stock on the open market.
During the quarter, CTG entered into a $100 million, five-year
revolving credit agreement with a bank. In total at September 24, 1999, the
Company had approximately $94 million in available credit.
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 24, 1999, approximately 2.8
million shares have been repurchased under the authorizations, leaving 0.6
million shares authorized for future purchases.
The Company believes existing internally available funds, cash
generated by operations, and available 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
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 24, 1999 13
b.) Financial Data Schedule - September 25, 1998 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 and Chief
Financial Officer
Date: November 8, 1999
11
<PAGE> 1
EXHIBIT 11
----------
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 THREE QUARTERS ENDED
SEPT. 24, SEPT. 25, SEPT. 24, SEPT. 25,
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Weighted-average number of shares
outstanding during period 16,474 16,248 16,473 16,184
Add Common Stock equivalents -
incremental shares under stock option plans 247 611 310 752
------- ------- ------- -------
Number of shares on which diluted
earnings per share is based 16,721 16,859 16,783 16,936
======= ======= ======= =======
Net income for the period $ 3,530 $ 6,216 $14,546 $17,127
======= ======= ======= =======
Diluted earnings per share $ 0.21 $ 0.37 $ 0.87 $ 1.01
Basic earnings per share $ 0.21 $ 0.38 $ 0.88 $ 1.06
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000023111
<NAME> COMPUTER TASK GROUP, INC
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-24-1999
<CASH> 13,195,000
<SECURITIES> 0
<RECEIVABLES> 93,310,000
<ALLOWANCES> 1,156,000
<INVENTORY> 0
<CURRENT-ASSETS> 109,115,000
<PP&E> 40,379,000
<DEPRECIATION> 26,495,000
<TOTAL-ASSETS> 211,601,000
<CURRENT-LIABILITIES> 65,360,000
<BONDS> 0
0
0
<COMMON> 270,000
<OTHER-SE> 96,422,000
<TOTAL-LIABILITY-AND-EQUITY> 211,601,000
<SALES> 0
<TOTAL-REVENUES> 356,608,000
<CGS> 0
<TOTAL-COSTS> 236,298,000
<OTHER-EXPENSES> 93,426,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,416,000
<INCOME-PRETAX> 25,836,000
<INCOME-TAX> 11,290,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,546,000
<EPS-BASIC> 0.88
<EPS-DILUTED> 0.87
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000023111
<NAME> COMPUTER TASK GROUP, INC.
<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-BASIC> 1.06
<EPS-DILUTED> 1.01
</TABLE>
