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CTG Reports Second Quarter EPS Increase of 42% on 21% Revenue Growth

BUFFALO, N.Y. July 25, 2011 July 1, 2011

2011 Second Quarter Review

Revenue, operating income, net income, and diluted net income per share for the 2011 second quarter as compared with the 2010 second quarter are as follows (dollar amounts in thousands except per share data):

July 1, 2011

July 2, 2010

$ Change

% Change

Revenue

$

98,327

$

81,142

$

17,185

21%

Operating income  

$

4,677

$

3,489

$

1,188

34%

Net income

$

2,830

$

1,905

$

925

49%

Diluted net income per share

$

0.17

$

0.12

$

0.05

42%

The Company’s operating margin expanded by 50 basis points to 4.8% from 4.3% in the 2010 second quarter.

James R. Boldt

the United States October 1, 2013

$9.7 million $36.0 million $7.5 million $62.3 million $17.3 million $2.9 million $14.4 million $1.9 million

$16.1 million $14.3 million

$2.8 million $6.7 million July 1, 2011 $13.0 million $8.6 million $35 million April 2014

2011 First Half Review

Results for the first half of the year reflect the same trends seen in the second quarter.

Revenue, operating income, net income, and diluted net income per share for the 2011 first half as compared with the 2010 first half are as follows (dollar amounts in thousands except per share data):

July 1, 2011

July 2, 2010

$ Change

% Change

Revenue

$

194,236

$

159,631

$

34,605

22%

Operating income  

$

9,276

$

6,578

$

2,698

41%

Net income

$

5,658

$

3,691

$

1,967

53%

Diluted net income per share

$

0.34

$

0.23

$

0.11

48%

$69.7 million $124.5 million $34.4 million

$31.3 million $28.2 million

Stock Repurchase Program

$13.20 July 2011 July 22, 2011

2011 Revenue and Earnings Guidance

$98 million to $100 million $0.16 to $0.18

$390 million to $396 million $0.67 to $0.73

Mr. Boldt commented, "Given the strong demand we are experiencing, we are looking for third quarter results to approximate the 2011 second quarter even with utilization rates typically being the lowest of the year based on the higher number of billable employees using vacation time and one less billing day than this year’s second quarter.  With the continued ramping up of more profitable solutions projects, new EMR work, and a return to more normal utilization rates, we expect fourth quarter earnings to be the highest of the year.  In addition to the double-digit revenue and earnings growth we see for the full year, we are also on track for a meaningful improvement in our business mix due to the amount of new higher margin solutions work we are adding this year in our healthcare business."  

Mr. Boldt concluded, "Our position as a leading healthcare IT consultant gives us confidence in our ability to continue growing healthcare revenue with EMR work remaining the major contributor in the near term, and ICD-10 compliance support, accountable care organization consulting services, and medical informatics solutions next on the list of significant revenue growth opportunities.  Additionally, with the healthcare industry already at 17% of U.S. GDP and projected to reach 20% by 2015, we expect market demand for healthcare IT services to remain at high levels given the contribution technology can make in containing costs, increasing efficiencies, and improving outcomes.  Continued growth of the healthcare industry, federal government incentives and requirements supporting healthcare technology investments, and our strong and growing healthcare IT practice, all put CTG in a very good position to advance our strategic focus on healthcare and continue increasing revenue and earnings at a robust pace."

About CTG

North America Western Europe www.ctg.com

Safe Harbor Statement

This document contains certain forward-looking statements concerning the Company’s current expectations as to future growth. These statements are based upon a review of industry reports, current business conditions in the areas where the Company does business, the availability of qualified professional staff, the demand for the Company’s services, and other factors that involve risk and uncertainty. As such, actual results may differ materially in response to a change in such factors. Such forward-looking statements should be read in conjunction with the Company’s disclosures set forth in the Company’s 2010 Form 10-K, which is incorporated by reference. The Company assumes no obligation to update the forward-looking information contained in this release.

Conference Call and Webcast

Tuesday, July 26, 2011 10:00 a.m. Eastern Time James R. Boldt between 9:45 a.m. and 9:50 a.m. James Boldt 12:00 p.m. Eastern Time July 26, 2011 11:00 p.m. Eastern Time July 29, 2011

http://www.ctg.com http://investor.ctg.com/events.cfm

Financial statements follow.

COMPUTER TASK GROUP, INCORPORATED (CTG)

Condensed Consolidated Statements of Income

(Unaudited)

(amounts in thousands except per share data)

For the Quarter Ended

For the Two
Quarters Ended

July 1,
2011

July 2,
2010

July 1,
2011

July 2,
2010

Revenue

$

98,327

$

81,142

$

194,236

$

159,631

Direct costs

77,594

63,350

153,706

124,831

Selling, general and administrative expenses

16,056

14,303

31,254

28,222

Operating income  

4,677

3,489

9,276

6,578

Other expense, net

(48) 

(71) 

(85) 

(118) 

Income before income taxes

4,629

3,418

9,191

6,460

Provision for income taxes

1,799

1,513

3,533

2,769

Net income

$

2,830

$

1,905

$

5,658

$

3,691

Net income per share:

   Basic

$

0.19

$

0.13

$

0.38

$

0.25

   Diluted

$

0.17

$

0.12

$

0.34

$

0.23

Weighted average shares outstanding:

   Basic

15,050

14,728

14,909

14,725

   Diluted

16,864

16,095

16,759

16,051

COMPUTER TASK GROUP, INCORPORATED (CTG)
Condensed Consolidated Balance Sheets
(Unaudited)

(amounts in thousands)

July 1,
2011

July 2,
2010

July 1,
2011

July 2,
2010

Current Assets:

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