10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from              to             

Commission File No. 1-9410

COMPUTER TASK GROUP, INCORPORATED

(Exact name of Registrant as specified in its charter)

State of New York	16-0912632
(State of incorporation)	(I.R.S. Employer Identification No.)

800 Delaware Avenue, Buffalo, New York	14209
(Address of principal executive offices)	(Zip Code)

(716) 882-8000

Registrant’s telephone number, including area code:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $.01 par value	The NASDAQ Stock Market LLC
Rights to Purchase Series A Participating Preferred Stock	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES  ¨    NO  x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    YES  ¨    NO  x

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  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨            Accelerated filer  x            Non-accelerated filer  ¨            Small reporting company  ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).    YES  ¨    NO   x

The aggregate market value of the Registrant’s voting and non-voting common equity, computed by reference to the price at which the common equity was last sold on the last business day of the Registrant’s most recently completed second quarter was $69.4 million. Solely for the purposes of this calculation, all persons who are or may be executive officers or directors of the Registrant have been deemed to be affiliates.

The total number of shares of Common Stock of the Registrant outstanding at February 28, 2008 was 18,833,514

DOCUMENTS INCORPORATED BY REFERENCE

Certain sections of the Company’s definitive proxy statement to be filed with the Securities and Exchange Commission (SEC) within 120 days of the end of the Company’s fiscal year ended December 31, 2007, are incorporated by reference into Part III hereof. Except for those portions specifically incorporated by reference herein, such document shall not be deemed to be filed with the SEC as part of this annual report on Form 10-K.

PART I

Forward-Looking Statements

This annual report on Form 10-K contains forward-looking statements by management and the Company that are subject to a number of risks and uncertainties. These forward-looking statements are based on information as of the date of this report. The Company assumes no obligation to update these statements based on information from and after the date of this report. Generally, forward-looking statements include words or phrases such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “projects,” “could,” “may,” “might,” “should,” “will” and words and phrases of similar impact. The forward-looking statements include, but are not limited to, statements regarding future operations, industry trends or conditions and the business environment, and statements regarding future levels of, or trends in, revenue, operating expenses, capital expenditures, and financing. The forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including the following: (i) industry and economic conditions, including fluctuations in demand for IT services, (ii) the availability to us of qualified professional staff, (iii) domestic and foreign industry competition, (iv) rate and wage inflation or deflation, (v) risks associated with operating in foreign jurisdictions, (vi) the impact of current and future laws and government regulation, as well as repeal or modification of same, affecting the IT solutions and staffing industry, taxes and the Company’s operations in particular, (vii) renegotiations, nullification, or breaches of contracts with customers, vendors, subcontractors or other parties, (viii) consolidation among the Company’s competitors or customers, (ix) the partial or complete loss of the revenue the Company generates from IBM, and (x) the risks described in Item 1A of this annual report on Form 10-K and from time to time in the Company’s reports filed with the Securities and Exchange Commission.

Item 1. Business

Overview

Computer Task Group, Incorporated (the Company, CTG, or the Registrant) was incorporated in Buffalo, New York on March 11, 1966, and its corporate headquarters are located at 800 Delaware Avenue, Buffalo, New York 14209 (716-882-8000). CTG is an international information technology (IT) solutions and staffing company. CTG employs approximately 3,400 people worldwide and serves customers through an international network of offices in North America and Europe. During 2007, the Company had six operating subsidiaries: Computer Task Group of Canada, Inc., providing services in Canada; and Computer Task Group Belgium N.V., Computer Task Group IT Solutions, S.A., Computer Task Group Luxembourg PSF, Computer Task Group (U.K.) Ltd., and CTG Deutschland GmbH, each primarily providing services in Europe.

Services

The Company operates in one industry segment, providing Information Technology (IT) services to its clients. These services include IT Staffing and IT Solutions. CTG provides these primary services to all of the markets that it serves. The services provided typically encompass the IT business solution life cycle, including phases for planning, developing, implementing, managing, and ultimately maintaining the IT solution. A typical customer is an organization with large, complex information and data processing requirements. Approximately 78% of consolidated 2007 revenue of $325.3 million was generated in North America and 22% in Europe. The Company’s IT Staffing and IT Solutions services are as follows:

• IT Staffing: CTG recruits, retains, and manages IT talent for its clients. The Company services both large organizations with multiple locations and high-volume IT requirements, and companies that need to augment their own staff on a flexible basis. Our clients may require the services of our IT talent on a temporary or long-term basis. Our IT professionals generally work with the client’s in-house staff at our client’s place of business. Our recruiting organization works with customers to define their staffing requirements and develop competitive pricing to meet those requirements.

2

• IT Solutions: CTG’s services in this area range from helping clients assess their business needs and identifying the right IT solutions to meet these needs, to the delivery of services that include the selection and implementation of packaged software and the design, construction, testing, and integration of new systems. Also included in IT Solutions is Application Management Outsourcing (AMO). In an AMO project, a client outsources the management of some or all of its applications so that their internal management and staff can focus on projects that will help them in creating and fostering initiatives that will aid in delivering a competitive advantage to the company. CTG’s services in this area include support of single or multiple applications, help desk, and facilities management through a full suite of cost-effective maintenance, enhancement, and systems development and integrated solutions.

The Company’s solutions / staffing revenue was 32% / 68% for the year ended December 31, 2007 as compared to 30% / 70% for the year ended December 31, 2006, and 29% / 71% for the year ended December 31, 2005.

The Company promotes a majority of its services through three vertical market focus areas: Technology Service Providers, Healthcare (which includes services provided to health care providers, health insurers, and life sciences companies), and Financial Services. The vertical areas of Technology Service Providers, Healthcare, and Financial Services totaled 38%, 25%, and 11% of total consolidated revenue in 2007, 41%, 24%, and 10% of total consolidated revenue in 2006, and 41%, 24%, and 8% of total consolidated revenue in 2005, respectively. Outside of these three vertical market focus areas, the Company provides its services to customers in general industries, which totaled 26% of total consolidated revenue in 2007, 25% in 2006, and 27% in 2005, respectively.

International Business Machines Corporation (IBM) is CTG’s largest customer. CTG provides services to various IBM divisions in many locations. During 2004, the Company signed an addendum to the Technical Services Agreement it has with IBM making it a predominant supplier to IBM’s Systems and Technology Group. In 2006, the Company signed an addendum to this agreement which extends its expiration date to December 31, 2008. The agreement and the addendum accounted for approximately 90% of all of the services provided to IBM by the Company in 2007. In 2007, 2006, and 2005, IBM accounted for $104.6 million or 32.2%, $115.4 million or 35.3%, and $105.5 million or 35.8% of the Company’s consolidated revenue, respectively. No other customer accounted for more than 10% of the Company’s revenue in 2007, 2006 or 2005.

Pricing and Backlog

The Company recognizes revenue when persuasive evidence of an arrangement exists, when the services have been rendered, when the price is determinable, and when collectibility of the amounts due is reasonably assured. For time-and-material contracts, revenue is recognized as hours are incurred and costs are expended. Revenue from time-and-material projects totaled approximately 88%, 90% and 92% of consolidated revenue for the years ended December 31, 2007, 2006 and 2005, respectively.

For contracts with periodic billing schedules, primarily monthly, revenue is recognized as services are rendered to the customer. Revenue from such projects totaled approximately 8%, 6% and 5% of consolidated revenue for the years ended December 31, 2007, 2006 and 2005, respectively.

Revenue for fixed price contracts is recognized as per the proportional method of accounting using an input-based approach whereby salary and indirect labor costs incurred are measured and compared to the total estimate of costs at completion for a project. Revenue is recognized based upon the percent complete calculation of total incurred costs to total estimated costs. The Company infrequently works on fixed price projects that include significant amounts of material or other non-labor related costs which could distort the percent complete within a percentage complete calculation. The Company’s estimate of the total labor costs it expects to incur over the term of the contract is based on the nature of the project and our past experience on similar projects, and includes management judgments and estimates which affect the amount of revenue recognized on fixed price contracts in any accounting period. Revenue from fixed-price contracts accounted for under the percentage-of-completion method totaled approximately 4%, 4% and 3% of consolidated revenue for the years ended December 31, 2007, 2006 and 2005, respectively.

3

As of December 31, 2007 and 2006, the backlog for fixed-price and all managed-support contracts was approximately $38 million and $34.3 million, respectively. Approximately 77% or $29.3 million of the December 31, 2007 backlog is expected to be earned in 2008. Of the $34.3 million of backlog at December 31, 2006, approximately 73%, or $25.1 million was earned in 2007. Revenue is subject to seasonal variations, with a minor slowdown in months of high vacation and legal holidays (July, August, and December). Backlog does not tend to be seasonal; however, it does fluctuate based upon the timing of entry into long-term contracts.

Competition

The IT services market is highly competitive. The market is also highly fragmented with many providers with no single competitor maintaining a clear market leadership. Competition varies by location, the type of service provided, and the customer to whom services are provided. The Company’s competition comes from four major channels: large national or international vendors, including major accounting and consulting firms; hardware vendors and suppliers of packaged software systems; small local firms or individuals specializing in specific programming services or applications; and a customer’s internal data processing staff. CTG competes against all four of these channels for its share of the market. The Company believes that to compete successfully it is necessary to have a local geographic presence, offer appropriate IT solutions, provide skilled professional resources, and price its services competitively.

CTG has implemented a Global Management System, with the goal to achieve continuous, measured improvements in services and deliverables. As part of this program, CTG has developed specific methodologies for providing high value services that result in unique solutions and specified deliverables for its clients. The Company believes these methodologies will enhance its ability to compete. CTG initially achieved worldwide ISO 9001:1994 certification in June 2000. CTG received its worldwide ISO 9001:2000 certification in January 2003. The Company believes it is the only IT services company of its size to achieve worldwide certification.

Intellectual Property

The Company has registered its symbol and logo with the U.S. Patent and Trademark Office and has taken steps to preserve its rights in other countries where it operates. CTG has entered into agreements with various software and hardware vendors from time to time in the normal course of business, and has capitalized certain costs under software development projects, none of which are significant to the business.

Employees

Our business depends on our ability to attract and retain qualified professional staff to provide services to our customers. The Company has a structured recruiting organization that works with our clients to meet their requirements by recruiting and providing high quality, motivated staff. We employ approximately 3,400 employees worldwide, with approximately 2,800 in the United States and Canada and 600 in Europe. Of these, approximately 3,000 are IT professionals and 400 are individuals who work in sales, recruiting, delivery, administrative and support positions. We believe that our relationship with our employees is good. No employees are covered by a collective bargaining agreement or are represented by a labor union. CTG is an equal opportunity employer.

4

Financial Information Relating to Foreign and Domestic Operations

The following table sets forth certain financial information relating to the performance of the Company in the United States, Belgium, other European countries, and other countries for the years ended December 31, 2007, 2006, and 2005. This information should be read in conjunction with the audited consolidated financial statements and notes thereto included in Item 8, “Financial Statements and Supplementary Data” included in this report.

	2007			2006			2005
	(amounts in thousands)
Revenue from External Customers:
United States	$	250,097		$	265,386		$	243,223
Belgium		50,786			41,500			32,940
Other European countries		21,311			17,447			15,384
Other countries		3,091			2,920			2,918
Total revenue	$	325,285		$	327,253		$	294,465
Operating Income (Loss):
United States	$	20,062		$	18,957		$	16,627
Europe		1,896			2,801			1,884
Other countries		(187	)		(194	)		(11	)
Corporate and other		(15,247	)		(14,710	)		(13,575	)
Total operating income	$	6,524		$	6,854		$	4,925
Identifiable Assets:
United States	$	70,590		$	76,689		$	100,620
Europe		26,662			18,849			13,817
Other countries		649			838			834
Corporate and other (1)		14,560			15,341			13,029
Total identifiable assets	$	112,461		$	111,717		$	128,300

⁽¹⁾ Corporate and other identifiable assets consist principally of cash and cash equivalents, investments, deferred income taxes, and other assets

5

Executive Officers of the Company

As of December 31, 2007, the following individuals were executive officers of the Company:

Name	Age	Office	Period During Which Served as Executive Officer	Other Positions and Offices with Registrant
James R. Boldt	56	Chairman, President and Chief Executive Officer	June 21, 2001 for President, July 16, 2001 for Chief Executive Officer, May 2002 for Chairman, all to date	Director
		Executive Vice President	February 2001 to June 2001
		Vice President, Strategic Staffing	December 2000 to September 2001
		Acting Chief Executive Officer	June 2000 to November 2000
		Vice President and Chief Financial Officer	February 12, 1996 to October 1, 2001
Michael J. Colson	45	Senior Vice President	January 3, 2005 to date	None
Arthur W. Crumlish	53	Senior Vice President	September 24, 2001 to date	None
Filip J.L. Gyde	47	Senior Vice President	October 1, 2000 to date	None
Brendan M. Harrington	41	Senior Vice President, Chief Financial Officer	September 13, 2006 to date	None
		Interim Chief Financial Officer	October 17, 2005 to September 12, 2006	None
Thomas J. Niehaus	46	Senior Vice President	July 22, 1999 to date	None
Peter P. Radetich	54	Senior Vice President, General Counsel	April 28, 1999 to date	Secretary

6

Mr. Boldt was appointed President and joined CTG’s Board of Directors on June 21, 2001, and was appointed Chief Executive Officer on July 16, 2001. Mr. Boldt became the Company’s Chairman in May 2002. Mr. Boldt joined the Company as a Vice President and its Chief Financial Officer and Treasurer in February 1996.

Mr. Colson joined the Company as Senior Vice President of Solutions Development in January 2005. Prior to that, Mr. Colson was Chief Executive Officer of Manning and Napier Information Services, a software and venture capital firm from September 1998 until the time he joined CTG.

Mr. Crumlish was promoted to Senior Vice President in September 2001, and is currently responsible for the Company’s Strategic Staffing Services organization. Prior to that, Mr. Crumlish was Controller of the Company’s Strategic Staffing Services organization. Mr. Crumlish joined the Company in 1990.

Mr. Gyde was promoted to Senior Vice President in October 2000, at which time he assumed responsibility for all of the Company’s European operations. Prior to that, Mr. Gyde was Managing Director of the Company’s Belgium operation. Mr. Gyde has been with the Company since May 1987.

Mr. Harrington was promoted to Senior Vice President and Chief Financial Officer on September 13, 2006. Previously he was Interim Chief Financial Officer and Treasurer from October 17, 2005 to September 12, 2006. Prior to that, he held the position of Corporate Controller for the Company since May 2005. Mr. Harrington joined the Company in February 1994 and served in a number of managerial financial positions in the Company’s corporate and European operations before being appointed Corporate Controller.

Mr. Niehaus joined the Company in February 1999, and was promoted to Senior Vice President of CTG Healthcare Solutions in July 1999. Previously, Mr. Niehaus was Executive Vice President of Elumen Solutions, Inc. from September 1997 to February 1999. Prior to that, Mr. Niehaus was Vice President of Exemplar Systems.

Mr. Radetich joined the Company in June 1988 as Associate General Counsel, and was promoted to General Counsel and Secretary in April 1999.

Available Company Information

The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (Exchange Act), and reports pertaining to the Company filed under Section 16 of the Exchange Act are available without charge on the Company’s website at www.ctg.com as soon as reasonably practicable after the Company electronically files the information with, or furnishes it to, the SEC. The Company’s code of ethics, committee charters and governance policies are also available without charge on the Company’s website at www.ctg.com/investors/corporategov.htm.

7

Item 1A. Risk Factors

We operate in a dynamic and rapidly changing environment that involves numerous risks and uncertainties. The following section describes some, but not all, of the risks and uncertainties that could have a material adverse effect on our business, financial condition, results of operations and the market price of our common stock, and could cause our actual results to differ materially from those expressed or implied in our forward-looking statements.

Decreases in demand for information technology (IT) solutions and staffing services in the future would cause an adverse effect on our revenue and operating results.

There was a steady decline in demand in the technology services sector from the second half of 1999 through 2003 as a recession in the technology industry negatively affected spending for IT services. We believe that staffing demand began to increase in 2004, and returned to more normalized levels in 2005 for the first time in five years. Overall, staffing demand was positive in 2006 and 2007. However, the U.S. economy, where the Company performed greater than 75% of its business in 2007, has significantly deteriorated in the second half of 2007 and early 2008 primarily due to subprime mortgage issues, the high cost of oil, and other economic concerns. These negative pressures on the economy have led to a contraction of the credit markets, and many believe may lead to a recession in 2008. Declines in spending for IT services in 2008 or future years may adversely affect our operating results in the future as they have in the past.

Our business depends on a large number of highly qualified professionals and if we are not able to recruit and retain a sufficient number of these professionals, we would not be able to provide high quality services to our current and future customers, which would have an adverse effect on our revenue and operating results.

We actively compete with many other IT service providers for qualified professional staff. The availability or lack thereof of qualified professional staff may affect our ability to provide services and meet the needs of our customers in the future. An inability to fulfill customer requirements due to a lack of available qualified staff at agreed upon rates may adversely impact our operating results in the future.

Increased competition and the bargaining power of our large customers may cause our billing rates to decline, which would have an adverse effect on our revenue and, if we are unable to control our personnel costs accordingly, our operating results.

We have experienced several reductions in the rates for which we bill for services from some of our larger customers during highly competitive periods in the past. Additionally, we actively compete against many other companies for business with new and existing clients. Competitive pressures may lead to a further decline in the rates that we bill our customers for services, which may adversely affect our operating results in the future.

The currency, legislative, tax, regulatory and economic risks associated with international operations could have an adverse effect on our operating results if we are unable to mitigate or hedge these risks.

We have operations in the United States and Canada in North America, and in Belgium, the United Kingdom, Luxembourg and Germany in Europe. Although our foreign operations conduct their business in their local currencies, they are subject to currency fluctuations. Each of our operations is subject to legislation, employment and tax law changes, and economic climates. These factors related to our foreign operations are different than those of the United States. Although we actively manage these foreign operations with local management teams, economic conditions or other changes beyond our control may negatively affect our overall operating results.

We derive a significant portion of our revenue from a single customer and a significant reduction in the amount of IT services requested by this customer would have an adverse effect on our revenue and operating results.

In 2007, International Business Machines (IBM) was our largest customer, accounting for $104.6 million or 32.2% of consolidated revenue. The Company’s accounts receivable balance from IBM at December 31, 2007 totaled $10.3 million. During 2004, we signed an addendum to the Technical Services Agreement with IBM making us a predominant supplier to IBM’s Systems and Technology Group. In 2006, the Company signed an addendum to this agreement which extends its expiration date to December 31, 2008. We expect to continue to derive a significant portion of our revenue from IBM in 2008 and in future years. However, a significant decline or the loss of the revenue from IBM would have a significant negative effect on our operating results. No other customer accounted for more than 10% of our revenue in 2007, 2006 or 2005.

8

The IT services industry is highly competitive and fragmented, which means that our customers have a number of choices for providers of IT services and we may not be able to compete effectively.

The market for our services is highly competitive. The market is fragmented, and no company holds a dominant position. Consequently, our competition for client requirements and experienced personnel varies significantly by geographic area and by the type of service provided. Some of our competitors are larger and have greater technical, financial, and marketing resources and greater name recognition than we have in the markets we collectively serve. In addition, clients may elect to increase their internal IT systems resources to satisfy their custom software development and integration needs. Finally, our industry is being impacted by the growing use of lower-cost offshore delivery capabilities (primarily India). There can be no assurance that we will be able to continue to compete successfully with existing or future competitors or that future competition will not have a material adverse effect on our results of operations and financial condition.

Changes in government regulations and laws affecting the IT services industry, including accounting principles and interpretations and the taxation of domestic and foreign operations, could adversely affect our results of operations.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and new SEC regulations, are creating uncertainty for companies such as ours. These new or changed laws, regulations and standards are subject to varying interpretations which, in many instances, is due to their lack of specificity. As a result, the application of these new standards and regulations in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, our efforts to comply with evolving laws, regulations and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. In particular, our efforts to comply with Section 404 of the Sarbanes-Oxley Act of 2002 and the related regulations regarding our required assessment of our internal controls over financial reporting and our independent auditors’ audit of that assessment has required the commitment of significant internal, financial and managerial resources.

The Financial Accounting Standards Board (FASB), the SEC, and the Public Company Accounting Oversight Board (PCAOB) or other accounting rulemaking authorities may issue new accounting rules or standards that are different than those that we presently apply to our financial results. Such new accounting rules or standards could require significant changes from the way we currently report our financial condition, results of operations or cash flows.

U.S. generally accepted accounting principles have been the subject of frequent interpretations. As a result of the enactment of the Sarbanes-Oxley Act of 2002 and the review of accounting policies by the SEC as well as by national and international accounting standards bodies, the frequency of future accounting policy changes may accelerate. Such future changes in financial accounting standards may have a significant effect on our reported results of operations, including results of transactions entered into before the effective date of the changes.

We are subject to income taxes in the United States and numerous foreign jurisdictions. Our provision for income taxes and our tax liability in the future could be adversely affected by numerous factors including, but not limited to, income before taxes being lower than anticipated in countries with lower statutory tax rates and higher than anticipated in countries with higher statutory tax rates, changes in the valuation of deferred tax assets and liabilities, and changes in tax laws, regulations, accounting principles or interpretations thereof, which could adversely impact our financial condition, results of operations and cash flows in future periods.

9

Our customer contracts generally have a short term or are terminable on short notice and a significant number of failures to renew, early terminations or renegotiations of our existing customer contracts could adversely affect our results of operations.

Our clients typically retain us on a non-exclusive, engagement-by-engagement basis, rather than under exclusive long-term contracts. We perform approximately 88% of our services on a time and materials basis. As such, our customers generally have the right to terminate a contract with us upon written notice without the payment of any financial penalty. Client projects may involve multiple engagements or stages, and there is a risk that a client may choose not to retain us for additional stages of a project or that a client will cancel or delay additional planned engagements. These terminations, cancellations or delays could result from factors that are beyond our control and are unrelated to our work product or the progress of the project, but could be related to business or financial conditions of the client, changes in client strategies or the economy in general. When contracts are terminated, we lose the associated revenue and we may not be able to eliminate the associated costs in a timely manner. Consequently, our operating results in subsequent periods may be lower than expected. Our clients can cancel or reduce the scope of their engagements with us on short notice. If they do so, we may be unable to reassign our professionals to new engagements without delay. The cancellation or reduction in scope of an engagement could, therefore, reduce the utilization rate of our professionals, which would have a negative impact on our business, financial condition, and results of operations. As a result of these and other factors, our past financial performance should not be relied on as a guarantee of similar or better future performance. Due to these factors, we believe that our results of operations may fluctuate from period-to-period in the future.

The introduction of new IT products or services may render our existing IT Staffing, IT Solutions, or outsourcing service offerings to be obsolete, which, if we are unable to keep pace with these corresponding changes, could have an adverse effect on our business.

Our success depends, in part, on our ability to implement and deliver strategic IT Staffing, IT Solutions, and outsourcing services that anticipate and keep pace with rapid and continuing changes in technology, industry standards and client preferences. We may not be successful in anticipating or responding to these developments on a timely basis, and our offerings may not be successful in the marketplace. Also, services, solutions and technologies developed by our competitors may make our staffing, solution or outsourcing offerings uncompetitive or obsolete. Any one of these circumstances could have a material adverse effect on our ability to obtain and successfully complete client engagements.

Existing and potential customers are outsourcing or considering outsourcing their IT requirements to foreign countries in which we may not currently have operations, which could have an adverse effect on our ability to obtain new customers or retain existing customers.

In the past few years, more companies are using or are considering using low cost offshore outsourcing centers to perform technology related work and complete projects. Currently, we have partnered with clients to perform services in Russia and India to mitigate and reduce this risk to our Company. However, the risk of additional increases in the future in the outsourcing of IT solutions overseas could have a material, negative impact on our future operations.

A significant portion of our total assets consists of goodwill, which is subject to a periodic impairment analysis and a significant impairment determination in any future period could have an adverse effect on our results of operations even without a significant loss of revenue or increase in cash expenses attributable to such period.

We have goodwill totaling approximately $35.7 million at December 31, 2007 resulting from our acquisition of Elumen Solutions, Inc. (Elumen) in early 1999. Elumen provided IT services into healthcare and related companies, and was merged with the Company’s existing staff which also served the healthcare industry. At least annually, we evaluate this goodwill for impairment based on the fair value of the business operations to which this goodwill relates. This estimated fair value could change if we are unable to achieve operating results at the levels that have been forecasted, the market valuation of such companies decreases based on transactions involving similar companies which could occur given the recent economic downturn in the countries in which the Company operates, or there is a permanent, negative change in the market demand for the services offered by this business unit. These changes could result in an impairment of the existing goodwill balance that could require a material non-cash charge to our results of operations.

10

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Company owns and occupies a headquarters building at 800 Delaware Avenue, and an office building at 700 Delaware Avenue, both located in Buffalo, New York, operated by CTG of Buffalo, and part of the Company’s North American operations. The corporate headquarters consists of approximately 40,000 square feet and is occupied by corporate administrative operations. The office building consists of approximately 39,000 square feet and is also occupied by corporate administrative operations. At December 31, 2007, these properties were not mortgaged or pledged as collateral against the Company’s existing revolving credit agreement.

The remainder of the Company’s locations are leased facilities. Most of these facilities serve as sales and support offices and their size varies, generally in the range of approximately 250 to 11,000 square feet, with the number of people employed at each office. The Company’s lease terms generally vary from periods of less than a year to five years and generally have flexible renewal options. The Company believes that its present owned and leased facilities are adequate to support its current and anticipated future needs.

Item 3. Legal Proceedings

The Company and its subsidiaries are involved from time to time in various legal proceedings arising in the ordinary course of business. Although the outcome of lawsuits or other proceedings involving the Company and its subsidiaries cannot be predicted with certainty and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, management does not expect these matters, if any, to have a material adverse effect on the financial position, results of operations, or cash flows of the Company.

Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders in the fourth quarter of 2007.

11

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Stock Market Information

The Company’s common stock is traded on The NASDAQ Stock Market LLC under the symbol CTGX. Prior to June 6, 2006, the Company’s common stock was traded on the New York Stock Exchange under the symbol CTG. The following table sets forth the high and low sales prices for the Company’s common stock for each quarter of the previous two years.

Stock Price	High		Low
Year ended December 31, 2007
Fourth Quarter	$	6.05	$	4.02
Third Quarter	$	5.12	$	4.14
Second Quarter	$	4.98	$	4.15
First Quarter	$	4.80	$	4.10
Year ended December 31, 2006
Fourth Quarter	$	4.90	$	3.57
Third Quarter	$	5.00	$	3.40
Second Quarter	$	6.00	$	3.91
First Quarter	$	4.60	$	3.80

On February 26, 2008, there were 2,346 record holders of the Company’s common shares. The Company has not paid a dividend since 2000. The Company paid an annual cash dividend of $.05 per share from 1993 to 2000 and, prior to that, paid $.025 per share annually since 1976 plus a 10% share dividend in 1980. The Company is required to meet certain financial covenants under its current revolving credit agreement in order to pay dividends. The Company was in compliance with these financial covenants at December 31, 2007. The determination of the timing, amount and payment of dividends on the Company’s common stock in the future is at the discretion of the Board of Directors and will depend upon, among other things, the Company’s profitability, liquidity, financial condition, capital requirements and compliance with the aforementioned financial covenants.

For information concerning common stock issued in connection with the Company’s equity compensation plans, see Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

12

Issuer Purchases of Equity Securities

The chart below reflects purchases by the Company of its common stock during the fourth quarter ended December 31, 2007.

Period	Total Number of Shares Purchased	Average Price Paid per Share *		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that may yet be Purchased Under the Plans or Programs
September 29 - October 31	130,482	$	4.51	130,482	785,011
November 1 - November 30	249,900	$	5.06	249,900	535,111
December 1 - December 31	118,882	$	5.34	118,882	416,229
Total	499,264	$	4.98	499,264	416,229

During February 2007, the Company’s Board of Director’s authorized a total of 1.0 million shares for future stock repurchases. In February 2008, the Board of Directors authorized the repurchase of an additional 1.0 million shares. The share repurchase program does not have an expiration date, nor was it terminated during the fourth quarter of 2007.

* Includes commissions paid

13

Company Performance Graph

The following graph displays a five-year comparison of cumulative total shareholder returns for the Company’s common stock, the S&P 500 Index, the Dow Jones U.S. Computer Services Index, and a peer group (Peer Group), assuming a base index of $100 at the end of 2002. The cumulative total return for each annual period within the five years presented is measured by dividing (1) the sum of (A) the cumulative amount of dividends for the period, assuming dividend reinvestment, and (B) the difference between the Company’s share price at the end and the beginning of the period by (2) the share price at the beginning of the period. The calculations were made excluding trading commissions and taxes.

	Base Period	INDEXED RETURNS Years Ending
	Dec 02	Dec 03	Dec 04	Dec 05	Dec 06	Dec 07
Computer Task Group, Inc.	100	111.46	160.46	113.18	136.10	158.45
S&P 500 Index	100	128.68	142.69	149.70	173.34	182.86
Dow Jones U.S. Computer Services Index	100	134.18	146.28	129.26	153.87	166.82
Peer Group	100	138.85	146.20	164.08	157.42	168.19

For 2007, the Company has added the Dow Jones U.S. Computer Services Index to its company performance graph. The Company’s Peer Group consists of Analysts International Corp., Ciber, Inc., Computer Horizons Corp., Compuware Corporation, and Technology Solutions Corp. In the past, there were additional companies in CTG’s peer group, but several were acquired or sold in recent years including one in 2007, and CTG can no longer compare its shareholder return results to those companies. These changes leave the Peer Group index with only five remaining companies at December 31, 2007, which CTG does not consider to be adequate to make a proper comparison of shareholder returns. Accordingly, the Dow Jones U.S. Computer Services Index has been added to the shareholder return chart in 2007 and will replace the Peer Group index beginning in 2008.

14

Item 6. Selected Financial Data

Consolidated Summary – Five-Year Selected Financial Information

The selected operating data and financial position information set forth below for each of the years in the five-year period ended December 31, 2007 has been derived from the Company’s audited consolidated financial statements. This information should be read in conjunction with the audited consolidated financial statements and notes thereto included in Item 8, “Financial Statements and Supplementary Data” included in this report. Information reported for 2003 has been revised, as applicable, to reflect the disposition of CTG Nederland, B.V. effective January 1, 2004.

(amounts in millions, except per-share data)	2007		2006		2005		2004			2003
		(1, 2)		(2)
Operating Data
Revenue	$	325.3	$	327.3	$	294.5	$	237.1		$	245.5
Operating income	$	6.5	$	6.9	$	4.9	$	3.1		$	5.5
Income from continuing operations	$	4.2	$	3.5	$	2.4	$	3.0		$	2.7
Net income (loss)	$	4.2	$	3.5	$	2.4	$	(1.4	) (3)	$	2.7
Basic net income per share from continuing operations	$	0.26	$	0.21	$	0.14	$	0.18		$	0.16
Basic net income (loss) per share	$	0.26	$	0.21	$	0.14	$	(0.09	) (3)	$	0.16
Diluted net income per share from continuing operations	$	0.25	$	0.21	$	0.14	$	0.17		$	0.16
Diluted net income (loss) per share	$	0.25	$	0.21	$	0.14	$	(0.08	) (3)	$	0.16
Cash dividend per share	$	–	$	–	$	–	$	–		$	–
Financial Position
Working capital	$	23.2	$	21.7	$	40.3	$	17.2		$	16.5
Total assets	$	112.5	$	111.7	$	128.3	$	103.8		$	101.4
Long-term debt	$	–	$	–	$	23.2	$	–		$	–
Shareholders’ equity	$	65.1	$	61.6	$	57.5	$	57.0		$	56.6

(1) During 2007, the Company received two unsolicited merger proposals from RCM Technologies, Inc. After consideration of the proposals, the Company’s Board of Directors unanimously determined that the proposals were inadequate and did not reflect the value inherent in CTG’s business and the Company’s potential growth opportunities. In 2007, included in operating income, the Company recorded $0.7 million related to advisory fees incurred in conjunction with its consideration of the two unsolicited merger proposals.

(2) During 2006, the Company adopted the provisions of FAS 123R, “Share-Based Payment” (FAS 123R) and related interpretations. The Company recognized compensation expense of $863,000 and $856,000 in 2007 and 2006, respectively, in its consolidated statements of operations as selling, general and administrative expenses. The tax benefit recorded for this compensation expense was $294,000 and $260,000 in 2007 and 2006, respectively, resulting in a net after tax cost to the Company of $569,000 in 2007 and $596,000 in 2006. For additional information regarding the adoption and use of FAS 123R, see note 1 to the consolidated financial statements in Item 8, “Financial Statements and Supplementary Data” included in this report.

(3) Includes a loss from discontinued operations of approximately $4.4 million, or $0.27 per basic share and $0.25 per diluted share from the disposition of CTG Nederland, B.V. effective January 1, 2004.

15

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

Forward-Looking Statements

This management’s discussion and analysis of financial condition and results of operations contains forward-looking statements by management and the Company that are subject to a number of risks and uncertainties. These forward-looking statements are based on information as of the date of this report. The Company assumes no obligation to update these statements based on information from and after the date of this report. Generally, forward-looking statements include words or phrases such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “projects,” “could,” “may,” “might,” “should,” “will” and words and phrases of similar impact. The forward-looking statements include, but are not limited to, statements regarding future operations, industry trends or conditions and the business environment, and statements regarding future levels of, or trends in, revenue, operating expenses, capital expenditures, and financing. The forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including the following: (i) industry and economic conditions, including fluctuations in demand for IT services, (ii) the availability to us of qualified professional staff, (iii) domestic and foreign industry competition, (iv) rate and wage inflation or deflation, (v) risks associated with operating in foreign jurisdictions, (vi) the impact of current and future laws and government regulation, as well as repeal or modification of same, affecting the IT solutions and staffing industry, taxes and the Company’s operations in particular, (vii) renegotiations, nullification, or breaches of contracts with customers, vendors, subcontractors or other parties, (viii) consolidation among the Company’s competitors or customers, (ix) the partial or complete loss of the revenue the Company generates from IBM, and (x) the risks described in Item 1A of this annual report on Form 10-K and from time to time in the Company’s reports filed with the SEC.

Industry Trends

The market demand for the Company’s services is heavily dependent on IT spending by major corporations, organizations and government entities in the markets and regions that we serve. The pace of technology change and changes in business requirements and practices of our clients all have a significant impact on the demand for the services that we provide. Competition for new engagements and pricing pressure has been strong. We have responded to these challenging business conditions by focusing on two main services, which are providing IT solutions and strategic staffing to our clients. The Company’s solutions / staffing revenue was 32% / 68% for the year ended December 31, 2007, 30% / 70% for the year ended December 31, 2006, and 29% / 71% for the year ended December 31, 2005.

The Company has promoted a majority of our services through three vertical market focus areas, which are technology service providers, healthcare (which includes services provided to health care providers, health insurers, and life sciences companies), and financial services. The vertical areas of technology service providers, healthcare, and financial services totaled 38%, 25%, and 11% of total consolidated revenue in 2007, 41%, 24%, and 10% of total consolidated revenue in 2006 and 41%, 24%, and 8% of total consolidated revenue in 2005, respectively. Outside of these three vertical market focus areas, the Company provides its services to customers in general industries, which totaled 26% of total consolidated revenue in 2007, 25% in 2006, and 27% in 2005, respectively. We have also closely monitored and managed the utilization of our billable personnel, and have actively managed our selling, general and administrative costs as a percentage of revenue.

The IT services industry is extremely competitive and characterized by continuous changes in customer requirements and improvements in technologies. Our competition varies significantly by geographic region, as well as by the type of service provided. Many of our competitors are larger than CTG, and have greater financial, technical, sales and marketing resources. In addition, the Company frequently competes with a client’s own internal IT staff. Our industry is being impacted by the growing use of lower-cost offshore delivery capabilities (primarily India). There can be no assurance that we will be able to continue to compete successfully with existing or future competitors or that future competition will not have a material adverse effect on our results of operations and financial condition.

16

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, when the services have been rendered, when the price is determinable, and when collectibility of the amounts due is reasonably assured. For time-and-material contracts, revenue is recognized as hours are incurred and costs are expended. Revenue from time-and-material projects totaled approximately 88%, 90% and 92% of consolidated revenue for the years ended December 31, 2007, 2006 and 2005, respectively.

For contracts with periodic billing schedules, primarily monthly, revenue is recognized as services are rendered to the customer. Revenue from such projects totaled approximately 8%, 6% and 5% of consolidated revenue for the years ended December 31, 2007, 2006 and 2005, respectively.

Revenue for fixed price contracts is recognized as per the proportional method of accounting using an input-based approach whereby salary and indirect labor costs incurred are measured and compared to the total estimate of costs at completion for a project. Revenue is recognized based upon the percent complete calculation of total incurred costs to total estimated costs. The Company infrequently works on fixed price projects that include significant amounts of material or other non-labor related costs which could distort the percent complete within a percentage complete calculation. The Company’s estimate of the total labor costs it expects to incur over the term of the contract is based on the nature of the project and our past experience on similar projects, and includes management judgments and estimates which affect the amount of revenue recognized on fixed price contracts in any accounting period. Revenue from fixed-price contracts accounted for under the percentage-of-completion method totaled approximately 4%, 4% and 3% of consolidated revenue for the years ended December 31, 2007, 2006 and 2005, respectively.

Results of Operations

The table below sets forth data as contained on the consolidated statements of income, with the percentage information calculated as a percentage of consolidated revenue as reported on the Company’s consolidated statements of income as included in Item 8, “Financial Statements and Supplementary Data” in this report.

Year ended December 31,	2007		2006		2005
(percentage of revenue)
Revenue	100.0	%	100.0	%	100.0	%
Direct costs	77.7	%	77.3	%	77.0	%
Selling, general, and administrative expenses	20.3	%	20.6	%	21.3	%
Operating income	2.0	%	2.1	%	1.7	%
Interest and other income (expense), net	0.1	%	(0.2	)%	(0.5	)%
Income before income taxes	2.1	%	1.9	%	1.2	%
Provision for income taxes	0.8	%	0.8	%	0.4	%
Net income	1.3	%	1.1	%	0.8	%

2007 as compared to 2006

In 2007, the Company recorded revenue of $325.3 million, a decrease of 0.6% as compared to revenue of $327.3 million recorded in 2006. Revenue from the Company’s North American operations totaled $253.2 million in 2007, a decrease of 5.7% when compared to revenue of $268.4 million in 2006. Revenue from the Company’s European operations totaled $72.1 million in 2007, an increase of 22.4% when compared to 2006 revenue from European operations of $58.9 million. The European revenue represented 22.2% and 18.0% of 2007 and 2006 consolidated revenue, respectively. The Company’s revenue includes reimbursable expenses billed to customers. These expenses totaled $7.9 million and $9.4 million in 2007 and 2006, respectively.

17

In North America, the revenue decrease in 2007 as compared to 2006 is primarily the result of the reduction in demand that occurred from IBM in the 2006 third quarter, partially offset by increases in the Company’s solutions business. The 2006 customer headcount reduction resulted in an estimated annual loss of approximately $35 million in revenue. The areas of greatest demand in the solutions practice have been testing, clinical transformation projects, and transitional outsourcing. As a result of this increase in demand for the Company’s solutions services, coupled with the reduction in the 2006 third quarter of the staffing headcount, the mix of the Company’s solutions / staffing revenue increased to 32% / 68% at December 31, 2007 from 30% / 70% at December 31, 2006.

The significant increase in revenue in the Company’s European operations was in part due to the addition of billable staff as compared to the prior year as demand for the Company’s solution offerings, primarily in the testing area, was strong for most of 2007. The staffing business in Europe remained relatively consistent year-over-year. Significantly adding to the increase in year-over-year revenue was the strength of the currencies of Belgium, the United Kingdom, Luxembourg, and Germany the countries in which the Company’s European subsidiaries operate. In Belgium, Luxembourg and Germany, the functional currency is the Euro, while in the United Kingdom the functional currency is the British pound. Had there been no change in these exchange rates from the 2006 to 2007, total European revenue would have been approximately $6.1 million lower, or $66.0 million as compared to the $72.1 million reported.

In 2007, IBM was the Company’s largest customer, accounting for $104.6 million or 32.2% of consolidated revenue as compared to $115.4 million or 35.3% of 2006 consolidated revenue. During 2004, the Company signed an addendum to the Technical Services Agreement it has with IBM making it a predominant supplier to IBM’s Systems and Technology Group which has driven a large portion of the increase in the demand for the Company’s staffing services. In 2006, the Company signed an addendum to this agreement which extends its expiration date to December 31, 2008. We expect to continue to derive a significant portion of our revenue from IBM in 2008 and in future years. However, a significant decline or the loss of the revenue from IBM, as occurred in the 2006 third quarter, would have a significant negative effect on our operating results. The Company’s accounts receivable from IBM at December 31, 2007 and December 31, 2006 totaled $10.3 million and $10.9 million, respectively. No other customer accounted for more than 10% of the Company’s revenue in either 2007 or 2006.

Direct costs, defined as costs for billable staff including billable out-of-pocket expenses, were 77.7% of 2007 revenue as compared to 77.3% of 2006 revenue. The slight increase in direct costs as a percentage of revenue in 2007 as compared to 2006 is primarily due to a decrease in utilization of billable personnel late in 2007 as compared to 2006, primarily in our European operations. This decrease in utilization was partially offset by an increase in the amount of solutions business in the Company’s sales mix during 2007, which generally yields higher margins than the Company’s staffing business.

Selling, general and administrative (SG&A) expenses were 20.3% of revenue in 2007 as compared to 20.6% of revenue in 2006. Overall, the decrease in SG&A expense as a percentage of revenue reflects the Company’s continued efforts to control and reduce its SG&A costs throughout the Company as a percentage of revenue. Additionally, during the second and third quarters of 2007, the Company received two unsolicited merger proposals from RCM Technologies, Inc. After consideration of the proposals, the Company’s Board of Directors unanimously determined that the proposals were inadequate and did not reflect the value inherent in CTG’s business and the Company’s potential growth opportunities. In 2007, included in SG&A expenses, the Company recorded $0.7 million related to advisory fees incurred in conjunction with its consideration of the two unsolicited merger proposals. Additionally, in the 2007 fourth quarter, the Company reserved for approximately $0.2 million of its accounts receivable balances related to a customer that declared bankruptcy.

Operating income was 2.0% of revenue in 2007 as compared to 2.1% of revenue in 2006. The Company’s operating income as a percentage of revenue generally increased throughout 2007 primarily due to a shift in the Company’s business mix to a higher percentage of solutions business as compared to staffing. However, operating income in 2007 was reduced due to the advisory fees and accounts receivable reserve described above. Operating income from North American operations was $4.6 million in 2007 as compared to $4.1 million in 2006, while European operations recorded operating income of $1.9 million in 2007 and $2.8 million in 2006. European operating income decreased year-over-year due to less utilization of its billable personnel in 2007 and higher administrative costs to support the revenue growth in Europe.

18

Interest and other income (expense), net was 0.1% of revenue in 2007 and (0.2) % in 2006. During the 2007 first quarter, the Company sold an investment resulting in a gain of approximately $0.6 million. Additionally, there was less interest expense as a percentage of revenue in 2007 as compared to 2006 as the Company entered into an advance payment program with a significant customer in 2006 that affected only a portion of the first quarter of 2006. During 2007, the average outstanding debt balance was $5.0 million as compared to $6.6 million in 2006.

The Company’s effective tax rate (ETR) is calculated quarterly based upon current assumptions relating to the full years estimated operating results, and various tax related items. The Company’s normal ETR is approximately 37-41%. The 2007 ETR was 37.6%. The 2007 ETR was at the low end of the range primarily due to several items that decreased tax expense by approximately $0.1 million, net. The Company decreased the valuation allowance for the net operating loss for U.S. state jurisdictions by approximately $0.2 million, which was offset by adding approximately $0.1 million to its tax reserves due to changes in estimate of recoverability. Without these items the 2007 ETR would have been approximately 39.1%. The 2006 ETR was 43.2%. The 2006 ETR was higher than normal primarily due to several items that increased tax expense by approximately $0.2 million, including adding approximately $0.1 million to its tax reserves due to a change in estimate of recoverability, and an increase in the valuation allowance for net operating losses for Canada by approximately $0.1 million in the 2006 fourth quarter. Without these items, the 2006 ETR would have been approximately 39.5%.

The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (Interpretation 48) on January 1, 2007. Upon implementation of Interpretation 48, the Company was not required to recognize any increase in its liability for unrecognized tax benefits.

Net income for 2007 was 1.3% of revenue or $0.25 per diluted share, compared to net income of 1.1% of revenue or $0.21 per diluted share in 2006. Diluted earnings per share were calculated using 16.7 million weighted-average equivalent shares outstanding in both 2007 and 2006. The dilutive effect of incremental shares outstanding under the Company’s equity-based compensation plans in 2007 was offset by purchases of shares for treasury by the Company during 2007.

2006 as compared to 2005

In 2006, the Company recorded revenue of $327.3 million, an increase of 11.1% compared to revenue of $294.5 million recorded in 2005. Revenue from the Company’s North American operations totaled $268.4 million in 2006, an increase of 9% when compared to 2005 revenue of $246.2 million. Revenue from the Company’s European operations totaled $58.9 million in 2006, an increase of 21.9% when compared to 2005 revenue of $48.3 million. The European revenue represented 18% and 16.4% of 2006 and 2005 consolidated revenue, respectively. The Company’s revenue includes reimbursable expenses billed to customers. These expenses totaled $9.4 million and $9.2 million in 2006 and 2005, respectively.

In North America, the revenue increase in 2006 over 2005 is primarily the result of adding approximately 1,200 billable staff from January 1, 2005 through the end of the second quarter of 2006, largely due to the expansion of the IBM staffing business. During 2004, the Company signed an addendum to the Technical Services Agreement it has with IBM making it a predominant supplier to IBM’s Systems and Technology Group. The revenue increase in North America in 2006 from the addition of billable staff was partially offset as the Company entered a cash discount advance payment program with a significant customer which reduced revenue and operating income by approximately $1.6 million.

On July 24, 2006, the Company was informed by a significant customer of a reduction in their need for approximately 350 of CTG’s staff. The reduction was not a result of CTG’s performance, but rather a change in our client’s business needs. The reduction, which ultimately totaled approximately 450 staff of the 1,200 staff added between January 2005 and June 2006, occurred in the Company’s lower margin staffing business. This staff reduction equates to a reduction of approximately $35 million of annual revenue.

During 2006, the Company has experienced a slight increase in demand for the high-growth IT solutions business in which it is focused. The areas of greatest demand in the solutions practice have been testing, clinical transformation projects, and transitional outsourcing. As a result of this increase in demand, coupled with the reduction in the 2006 third quarter of the staffing headcount previously discussed, the mix of the Company’s solutions / staffing revenue increased to 30% / 70% at December 31, 2006 from 29% / 71% at December 31, 2005.

19

The significant increase in revenue in the Company’s European operations was also primarily due to the addition of billable staff as compared to the prior year as demand for the Company’s solution offerings, primarily in the testing area, remained strong. The staffing business in Europe has remained relatively consistent year-over-year. Adding to the increase in year-over-year revenue was the strength of the currencies of Belgium, the United Kingdom, and Luxembourg, the countries in which the Company’s European subsidiaries operate. In Belgium and Luxembourg, the functional currency is the Euro, while in the United Kingdom the functional currency is the British pound. If there had been no change in these exchange rates from 2005 to 2006, total European revenue would have been approximately $0.5 million lower, or $58.4 million, as compared to the $58.9 million reported.

In 2006, IBM was the Company’s largest customer, accounting for $115.4 million or 35.3% of consolidated revenue as compared to $105.5 million or 35.8% of 2005 consolidated revenue. A significant portion of the staff added in North America from January 1, 2005 to June 30, 2006 was with IBM. During 2004, the Company signed an addendum to the Technical Services Agreement it has with IBM making it a predominant supplier to IBM’s Systems and Technology Group which has driven a large portion of the increase in the demand for the Company’s staffing services. In 2006, the Company signed an addendum to this agreement which extends its expiration date to December 31, 2008. The Company’s accounts receivable from IBM at December 31, 2006 and December 31, 2005 amounted to $10.9 million and $33.9 million, respectively. No other customer accounted for more than 10% of the Company’s revenue in either 2006 or 2005.

Direct costs, defined as costs for billable staff including billable out-of-pocket expenses, were 77.3% of revenue in 2006 as compared to 77% of 2005 revenue. The increase in direct costs as a percentage of revenue in 2006 as compared to 2005 is primarily due to an increase in revenue of approximately $20 million for the Company’s staffing business in 2006 as compared to 2005, which generally yields lower direct profit margins than the remainder of the Company’s business.

SG&A expenses were 20.6% of revenue in 2006 as compared to 21.3% of revenue in 2005. The decrease in SG&A expense as a percentage of revenue reflects the Company’s continued efforts to control and reduce its SG&A costs in various areas as a percentage of revenue. On January 1, 2006, the Company adopted the provisions of FAS 123R, “Share-Based Payment” and related interpretations. With the adoption of the standard, the calculated cost of its stock-based compensation awards is recognized in the Company’s statement of income over the period in which an employee or director is required to provide the services for its award. The Company recognized compensation expense of $856,000 in 2006.

Operating income was 2.1% of revenue in 2006 as compared to 1.7% of revenue in 2005. The Company’s operating income as a percentage of revenue generally increased throughout 2006 primarily due to the reductions, as a percentage of revenue, of SG&A costs. Operating income from North American operations was $4.1 million in 2006 as compared to $3.0 million in 2005, while European operations recorded operating income of $2.8 million in 2006 and $1.9 million in 2005.

Interest and other expense, net was 0.2% of revenue in 2006 and 0.5% in 2005. The decrease as a percentage of revenue from 2005 to 2006 is primarily due to lower average outstanding debt balances in 2006 resulting from a cash discount advance payment program entered into with a significant customer in the first quarter of 2006. During 2006, the average outstanding debt balance was $6.6 million as compared to $17.3 million in 2005.

The ETR is calculated quarterly based upon current assumptions relating to the full years estimated operating results, and various tax related items. The Company’s normal ETR is approximately 37-41%. The 2006 ETR was 43.2%. The 2006 ETR was higher than normal primarily due to several items that increased tax expense by approximately $0.2 million. The Company added approximately $0.1 million to its tax reserves due to a change in estimate of recoverability, and increased the valuation allowance for the net operating loss for Canada by approximately $0.1 million in the fourth quarter of 2006. Without these items the 2006 ETR would have been approximately 39.5%. The 2005 ETR was 31.8%. The 2005 ETR was lower than normal primarily due to several items that created net tax benefits totaling approximately $0.3 million. The Company released a net amount of approximately $0.1 million from its tax reserves primarily due to a change in judgment and settlement of open items, and also reduced a valuation allowance for its net operating loss for Canada by approximately $0.2 million in the fourth quarter of 2005. Without these items the Company’s 2005 ETR would have been approximately 40.1%.

20

Net income for 2006 was 1.1% of revenue or $0.21 per diluted share, compared to net income of 0.8% of revenue or $0.14 per diluted share in 2005. Diluted earnings per share were calculated using 16.7 million and 17.1 million weighted-average equivalent shares outstanding in 2006 and 2005, respectively. The year-over-year decrease in shares is primarily due to treasury stock purchases made in 2006.

Recent Accounting Pronouncements

In September 2006, the FASB issued FAS 157, “Fair Value Measurements.” This FAS defines fair value, provides guidance for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. This FAS will be effective for the Company for the fiscal year beginning January 1, 2008. Although the Company is currently evaluating the effect that the adoption this FAS will have on its financial condition or results of operations, it does not believe the impact, if any, will be material.

In September 2006, the FASB issued FAS 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.” This FAS required the Company to recognize the overfunded or underfunded status of its defined benefit plans as either assets or liabilities, as applicable, in its consolidated balance sheets. The Company adopted these provisions of this FAS for the year ended December 31, 2006. Beginning for the year ended December 31, 2008, the FAS also requires the Company to measure the funded status of its plans as of the date of its year-end. Previously, the Company has measured the funded status of its pension plan in The Netherlands as of the end of is fiscal month of September. However, in 2008, that plan will be measured as of December 31, 2008. Although the Company is currently evaluating the effect that the adoption this FAS will have on its financial condition or results of operations, it does not believe the impact will be material.

In February 2007, the FASB issued FAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” This FAS allows an entity to elect to measure financial instruments and certain other items at fair value that are currently not being measured at fair value. This FAS will be effective for the Company for the fiscal year beginning January 1, 2008. Although the Company is currently evaluating the effect that the adoption this FAS will have on its financial condition or results of operations, it does not believe the impact, if any, will be material.

In 2006, the Emerging Issues Task Force issued EITF 06-04, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements.” This EITF requires an entity to account for both assets and liabilities associated with the purchase of endorsement split-dollar life insurance arrangements for employees where the policy continues to be in place after the employee’s retirement. This EITF will be effective for the Company for the fiscal year beginning January 1, 2008. Although the Company is currently evaluating the effect that the adoption this EITF will have on its financial condition or results of operations, it does not believe the impact will be material.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires the Company’s management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company’s significant accounting policies are included in note 1 to the consolidated financial statements contained in this Form 10-K under Item 8, “Financial Statements and Supplementary Data.” These policies, along with the underlying assumptions and judgments made by the Company’s management in their application, have a significant impact on the Company’s consolidated financial statements. The Company identifies its most critical accounting policies as those that are the most pervasive and important to the portrayal of the Company’s financial position and results of operations, and that require the most difficult, subjective and/or complex judgments by management regarding estimates about matters that are inherently uncertain. The Company’s most critical accounting policies are those related to goodwill valuation, income taxes, specifically relating to deferred taxes and valuation allowances, and the discount rates and expected return on plan assets, as applicable, used to calculate the Company’s pension obligations.

21

Goodwill Valuation

The goodwill balance of $35.7 million is evaluated annually or more frequently if facts and circumstances indicate impairment may exist. This evaluation, as applicable, is based on estimates and assumptions that may be used to analyze the appraised value of similar transactions from which the goodwill arose, the appraised value of similar companies, or estimates of future discounted cash flows. The estimates and assumptions on which the Company’s evaluations are based necessarily involve judgments and are based on currently available information, any of which could prove wrong or inaccurate when made, or become wrong or inaccurate as a result of subsequent events.

At our respective measurement dates for 2007, 2006 and 2005, with the assistance of an independent appraisal company, the Company completed its annual valuation of the business unit to which the Company’s goodwill relates. These valuations indicated that the estimated fair value of the business unit exceeded the carrying value of this unit in each period. Additionally, there are no facts or circumstances that arose during 2005, 2006 or 2007 that led management to believe the goodwill was impaired. Accordingly, the Company believes no impairment was required to be recorded in its consolidated financial results. Changes in business conditions which could impact future valuations however, could lead to impairment charges.

Income Taxes – Deferred Taxes and Valuation Allowances

At December 31, 2007, the Company had a total of approximately $6.2 million of current and non-current net deferred tax assets recorded on its consolidated balance sheet. The changes in deferred tax assets and liabilities from period to period are determined based upon the changes in differences between the basis of assets and liabilities for financial reporting purposes and the basis of assets and liabilities for tax purposes, as measured by the enacted tax rates when these differences are estimated to reverse. The Company has made certain assumptions regarding the timing of the reversal of these assets and liabilities, and whether taxable income in future periods will be sufficient to recognize all or a part of any gross deferred tax asset of the Company.

At December 31, 2007, the Company had deferred tax assets recorded resulting from net operating losses totaling approximately $2.9 million. Management of the Company has analyzed each jurisdiction’s tax position, including forecasting potential taxable income in future periods, and the expiration of the net operating loss carryforwards as applicable, and determined that it is unclear whether all of these deferred tax assets will be realized at any point in the future. Accordingly, at December 31, 2007, the Company had offset a portion of these assets with a valuation allowance totaling $2.5 million, resulting in a net deferred tax asset from net operating loss carryforwards of approximately $0.4 million.

The Company’s deferred tax assets and their potential realizability are evaluated each quarter to determine if any changes should be made to the valuation allowance. Any change in the valuation allowance in the future could result in a change in the Company’s ETR. An additional 1% increase in the ETR in 2007 would have reduced net income by approximately $68,000.

Defined-Benefit Pension Plans – Discount Rates and Expected Return on Plan Assets

The Company maintains a non-qualified defined-benefit Executive Supplemental Benefit Plan (ESBP) that provides certain former key executives with deferred compensation benefits, based on years of service and base compensation, payable during retirement. The plan was amended as of November 30, 1994, to freeze benefits for participants at that time. The Company also retained a contributory defined-benefit plan for its previous employees located in The Netherlands (NDBP) when the Company disposed of its subsidiary, CTG Nederland, B.V., in the first quarter of 2004. Benefits paid under the NDBP are a function of a percentage of career average pay. The NDBP was curtailed for additional contributions in January 2003.

For the ESBP, the discount rate used in 2007 to calculate the benefit obligation was 6.57%, which is reflective of a series of bonds that are included in the Moody’s Aa long-term corporate bond yield whose cash flow approximates the payments to participants under the ESBP for the remainder of the plan. This rate was an increase of 77 basis points from the rate used in the prior year to calculate the benefit obligation and resulted in a decrease in the plan’s liabilities of approximately $0.5 million.

22

For the NDBP, the discount rate used in 2007 to calculate the benefit obligation was 5.3%, which is reflective of the current return on long-term corporate bonds that have a remaining life of greater than 10 years which corresponds to the remaining average life of the plan. This rate was an increase of 70 basis points from the rate used in the prior year and resulted in a decrease in the plan’s liabilities of approximately $0.9 million. The expected return on plan assets for 2007 was 5% or approximately $0.3 million. The assets in the NDBP are 20% invested in the Aegon World Equity Fund. This fund invests in global equities, with a small portion of the fund in new or emerging economies. The remaining 80% of the assets are invested as determined by Aegon with no direction from the Company, with a guaranteed minimum return to the Company of 4%. The Company’s investments were allocated as indicated above in 2005, 2006 and 2007, and the Company does not anticipate changing these allocation percentages going forward. The expected return on plan assets for 2007 was a function of the average historical return of 4.5% on the 80% of the funds invested by Aegon, and an estimated return of 9% on the 20% of the funds invested in the Aegon Equity Fund. The three year return to the Company on the Aegon Equity Fund was approximately 16%. In 2007, the actual return on plan assets approximated the expected return on plan assets.

Other Estimates

The Company has also made a number of estimates and assumptions relating to the reporting of other assets and liabilities and the disclosure of contingent assets and liabilities to prepare the consolidated financial statements pursuant to the rules and regulations of the SEC. Such estimates primarily relate to the valuation of stock options for recording equity-based compensation expense, allowances for doubtful accounts receivable, investment valuation, legal matters, and estimates of progress toward completion and direct profit or loss on contracts, as applicable. Actual results could differ from these estimates.

Financial Condition and Liquidity

Cash provided by operating activities in 2007 was $5.2 million. Net income was $4.2 million, while other non-cash adjustments, primarily consisting of depreciation expense, equity-based compensation, deferred income taxes, deferred compensation, and a gain on investments totaled $3.7 million. The accounts receivable balance decreased $2.2 million primarily due to the decrease in the timing of the collection of outstanding invoices resulting in a decrease in days sales outstanding to 58 days at December 31, 2007 from 63 days at December 31, 2006. Prepaid and other assets increased $0.5 million due to the purchase of certain items prior to year-end, while other assets increased $1.3 million primarily due to the increase in cash surrender value of Company owned life insurance policies and the change in the discount rate for the NDBP which increased the net asset of the plan by approximately $1.2 million. Accounts payable increased $1.0 million due to the timing of certain payments at year-end. Accrued compensation decreased $2.7 million primarily due to the timing of payments to subcontractors near year-end 2007, which resulted in a year-over-year decrease of $2.3 million in the amount owed to subcontractors. Advance billings on contracts decreased $1.1 million due to the timing of billings on customer accounts near the end of 2007.

Investing activities used $1.1 million in 2007, including $2.1 million spent for additions to property and equipment, offset by $0.8 million received from the sales of investments and $0.2 million received from an insurance claim. The Company has no significant commitments for the purchase of property or equipment at December 31, 2007.

Financing activities used $4.9 million of cash in 2007. For December 31, 2007, there were no net borrowings on the Company’s revolving credit line. The Company is required to meet certain financial covenants in order to maintain borrowings under its revolving line of credit agreement, which allows the Company to borrow up to $35 million, pay dividends, and make acquisitions. The Company was in compliance with these covenants at December 31, 2007. The Company borrows or repays its revolving debt as needed based upon its working capital obligations, including the timing of the U.S. bi-weekly payroll. Daily average borrowings for 2007 were approximately $5.0 million.

During 2007, the Company used $4.4 million to purchase approximately 0.9 million shares of its stock for treasury. At December 31, 2007, approximately 0.4 million shares remain authorized for future purchases. During February 2008, the Company’s Board of Director’s authorized an additional 1.0 million shares be added to the remaining shares in the current buyback authorization.

23

At December 31, 2007, the Company has restricted use to approximately $0.4 million of its cash and cash equivalents as the funds are held as a guarantee by a financial institution for leased office space.

The Company believes existing internally available funds, cash potentially generated from operations, and available borrowings under the Company’s revolving line of credit totaling approximately $34.6 million at December 31, 2007, will be sufficient to meet foreseeable working capital, capital expenditure, and stock repurchase requirements, and to allow for future internal growth and expansion.

Off-Balance Sheet Arrangements

The Company did not have off-balance sheet arrangements or transactions in either 2007, 2006 or 2005.

Quantitative and Qualitative Disclosures about Market Risk

The Company’s primary market risk exposures consist of interest rate risk associated with variable rate borrowings and foreign currency exchange risk associated with the Company’s European operations. See Item 7A, “Quantitative and Qualitative Disclosure about Market Risk” in this report.

Contractual Obligations

A summary of the Company’s contractual obligations at December 31, 2007 is as follows:

(in millions)		Total		Less than 1 year		Years 2-3		Years 4-5		More than 5 years
Long-term debt	A	$	–	$	–	$	–	$	–	$	–
Capital lease obligations	B		0.0		0.0		–		–		–
Operating lease obligations	C		20.5		6.7		8.0		2.2		3.6
Purchase obligations	D		1.8		1.6		0.2		–		–
Deferred compensation benefits (U.S.)	E		8.6		1.2		1.5		1.5		4.4
Deferred compensation benefits (Europe)	F		–		–		–		–		–
Other long-term liabilities	G		0.5		0.2		0.1		0.1		0.1
Unrecognized tax benefits	H		0.3		0.1		0.2		–		–
Total		$	31.7	$	9.8	$	10.0	$	3.8	$	8.1

A In February 2008, the Company entered into an amendment to its revolving credit agreement (Agreement) which allows the Company to borrow up to $35 million. This Agreement has a term of three years and expires in April 2011. The Company uses this facility to fund its working capital obligations as needed, primarily including funding the U.S. bi-weekly payroll. The Company currently has two outstanding letters of credit totaling approximately $0.4 million that collateralize an office lease and an employee benefit program.

B The Company has one capital lease totaling less than $50,000, and is not committed to enter any other capital lease obligations at this time.

C Operating lease obligations relate to the rental of office space, office equipment, and automobiles leased in the Company’s European operations. Total rental expense under operating leases in 2007, 2006, and 2005 was approximately $7.4 million, $6.3 million, and $6.3 million, respectively.

D The Company is currently obligated for purchase obligations in 2008, 2009 and 2010 to spend approximately $1.8 million, including $0.5 million for software maintenance and support fees, $0.3 million for computer-based training courses, $0.2 million for advisory fees related to the consideration of the unsolicited merger proposal from RCM Technologies, Inc., $0.1 million for professional organization memberships, $0.1 million for recruiting services, $0.4 million for telecommunications, and $0.2 million for equipment.

24

E The Company is committed for deferred compensation benefits in the U.S. under two plans. The Executive Supplemental Benefit Plan (ESBP) provides certain former key executives with deferred compensation benefits. The ESBP was amended as of November 30, 1994 to freeze benefits for participants at that time. Currently, 13 individuals are receiving benefits under this plan. The ESBP is deemed to be unfunded as the Company has not specifically identified Company assets to be used to discharge the deferred compensation benefit liabilities.

The Company also has a non-qualified defined-contribution deferred compensation plan for certain key executives. Contributions to this plan in 2007 were $0.4 million. The Company anticipates making contributions totaling approximately $0.4 million in 2008 to this plan for amounts earned in 2007.

F The Company retained a contributory defined-benefit plan for its previous employees located in The Netherlands when the Company disposed of its subsidiary, CTG Nederland B.V. This plan was curtailed on January 1, 2003 for additional contributions. As this plan is fully funded at December 31, 2007, the Company does not anticipate making additional payments to fund the plan in future years.

G The Company has other long-term liabilities including payments for a postretirement benefit plan and payments for taxes.

H The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (Interpretation 48) on January 1, 2007. The Company’s unrecognized tax benefits relate to positions taken on its tax returns which may be adjusted upon audit and for which the Company has reserved.

25

Item 7A. Quantitative and Qualitative Disclosure about Market Risk

The Company’s primary market risk exposures consist of interest rate risk associated with variable rate borrowings and foreign currency exchange risk associated with the Company’s European operations.

In February 2008, the Company entered into an amendment of its revolving credit agreement which allows the Company to borrow up to $35 million based upon available collateral. At both December 31, 2007 and 2006, there were no amounts outstanding under this agreement. Additionally, at both December 31, 2007 and 2006, there were $0.4 million outstanding under letters of credit under this Agreement.

The maximum amounts outstanding under the Company’s revolving credit agreements during 2007, 2006, and 2005 were $13.7 million, $23.9 million, and $29.4 million, respectively. Average bank borrowings outstanding for the years 2007, 2006, and 2005 were $5.0 million, $6.6 million, and $17.3 million, respectively, and carried weighted-average interest rates of 7.0%, 7.8%, and 6.0%, respectively. Accordingly, during 2007 a one percent increase in the weighted-average interest rate would have cost the Company an additional $50,000. The Company incurred commitment fees totaling approximately $0.1 million in each of 2007, 2006 and 2005 relative to the agreements.

During 2007, revenue was affected by the year-over-year foreign currency exchange rate changes of Belgium, the United Kingdom, Luxembourg and Germany, the countries in which the Company’s European subsidiaries operate. In Belgium, Luxembourg and Germany, the functional currency is the Euro, while in the United Kingdom, the functional currency is the British pound. Had there been no change in these exchange rates from the 2006 to 2007, total European revenue would have been approximately $6.1 million lower, or $66.0 million as compared to the $72.1 million reported. Operating income in Europe was not significantly affected by year-over-year exchange rate changes in these countries. The Company has historically not used any market risk sensitive instruments to hedge its foreign currency exchange risk.

26

Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Computer Task Group, Incorporated:

We have audited the accompanying consolidated balance sheets of Computer Task Group, Incorporated and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2007. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Computer Task Group, Incorporated and subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.

As discussed in Notes 1 and 7 to the consolidated financial statements, during 2006 the Company adopted Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, and Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Computer Task Group, Incorporated’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 7, 2008 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP

Buffalo, New York

March 7, 2008

27

Consolidated Statements of Income

Year ended December 31, (amounts in thousands, except per-share data)	2007			2006			2005
Revenue	$	325,285		$	327,253		$	294,465
Direct costs		252,889			253,101			226,663
Selling, general, and administrative expenses		65,872			67,298			62,877
Operating income		6,524			6,854			4,925
Gain on investments		650			–			–
Interest and other income		298			204			101
Interest and other expense		(663	)		(909	)		(1,472	)
Income before income taxes		6,809			6,149			3,554
Provision for income taxes		2,563			2,654			1,131
Net income	$	4,246		$	3,495		$	2,423
Net income per share
Basic	$	0.26		$	0.21		$	0.14
Diluted	$	0.25		$	0.21		$	0.14

The accompanying notes are an integral part of these consolidated financial statements.

28

Consolidated Balance Sheets

December 31, (amounts in thousands, except share balances)	2007			2006
Assets
Current Assets:
Cash and cash equivalents	$	4,290		$	4,758
Accounts receivable, net of allowances of $955 and $866		52,314			52,544
in 2007 and 2006, respectively
Prepaid and other current assets		3,278			2,704
Deferred income taxes		1,350			1,185
Investments		–			813
Total current assets		61,232			62,004
Property and equipment, net of accumulated depreciation of $28,899 and $26,685 in 2007 and 2006, respectively		5,741			5,918
Goodwill		35,678			35,678
Deferred income taxes		5,108			4,990
Other assets		4,098			2,679
Investments		604			448
Total assets	$	112,461		$	111,717
Liabilities And Shareholders’ Equity
Current Liabilities:
Accounts payable	$	10,109		$	9,561
Accrued compensation		21,299			23,162
Advance billings on contracts		908			2,047
Other current liabilities		4,988			5,125
Income taxes payable		717			455
Total current liabilities		38,021			40,350
Deferred compensation benefits		8,396			8,792
Other long-term liabilities		965			944
Total liabilities		47,382			50,086
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		111,911			111,458
Retained earnings		49,481			45,235
Less: Treasury stock of 7,912,736 and 7,019,643 shares at cost, respectively		(39,257	)		(35,005	)
Stock Trusts of 3,377,217 and 3,622,560 shares at cost, respectively		(55,142	)		(56,189	)
Accumulated other comprehensive loss		(2,184	)		(4,138	)
Total shareholders’ equity		65,079			61,631
Total liabilities and shareholders’ equity	$	112,461		$	111,717

The accompanying notes are an integral part of these consolidated financial statements.

29

Consolidated Statements of Cash Flows

Year ended December 31, (amounts in thousands)	2007			2006			2005
Cash flows from operating activities:
Net income	$	4,246		$	3,495		$	2,423
Adjustments:
Depreciation expense		2,425			2,596			2,662
Equity-based compensation expense		863			856			–
Deferred income taxes		(261	)		316			(521	)
Deferred compensation		1,340			(27	)		117
Gain on investments		(650	)		–			–
Tax benefit on stock option exercises		–			–			31
Loss on sales of property and equipment		–			6			23
Changes in assets and liabilities:
(Increase) decrease in accounts receivable		2,165			21,076			(26,555	)
(Increase) decrease in prepaid and other current assets		(454	)		(640	)		33
Increase in other assets		(1,295	)		(481	)		(7	)
Increase in investments		(113	)		–			–
Increase (decrease) in accounts payable		1,029			243			(794	)
Increase (decrease) in accrued compensation		(2,655	)		404			5,917
Increase (decrease) in advance billings on contracts		(1,149	)		722			(609	)
Increase (decrease) in other current liabilities		(289	)		196			7
Increase in income taxes payable		225			314			374
Increase (decrease) in other long-term liabilities		(232	)		(288	)		704
Net cash provided by (used in) operating activities		5,195			28,788			(16,195	)
Cash flows from investing activities:
Additions to property and equipment		(2,142	)		(1,830	)		(3,422	)
Proceeds from sales of investments		809			–			–
Proceeds from insurance claim		187			–			–
Proceeds from sales of property and equipment		6			6			92
Net cash used in investing activities		(1,140	)		(1,824	)		(3,330	)
Cash flows from financing activities:
Proceeds from (payments on) long-term revolving debt, net		–			(23,150	)		18,500
Change in cash overdraft, net		(1,110	)		(387	)		1,165
Debt refinancing costs		–			–			(507	)
Proceeds from Employee Stock Purchase Plan		129			147			144
Purchase of stock for treasury		(4,415	)		(2,185	)		(1,395	)
Proceeds from other stock plans		445			514			228
Excess tax benefits from equity-based compensation		45			114			–
Net cash provided by (used in) financing activities		(4,906	)		(24,947	)		18,135
Effect of exchange rate changes on cash and cash equivalents		383			493			(551	)
Net increase (decrease) in cash and cash equivalents		(468	)		2,510			(1,941	)
Cash and cash equivalents at beginning of year		4,758			2,248			4,189
Cash and cash equivalents at end of year	$	4,290		$	4,758		$	2,248

The accompanying notes are an integral part of these consolidated financial statements.

30

Consolidated Statements of Changes in Shareholders’ Equity

	Common Stock			Capital in Excess of Par Value			Retained Earnings		Treasury Stock					Stock Trusts					Accumulated Other Comprehensive Income (loss)			Total Shareholders’ Equity
(amounts in thousands)	Shares	Amount							Shares		Amount			Shares		Amount
Balance as of December 31, 2004	27,018	$	270	$	111,272		$	39,317	6,149		$	(31,416	)	4,058		$	(58,045	)	$	(4,349	)	$	57,049
Employee Stock Purchase Plan share issuance	–		–		(23	)		–	–			–		(39	)		167			–			144
Stock Option Plan share issuance	–		–		(77	)		–	–			–		(79	)		336			–			259
Purchase of stock	–		–		–			–	377			(1,395	)	–			–			–			(1,395	)
Comprehensive income (loss):
Net income	–		–		–			2,423	–			–		–			–			–			2,423
Foreign currency adjustment	–		–		–			–	–			–		–			–			(1,016	)		(1,016	)
Minimum pension liability adjustment, net of tax	–		–		–			–	–			–		–			–			(110	)		(110	)
Unrealized gain on investments, net of tax	–		–		–			–	–			–		–			–			137			137
Total comprehensive income (loss)	–		–		–			2,423	–			–		–			–			(989	)		1,434
Balance as of December 31, 2005	27,018		270		111,172			41,740	6,526			(32,811	)	3,940			(57,542	)		(5,338	)		57,491
Employee Stock Purchase Plan share issuance	–		–		(2	)		–	–			–		(35	)		149			–			147
Stock Option Plan share issuance	–		–		(274	)		–	–			–		(185	)		788			–			514
Excess tax benefits from equity-based compensation	–		–		113			–	–			–		–			–			–			113
Restricted stock issuance/forfeiture	–		–		(407	)		–	2			(9	)	(97	)		416			–			–
Purchase of stock	–		–		–			–	492			(2,185	)	–			–			–			(2,185	)
Equity-based compensation	–		–		856			–	–			–		–			–			–			856
Pension loss adjustment, net of tax	–		–		–			–	–			–		–			–			(151	)		(151	)
Comprehensive income (loss):
Net income	–		–		–			3,495	–			–		–			–			–			3,495
Foreign currency adjustment	–		–		–			–	–			–		–			–			1,183			1,183
Minimum pension liability adjustment, net of tax	–		–		–			–	–			–		–			–			174			174
Unrealized loss on investments, net of tax	–		–		–			–	–			–		–			–			(6	)		(6	)
Total comprehensive income	–		–		–			3,495	–			–		–			–			1,351			4,846
Balance as of December 31, 2006	27,018		270		111,458			45,235	7,020			(35,005	)	3,623			(56,189	)		(4,138	)		61,631
Employee Stock Purchase Plan share issuance	–		–		10			–	–			–		(28	)		119			–			129
Stock Option Plan share issuance	–		–		(100	)		–	3			(14	)	(131	)		559			–			445
Excess tax benefits from equity-based compensation	–		–		45			–	–			–		–			–			–			45
Restricted stock plan share issuance/forfeiture	–		–		(339	)		–	7			(30	)	(87	)		369			–			–
Deferred compensation plan share issuance	–		–		(26	)		–	(42	)		207		–			–			–			181
Purchase of stock	–		–		–			–	925			(4,415	)	–			–			–			(4,415	)
Equity-based compensation	–		–		863			–	–			–		–			–			–			863
Comprehensive income (loss):
Net income	–		–		–			4,246	–			–		–			–			–			4,246
Foreign currency adjustment	–		–		–			–	–			–		–			–			1,258			1,258
Pension loss adjustment, net of tax	–		–		–			–	–			–		–			–			1,072			1,072
Unrealized gain on investments, net of tax	–		–		–			–	–			–		–			–			(376	)		(376	)
Total comprehensive income	–		–		–			4,246	–			–		–			–			1,954			6,200
Balance as of December 31, 2007	27,018	$	270	$	111,911		$	49,481	7,913		$	(39,257	)	3,377		$	(55,142	)	$	(2,184	)	$	65,079

The accompanying notes are an integral part of these consolidated financial statements.

31

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The consolidated financial statements include the accounts of Computer Task Group, Incorporated, and its subsidiaries (the Company or CTG), located primarily in North America and Europe. There are no unconsolidated entities, or off balance sheet arrangements. All inter-company accounts and transactions have been eliminated. Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with U.S. generally accepted accounting principles. Such estimates primarily relate to the valuation of goodwill, valuation allowances for deferred tax assets, actuarial assumptions including discount rates and expected rates of return, as applicable, for the Company’s defined benefit and postretirement benefit plans, the allowance for doubtful accounts receivable, assumptions underlying stock option valuation, investment valuation, legal matters, and estimates of progress toward completion and direct profit or loss on contracts. Actual results could differ from those estimates.

The Company operates in one industry segment, providing IT services to its clients. These services include IT Staffing and IT Solutions. CTG provides these primary services to all of the markets that it serves. The services provided typically encompass the IT business solution life cycle, including phases for planning, developing, implementing, managing, and ultimately maintaining the IT solution. A typical customer is an organization with large, complex information and data processing requirements. The Company promotes a significant portion of its services through three vertical market focus areas: Technology Service Providers, Healthcare (which includes services provided to health care providers, health insurers, and life sciences companies) and Financial Services. The Company focuses on these three vertical areas as it believes that these areas are either higher growth markets than the general IT services market and the general economy, or are areas that provide greater potential for the Company’s growth due to the size of the vertical market. The vertical areas of Technology Service Providers, Healthcare, and Financial Services totaled 38%, 25%, and 11% of total consolidated revenue in 2007, 41%, 24%, and 10% of total consolidated revenue in 2006 and 41%, 24%, and 8% of total consolidated revenue in 2005, respectively. Outside of these three vertical market focus areas, the Company provides its services to customers in general industries, which totaled 26% of total consolidated revenue in 2007, 25% in 2006, and 27% in 2005, respectively.

Revenue and Cost Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, when the services have been rendered, when the price is determinable, and when collectibility of the amounts due is reasonably assured. For time-and-material contracts revenue is recognized as hours are incurred and costs are expended. Revenue from time-and-material projects totaled approximately 88%, 90% and 92% of 2007, 2006, and 2005 consolidated revenue, respectively.

For contracts with periodic billing schedules, primarily monthly, revenue is recognized as services are rendered to the customer. Revenue from such projects totaled approximately 8%, 6%, and 5% of 2007, 2006, and 2005 consolidated revenue, respectively.

Revenue for fixed price contracts is recognized as per the proportional method of accounting using an input-based approach whereby salary and indirect labor costs incurred are measured and compared to the total estimate of costs at completion for a project. Revenue is recognized based upon the percent complete calculation of total incurred costs to total estimated costs. The Company infrequently works on fixed price projects that include significant amounts of material or other non-labor related costs which could distort the percent complete within a percentage complete calculation. The Company’s estimate of the total labor costs it expects to incur over the term of the contract is based on the nature of the project and our past experience on similar projects, and includes management judgments and estimates which affect the amount of revenue recognized on fixed price contracts in any accounting period. Revenue from fixed-price contracts accounted for under the percentage-of-completion method totaled approximately 4%, 4%, and 3% of 2007, 2006 and 2005 consolidated revenue, respectively.

As required, the Company includes billable expenses in its accounts as both revenue and direct costs. These billable expenses totaled $7.9 million, $9.4 million, and $9.2 million in 2007, 2006 and 2005, respectively.

32

Selling, general, and administrative costs are charged to expense as incurred.

Bad debt expense (benefit), net was approximately $0.2 million, $0, and $(0.1) million in 2007, 2006 and 2005, respectively.

Restricted Cash

At December 31, 2007, the Company has restricted use to approximately $0.4 million of its cash and cash equivalents as the funds are held as a guarantee by a financial institution for leased office space.

Fair Value of Financial Instruments

The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties. At December 31, 2007 and 2006, the carrying amounts of the Company’s financial instruments, which include cash and cash equivalents ($4.3 million and $4.8 million, respectively), accounts receivable, net ($52.3 million and $52.5 million, respectively), and accounts payable ($10.1 million and $9.6 million, respectively), approximate fair value. The Company’s investments ($0.6 million and $1.3 million, respectively) are recorded at fair value (see note 2, “Investments”).

Investments

The Company’s investments at December 31, 2007 consist of mutual funds which are allocated to the Computer Task Group, Incorporated Non-qualified Key Employee Deferred Compensation Plan. The mutual funds are classified as trading securities and are recorded in the Company’s consolidated balance sheets at fair value based upon market quotes. Unrealized gains and losses on these securities are recorded in earnings, and were nominal in 2007, 2006 and 2005. All other investments consisting of equity securities were sold during 2007.

Property and Equipment

Property and equipment are generally stated at historical cost less accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives of one year to 30 years, and begins after an asset has been put into service. The cost of property or equipment sold or otherwise disposed of, along with related accumulated depreciation, is eliminated from the accounts, and the resulting gain or loss, if any, is reflected in current earnings. Maintenance and repairs are charged to expense when incurred, while significant betterments to existing assets are capitalized.

The Company accounts for capitalized software costs under either Statement of Position (SOP) 98-1 “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use,” or FAS 86 “Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed,” according to the intended use of the software. At December 31, 2007, the Company has capitalized a total of approximately $0.2 million for two projects under SOP 98-1 and $0.1 million for one project under FAS 86, and has not yet begun to amortize these projects as they are not yet complete.

Leases

The Company is obligated under a number of long-term operating leases primarily for the rental of office space, office equipment and automobiles based in Europe. In instances where the Company has negotiated leases that contain rent holidays or escalation clauses, the expense for those leases is recognized monthly on a straight line basis over the term of the lease.

33

Goodwill

The Company tests its goodwill for impairment at least annually. During 2006, the Company changed its annual impairment test date from January 1 (effective valuation date of December 31) to the end of its October fiscal month-end. The Company believes its October fiscal month-end is preferable as it provides additional time prior to the Company’s year-end of December 31 to complete the impairment testing and report the results of those tests in its annual report on Form 10-K.

At the respective measurement dates for 2007, 2006, and 2005, with the assistance of an independent appraisal company, the Company completed its annual valuation of the business to which the Company’s goodwill relates. These valuations, as applicable, are based on estimates and assumptions that may analyze the appraised value of similar transactions from which the goodwill arose, the appraised value of similar companies, or estimates of future discounted cash flows. The valuations indicated that the estimated fair value of the business exceeded the carrying value of the business in each period. Additionally, there are no facts or circumstances that arose during 2007, 2006 or 2005 that led management to believe the goodwill was impaired. Accordingly, the Company believes no goodwill impairment is required to be recorded in its consolidated financial results.

Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell. The Company does not have any long-lived assets that are impaired or that it intends to dispose of at December 31, 2007.

Income Taxes

The Company provides for deferred income taxes for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. In assessing the realizability of deferred tax assets, management considers within each tax jurisdiction, whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

34

Equity-Based Compensation

On January 1, 2006, the Company adopted the provisions of FAS 123R, “Share-Based Payment” (FAS 123R) and related interpretations on a modified prospective basis, which required the Company to record equity-based compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards outstanding as of the date of adoption. With the adoption of the standard, the calculated fair value cost of its equity-based compensation awards are recognized in the Company’s income statement over the period in which an employee or director is required to provide the services for the award. Compensation cost is not recognized for employees or directors that do not render the requisite services. The Company recognized the expense for equity-based compensation in its 2007 and 2006 statements of income on a straight-line basis based upon awards that are ultimately expected to vest. See note 10, “Equity-Based Compensation.”

On November 16, 2005, the Board of Directors of the Company approved the acceleration of the vesting of all unvested out-of-the money stock options previously awarded to its employees, including its executive officers and its directors under the Company’s equity compensation plans having an exercise price greater than $3.48, which was the closing price of the Company’s common stock on that date. Options to purchase approximately 1.1 million shares of the Company’s common stock became exercisable immediately. The weighted-average exercise price of the options subject to the acceleration was $4.69.

The purpose of the acceleration was to enable the Company to eliminate future compensation expense the Company would otherwise recognize in its statements of income with respect to these accelerated options upon the adoption of FAS 123R. The Board of Directors took the action in the belief that it is in the best interest of the shareholders to minimize future compensation expense associated with stock options upon adoption of FAS 123R. The estimate of the maximum future compensation expense that would have been recorded in the Company’s statements of income had the vesting of these options not been accelerated was approximately $1.4 million.

The following table details the effect on net income (loss) and basic and diluted net income (loss) per share for the years ended December 31, 2007, 2006, and 2005 as if the Company had adopted the fair value recognition provisions of FAS 123R as they apply to stock-based employee compensation for all periods presented:

(amounts in thousands, except per-share data)	2007			2006			2005 (a)
Net income, as reported for the prior periods		N/A			N/A		$	2,423
Stock-based employee compensation expense	$	863		$	856		$	3,288
Tax benefit		(294	)		(260	)		(786	)
Stock based compensation, net of tax	$	569		$	596		$	2,502
Net income (loss), including stock-based compensation	$	4,246		$	3,495		$	(79	)
Basic net income per share, as reported for the prior periods		N/A			N/A		$	0.14
Basic net income (loss) per share, including the effect of stock-based compensation expense	$	0.26		$	0.21		$	(0.00	)
Diluted net income per share, as reported for the prior periods		N/A			N/A		$	0.14
Diluted net income (loss) per share, including the effect of stock-based compensation expense	$	0.25		$	0.21		$	(0.00	)

(a) Net income, net loss including stock-based compensation, and basic and diluted net income (loss) per share prior to January 1, 2006 did not include stock-based compensation expense as the Company continued to apply the recognition and expensing provisions of APB No. 25.

35

Net Income Per Share

Basic and diluted earnings per share (EPS) for the years ended December 31, 2007, 2006, and 2005 are as follows:

For the year ended (amounts in thousands, except per-share data)	Net Income		Weighted Average Shares	Earnings per Share
December 31, 2007
Basic EPS	$	4,246	16,181	$	0.26
Dilutive effect of outstanding equity instruments		–	473		–
Diluted EPS	$	4,246	16,654	$	0.25
December 31, 2006
Basic EPS	$	3,495	16,417	$	0.21
Dilutive effect of outstanding equity instruments		–	328		–
Diluted EPS	$	3,495	16,745	$	0.21
December 31, 2005
Basic EPS	$	2,423	16,735	$	0.14
Dilutive effect of outstanding equity instruments		–	331		–
Diluted EPS	$	2,423	17,066	$	0.14

Weighted-average shares represent the average number of issued shares less treasury shares and shares held in the Stock Trusts, and for the basic EPS calculations, unvested restricted stock.

Certain options representing 1.7 million, 1.8 million, and 2.3 million shares of common stock were outstanding at December 31, 2007, 2006, and 2005, respectively, but were not included in the computation of diluted earnings per share as their effect on the computation would have been anti-dilutive.

Foreign Currency

The functional currency of the Company’s foreign subsidiaries is the applicable local currency. The translation of the applicable foreign currencies into U.S. dollars is performed for assets and liabilities using current exchange rates in effect at the balance sheet date, for equity accounts using historical exchange rates, and for revenue and expense activity using the applicable month’s average exchange rates. The Company recorded gains (losses) totaling approximately $0 in 2007 and 2006, and $(0.1) million in 2005 from foreign currency transactions for the settlement of intercompany balances.

Cash and Cash Equivalents, and Cash Overdrafts

For purposes of the statement of cash flows, cash and cash equivalents are defined as cash on hand; demand deposits; and short-term, highly liquid investments with a maturity of three months or less. Total cash equivalents at December 31, 2007 and 2006 totaled $0.6 million and $0, respectively and consisted of overnight interest bearing deposits. Additionally, as the Company does not fund its bank accounts for the checks it has written until the checks are presented to the bank for payment, the change in cash overdraft, net represents the increase or decrease in outstanding checks year-over-year.

Taxes Collected from Customers

In instances where the Company collects taxes from its customers for remittance to governmental authorities, primarily in its European operations, such taxes are recorded and presented on a net basis.

36

Accumulated Other Comprehensive Loss

The components that make up accumulated other comprehensive loss on the consolidated balance sheets at December 31, 2007, 2006, and 2005 are as follows:

(amounts in thousands)	2007			2006			2005
Foreign currency adjustment	$	(1,780	)	$	(3,038	)	$	(4,221	)
Pension loss adjustment, net of tax of $458 in 2007 and $950 in 2006		(404	)		(1,476	)		–
Unrealized gain on investments, net of tax of $239 in 2006 and $243 in 2005		–			376			382
Minimum pension liability adjustment, net of tax of $949 in 2005		–			–			(1,499	)
	$	(2,184	)	$	(4,138	)	$	(5,338	)

For the years ended December 31, 2007 and 2006, the net tax expense associated with the pension loss adjustment, net was $0.5 million and $0.1 million, respectively. For the year ended December 31, 2005, the tax expense associated with the minimum pension liability adjustment was $0.1 million.

Recent Accounting Pronouncements

In 2006, the Emerging Issues Task Force issued EITF 06-04, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements.” This EITF requires an entity to account for both assets and liabilities associated with the purchase of endorsement split-dollar life insurance arrangements for employees where the policy continues to be in place after the employee’s retirement. This EITF will be effective for the Company for the fiscal year beginning January 1, 2008. Although the Company is currently evaluating the effect that the adoption this EITF will have on its financial condition or results of operations, it does not believe the impact will be material.

37

2. Investments

At December 31, 2007 and 2006, the carrying value of the Company’s investments is as follows:

December 31, (amounts in thousands)	2007		2006
Trading	$	604	$	448
Available-for-sale		–		813
	$	604	$	1,261

The Company’s investments at December 31, 2007 consist of mutual funds which are allocated to the Computer Task Group, Incorporated Non-qualified Key Employee Deferred Compensation Plan.

At December 31, 2006, the Company’s available-for-sale investments are summarized as follows:

December 31, (amounts in thousands)	2006
Equity securities - cost	$	198
Unrealized gains		615
Equity securities – fair value	$	813

There were no available-for-sale investments owned by the Company at December 31, 2006 that had an unrealized loss. The available-for-sale securities were classified as current assets at December 31, 2006 as the Company sold these assets in the first quarter of 2007. The Company did not sell any available-for-sale assets during 2006. At December 31, 2006, unrealized gains on available-for-sale investments, net of tax, was $0.4 million and were included in accumulated other comprehensive loss.

3. Property and Equipment

Property and equipment at December 31, 2007 and 2006 are summarized as follows:

December 31,	Useful Life	2007			2006
	(years)	(amounts in thousands)
Land	–	$	378		$	378
Buildings	30		4,423			4,448
Equipment	2-5		12,221			10,825
Furniture	5-10		4,926			4,738
Software	1-5		8,751			8,974
Leasehold improvements	3-10		3,941			3,240
			34,640			32,603
Less accumulated depreciation			(28,899	)		(26,685	)
		$	5,741		$	5,918

During 2007, the Company received approximately $0.2 million in insurance proceeds related to damage to its corporate headquarters.

38

4. Debt

During February 2008, the Company entered into an amendment of its existing revolving credit agreement (Agreement) which extended the term by three years. The Agreement allows the Company to borrow up to $35 million, has a term of three years, and expires in April 2011. The Agreement has interest rates ranging from 0 to 75 basis points over the prime rate and 150 to 225 basis points over LIBOR, and provides certain of the Company’s assets as security for outstanding borrowings. The Company is required to meet certain financial covenants in order to maintain borrowings under the Agreement, pay dividends, and make acquisitions. At December 31, 2007 and 2006, the Company was in compliance with these covenants. There were no amounts outstanding, and there was $0.4 million assigned to letters of credit under this Agreement at both December 31, 2007 and 2006.

The maximum amounts outstanding under the Agreement during 2007, 2006, and 2005 were $13.7 million, $23.9 million, and $29.4 million, respectively. Average bank borrowings outstanding for the years 2007, 2006, and 2005 were $5.0 million, $6.6 million, and $17.3 million, respectively, and carried weighted-average interest rates of 7.0%, 7.8%, and 6.0%, respectively. The Company incurred commitment fees totaling approximately $0.1 million in each of 2007, 2006 and 2005 relative to the Agreement.

Interest paid during 2007, 2006, and 2005 totaled $0.4 million, $0.6 million, and $1.1 million, respectively.

39

5. Income Taxes

The provision for income taxes for 2007, 2006, and 2005 consists of the following:

(amounts in thousands)	2007			2006			2005
Domestic and foreign components of income before income taxes are as follows:
Domestic	$	6,438		$	4,769		$	2,835
Foreign		371			1,380			719
	$	6,809		$	6,149		$	3,554
The provision (benefit) for income taxes consists of:
Current tax:
U.S. federal	$	1,753		$	1,208		$	924
Foreign		792			922			532
U.S. state and local		279			208			196
		2,824			2,338			1,652
Deferred tax:
U.S. federal		(132	)		(179	)		(613	)
Foreign		(8	)		353			172
U.S. state and local		(121	)		142			(80	)
		(261	)		316			(521	)
	$	2,563		$	2,654		$	1,131
The effective and statutory income tax rate can be reconciled as follows:
Tax at statutory rate of 34%	$	2,315		$	2,091		$	1,208
State tax, net of federal benefits		289			180			99
Benefit of state net operating losses previously offset by valuation allowances		(185	)		3			(29	)
Non-taxable income		(783	)		(687	)		(557	)
Non-deductible expenses		982			934			712
Change in beginning of year temporary differences		(12	)		(15	)		–
Change in estimate primarily related to foreign taxes		–			135			(161	)
Change in estimate primarily related to state taxes and tax reserves		65			91			(88	)
Benefit of foreign net operating losses previously offset by valuation allowances		(60	)		(17	)		(66	)
Other, net		(48	)		(61	)		13
	$	2,563		$	2,654		$	1,131
Effective income tax rate		37.6	%		43.2	%		31.8	%

40

The Company’s effective tax rate (ETR) is calculated quarterly based upon current assumptions relating to the full year’s estimated operating results, and various tax related items. The Company’s normal ETR is approximately 37-41%. The 2007 ETR was 37.6%. The 2007 ETR was at the low end of the range primarily due to several items that decreased tax expense by approximately $0.1 million, net. The Company decreased the valuation allowance for the net operating loss for U.S. state jurisdictions by approximately $0.2 million, which was offset by adding approximately $0.1 million to its tax reserves due to changes in estimates of recoverability. Without these items the 2007 ETR would have been approximately 39.1%. The 2006 ETR was 43.2%. The 2006 ETR was higher than normal primarily due to several items that increased tax expense by approximately $0.2 million, including adding approximately $0.1 million to its tax reserves due to a change in estimate of recoverability, and an increase to the valuation allowance for net operating losses for Canada by approximately $0.1 million in the 2006 fourth quarter. Without these items, the 2006 ETR would have been approximately 39.5%.

The Company’s deferred tax assets and liabilities at December 31, 2007 and 2006 consist of the following:

December 31, (amounts in thousands)	2007			2006
Assets
Deferred compensation	$	3,709		$	3,653
Loss carryforwards		2,954			3,106
Accruals deductible for tax purposes when paid		512			601
Depreciation		300			246
Allowance for doubtful accounts		329			248
Amortization		560			679
State taxes		669			705
Gross deferred tax assets		9,033			9,238
Deferred tax asset valuation allowance		(2,492	)		(2,768	)
Liabilities
Unrealized gain on investments		–			(272	)
Accrued income not recognized for tax		(336	)		–
Depreciation		–			(23	)
Gross deferred tax liabilities		(336	)		(295	)
Net deferred tax assets	$	6,205		$	6,175
Net deferred assets and liabilities are recorded as follows:
Net current assets		1,350			1,185
Net non-current assets		5,108			4,990
Net non-current liabilities		(253	)		–
Net deferred tax assets	$	6,205		$	6,175

At December 31, 2007, the net non-current liability is recorded on the consolidated balance sheet in other long-term liabilities. In assessing the realizability of deferred tax assets, management considers, within each taxing jurisdiction, whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Factors that may affect the Company’s ability to achieve sufficient forecasted taxable income in future periods may include, but are not limited to, the following: increased competition, a decline in sales or margins, a loss of market share, the availability of qualified professional staff, and a decrease in demand for IT services. Based upon the levels of historical taxable income and projections for future taxable income over the years in which the deferred tax assets are deductible, at December 31, 2007 management believes that it is more likely than not that the Company will realize the benefits, net of the established valuation allowance, of these deferred tax assets in the future.

41

The Company has various state net operating loss carryforwards totaling approximately $8.2 million. These state net operating losses have a carryforward period of 5 to 20 years and begin to expire in 2008. The Company also has a Canadian net operating loss carryforward of $0.5 million which begins to expire in 2008. The Netherlands net operating loss carryforward of $9.2 million begins to expire in 2009, while in the United Kingdom the net operating loss carryforward is approximately $0.2 million, and has no expiration date.

At December 31, 2007, the Company has a deferred tax asset before the valuation allowance resulting from net operating losses in various states of approximately $0.4 million, in The Netherlands of approximately $2.3 million, and approximately $0.2 million in various other countries where it does business. Management of the Company has analyzed each jurisdiction’s tax position, including forecasting potential taxable income in future years, and the expiration of the net operating loss carryforwards as applicable, and determined that it is unclear whether all of the deferred tax asset totaling $2.9 million will be realized at any point in the future. Accordingly, at December 31, 2007, the Company has offset a portion of the asset with a valuation allowance totaling $2.5 million, resulting in a net deferred tax asset from net operating loss carryforwards of approximately $0.4 million. During 2007, the valuation allowance decreased by approximately $0.3 million net, due to a variety of factors including foreign currency changes in The Netherlands of $0.1 million (which offset the reduction in the deferred tax asset), and $0.2 million related to the adjustment of the U.S. state net operating loss valuation allowance due to a change in estimate of recoverability.

The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (Interpretation 48) on January 1, 2007. Upon implementation of Interpretation 48, the Company was not required to recognize any increase in its liability for unrecognized tax benefits.

The Company files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to 2003.

A reconciliation of unrecognized tax benefits from January 1, 2007 to December 31, 2007 is as follows:

(amounts in thousands)
Balance at January 1, 2007	$	247
Additions based on tax positions related to the current year		96
Additions for tax positions of prior years		–
Reductions for tax positions of prior years		–
Reductions for lapse of statute of limitations		(29	)
Settlements		(25	)
Balance at December 31, 2007	$	289

Included in the balance at December 31, 2007 is approximately $280,000 of gross unrecognized tax benefits that if recognized would impact the Company’s effective tax rate. No significant increase or decrease in the total amount of unrecognized tax benefits is expected within the next twelve months.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. As of the date of adoption, the Company had accrued approximately $15,000 in interest and penalties, as applicable. At December 31, 2007, the Company had approximately $35,000 (less the associated tax benefit) accrued for the payment of interest and penalties, as applicable.

The Company has established reserves for tax contingencies based upon the probable outcome of tax positions taken for financial statement purposes compared to positions taken on the Company’s tax returns. The Company reviews its tax-contingency reserves on a quarterly basis to ensure they are appropriately stated. Such reviews include consideration of factors such as the cause of the action, the degree of probability of an unfavorable outcome, the Company’s ability to estimate the liability, and the timing of the liability and how it will impact the Company’s other tax attributes. At December 31, 2007, the Company believes it has adequately provided for its tax-related liabilities.

42

Undistributed earnings of the Company’s foreign subsidiaries were minimal at December 31, 2007, and are considered to be indefinitely reinvested. Accordingly, no provision for U.S. federal and state income taxes has been provided thereon. Upon distribution of these earnings in the form of dividends or otherwise, the Company would be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. In the event that the foreign entities’ earnings were distributed, it is estimated that U.S. federal and state income taxes, net of foreign credits, would be immaterial.

In 2007, 2006, and 2005, 131,000, 185,000, and 74,000 shares of common stock, respectively, were issued through the exercise of non-qualified stock options or through the disqualifying disposition of incentive stock options. The tax benefit to the Company from these transactions, which is credited to capital in excess of par value rather than recognized as a reduction of income tax expense, was $45,000, $113,000, and $31,000 in 2007, 2006, and 2005, respectively. These tax benefits have also been recognized in the consolidated balance sheets as a reduction of income taxes payable.

Net income tax payments during 2007, 2006, and 2005 totaled $1.7 million, $1.8 million, and $0.7 million, respectively.

6. Lease Commitments

At December 31, 2007, the Company was obligated under a number of long-term operating leases. Minimum future obligations under such leases are summarized as follows:

Year ending December 31, (amounts in thousands)
2008	$	6,719
2009		4,936
2010		3,020
2011		1,412
2012		761
Later years		3,654
Minimum future obligations	$	20,502

The operating lease obligations relate to the rental of office space, office equipment, and automobiles leased in Europe. Total rental expense under such operating leases for 2007, 2006, and 2005 was approximately $7.4 million, $6.3 million, and $6.3 million, respectively.

7. Deferred Compensation Benefits

The Company maintains a non-qualified defined-benefit Executive Supplemental Benefit Plan (ESBP) that provides certain former key executives with deferred compensation benefits, based on years of service and base compensation, payable during retirement. The plan was amended as of November 30, 1994, to freeze benefits for participants at that time.

Net periodic pension cost for the years ended December 31, 2007, 2006, and 2005 for the ESBP is as follows:

Net Periodic Pension Cost – ESBP (amounts in thousands)	2007		2006		2005
Interest cost	$	488	$	493	$	513
Amortization of actuarial loss		99		118		108
Net periodic pension cost	$	587	$	611	$	621

The Company also retained a contributory defined-benefit plan for its previous employees located in The Netherlands (NDBP) when the Company disposed of its subsidiary, CTG Nederland, B.V. Benefits paid are a function of a percentage of career average pay. The Plan was curtailed for additional contributions in January 2003.

43

Net periodic pension benefit for the twelve month periods ended September 28, 2007, September 29, 2006, and September 30, 2005 for the NDBP is as follows:

Net Periodic Pension Cost (Benefit) – NDBP (amounts in thousands)	2007			2006			2005
Interest cost	$	265		$	241		$	252
Expected return on plan assets		(338	)		(301	)		(281	)
Amortization of actuarial loss		(18	)		2			1
Net periodic pension benefit	$	(91	)	$	(58	)	$	(28	)

The change in benefit obligation and reconciliation of fair value of plan assets for the year ended December 31, 2007 and 2006 for the ESBP, and for the twelve month period ended September 28, 2007 and September 29, 2006 for the NDBP are as follows:

Changes in Benefit Obligation (amounts in thousands)	ESBP						NDBP
	2007			2006			2007			2006
Benefit obligation at beginning of period	$	8,783		$	9,159		$	5,532		$	5,774
Interest cost		488			493			265			241
Benefits paid		(703	)		(703	)		(67	)		(62	)
Actuarial gain		(421	)		(166	)		(850	)		(711	)
Effect of exchange rate changes		–			–			594			290
Benefit obligation at end of period		8,147			8,783			5,474			5,532
Reconciliation of Fair Value of Plan Assets
Fair value of plan assets at beginning of period		–			–			6,478			5,734
Actual return on plan assets		–			–			376			290
Employer contributions		703			703			–			197
Benefits paid		(703	)		(703	)		(67	)		(62	)
Effect of exchange rate changes		–			–			763			319
Fair value of plan assets at end of period		–			–			7,550			6,478
Accrued benefit cost (asset)	$	8,147		$	8,783		$	(2,076	)	$	(946	)
Accrued benefit cost (asset) is included in the consolidated balance sheet as follows:
Non-current assets		–			–		$	(2,076	)	$	(946	)
Current liabilities	$	774		$	734			–			–
Non-current liabilities	$	7,373		$	8,049			–			–
Discount rate:
Benefit obligation		6.57	%		5.80	%		5.30	%		4.60	%
Net periodic pension cost		5.80	%		5.60	%		5.30	%		4.60	%
Salary increase rate		–			–			–			–
Expected return on plan assets		–			–			5.00	%		5.00	%

For the ESBP, the accumulated benefit obligation at December 31, 2007 and 2006 was $8.1 million and $8.8 million, respectively. The amounts included in other comprehensive loss relating to the pension loss adjustment in 2007 and 2006, net of tax, were approximately $0.3 million and $0.2 million, respectively. Benefits paid to participants are funded by the Company as needed. The plan is deemed unfunded as the Company has not specifically identified Company assets to be used to discharge the deferred compensation benefit liabilities. The Company has purchased insurance on the lives of certain plan participants in amounts considered sufficient to reimburse the Company for the costs associated with the plan for those participants. The Company does not anticipate making contributions to the plan in 2008 and future years to fund the plan.

44

For the NDBP, the accumulated benefit obligation at both September 28, 2007 and September 29, 2006 was $5.5 million. The assets in the NDBP are 20% invested in the Aegon World Equity Fund. This fund invests in global equities, with a small portion of the fund in new or emerging economies. The remaining 80% of the assets are invested as determined by Aegon with no direction from the Company, with a guaranteed minimum return to the Company of 4%. The historical return to the Company on these investments has been approximately 4.5%. The Company’s investments were allocated as indicated above in both 2006 and 2007, and the Company does not anticipate changing these allocation percentages in 2008. The expected return on plan assets for 2006 and 2007 was a function of the average historical return of 4.5% on the 80% of the funds invested by Aegon, and a historical return of 9% on the 20% of the funds invested in the Aegon Equity Fund. The Company does not anticipate making additional contributions to the plan in 2008 and future years, as the plan is currently fully funded.

Anticipated benefit payments for the ESBP and the NDBP expected to be paid in future years are as follows:

Year ending December 31, (amounts in thousands)	ESBP		NDBP
2008	$	774	$	63
2009		759		70
2010		771		88
2011		749		93
2012		730		105
2013-2017		3,533		878
	$	7,316	$	1,297

For December 31, 2006, the Company adopted the provisions of FAS 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (FAS 158). FAS 158 required the Company to recognize the funded status of its plans, measured as the difference between the fair value of the plan assets and the benefit obligation, in its consolidated balance sheet. Additionally, FAS 158 required the Company to recognize as a component of other accumulated comprehensive loss, net of tax, the gains or losses and prior service costs or credits that arose during the period but were not recognized as components of net periodic pension cost. The disclosures below include the ESBP, the NDBP, and the postretirement benefit plan discussed in note 8, “Employee Benefits,” under the caption “Other Postretirement Benefits.”

The incremental effect of applying FAS 158 on individual line items in the Company’s consolidated balance sheet for December 31, 2006 is as follows:

(amounts in thousands)	Prior to FAS 158		Adjustment			After FAS 158
Deferred income taxes	$	5,102	$	(112	)	$	4,990
Other assets	$	2,653	$	26		$	2,679
Total assets	$	111,803	$	(86	)	$	111,717
Deferred compensation benefits	$	8,503	$	289		$	8,792
Total liabilities	$	49,797	$	289		$	50,086
Accumulated other comprehensive loss	$	3,987	$	151		$	4,138
Total shareholders’ equity	$	61,782	$	(151	)	$	61,631

The amounts included in accumulated other comprehensive loss, net of tax, that have not yet been recognized as components of net periodic benefit cost as of December 31, 2007 are as follows:

(amounts in thousands)	ESBP		NDBP			Post- Retirement Plan			Total
Unrecognized actuarial (gain) loss	$	1,013	$	(739	)	$	41		$	315
Unrecognized transition obligation		–		–			90			90
Unrecognized prior service cost		–		–			(1	)		(1	)
	$	1,013	$	(739	)	$	130		$	404

45

The amounts included in accumulated other comprehensive loss, net of tax, that have not yet been recognized as components of net periodic benefit cost as of December 31, 2006 are as follows:

(amounts in thousands)	ESBP		NDBP			Post- Retirement Plan			Total
Unrecognized actuarial (gain) loss	$	1,325	$	(26	)	$	71		$	1,370
Unrecognized transition obligation		–		–			107			107
Unrecognized prior service cost		–		–			(1	)		(1	)
	$	1,325	$	(26	)	$	177		$	1,476

The amounts recognized in other comprehensive loss, net of tax, for 2007, 2006, and 2005 primarily consists of an actuarial (gain) loss and a transition obligation totaled $1,072,000, $(174,000), and $110,000, respectively. Net periodic pension cost (benefit) for the ESBP and the NDBP, net periodic postretirement benefit cost, and the amounts recognized in other comprehensive loss, net of tax, for 2007, 2006, and 2005 totaled $1,640,000, $458,000, and $769,000, respectively.

The amounts in accumulated other comprehensive loss expected to be recognized as components of net periodic benefit cost during 2008 are as follows:

(amounts in thousands)	ESBP		NDBP			Post- Retirement Plan		Total
Unrecognized actuarial (gain) loss	$	66	$	(47	)	$	0	$	19
Unrecognized transition obligation		–		–			29		29
Unrecognized prior service cost		–		–			0		0
	$	66	$	(47	)	$	29	$	48

The Company also maintains a non-qualified defined-contribution deferred compensation plan for certain key executives. Company contributions to this plan, if any, are based on annually defined financial performance objectives. There were $0.4 million in contributions to the plan in 2007 for amounts earned in 2006, and $0.2 million in contributions to the plan in 2006 for amounts earned in 2005. There were no contributions to the plan in 2005. The Company anticipates making contributions in 2008 totaling approximately $0.4 million to this plan for amounts earned in 2007. The investments in the plan are included in the total assets of the Company, and are discussed in Note 2, “Investments.” During 2007, several participants in the plan exchanged a portion of their investments for stock units which represent shares of the Company’s common stock. In exchange for the funds received, the Company issued shares out of treasury stock equivalent to the number of share units received by the participants. These shares of common stock are not entitled to any voting rights and the holders will not receive dividends, if any are paid. The shares are being held by the Company, and will be released to the participants as prescribed by their payment elections under the plan.

8. Employee Benefits

401(k) Profit-Sharing Retirement Plan

The Company maintains a contributory 401(k) profit-sharing retirement plan covering substantially all U.S. employees. The Company matches up to 50% of the first 6% of eligible wages contributed by the participants. Company contributions consist of cash, and may include the Company’s stock, were funded and charged to operations in the amounts of $2.3 million, $2.4 million, and $2.1 million for 2007, 2006, and 2005, respectively.

Other Retirement Plans

The Company maintains various other defined contribution retirement plans covering substantially all of the remaining European employees. Company contributions charged to operations were $0.2 million in each of 2007, 2006, and 2005, respectively.

46

Other Postretirement Benefits

The Company provides limited healthcare and life insurance benefits to ten retired employees and their spouses, totaling 14 participants, pursuant to contractual agreements.

Net periodic postretirement benefit cost for the years ended December 31, 2007, 2006, and 2005 is as follows:

Net Periodic Postretirement Benefit Cost	2007		2006		2005
(amounts in thousands)
Interest cost	$	39	$	41	$	37
Amortization of transition amount		29		29		29
Amortization of actuarial loss		4		9		–
Net periodic postretirement benefit cost	$	72	$	79	$	66

No adjustments were made to the 2005, 2006 and 2007 net periodic postretirement benefit cost due to Medicare reform as the amounts were deemed to be insignificant.

The change in postretirement benefit obligation at December 31, 2007 and 2006 is as follows:

Changes in Postretirement Benefit Obligation	2007			2006
(amounts in thousands)
Postretirement benefit obligation at beginning of year	$	706		$	773
Interest cost		39			41
Benefits paid		(43	)		(54	)
Actuarial gain		(47	)		(54	)
Postretirement benefit obligation at end of year		655			706
Fair value of plan assets at end of year		–			–
Accrued postretirement benefit obligation	$	655		$	706
Accrued postretirement benefit obligation is included in the consolidated balance sheet as follows:
Current liabilities	$	67		$	59
Non-current liabilities	$	588		$	647
Discount rate:
Benefit obligation		6.51	%		5.80	%
Net periodic postretirement benefit cost		5.80	%		5.60	%
Salary increase rate		–			–

The discount rate used in 2007 to calculate the benefit obligation was 6.51%, which is reflective of a series of bonds that are included in the Moody’s Aa long-term corporate bond yield whose cash flow approximates the payments to participants for the remainder of the plan. Benefits paid to participants are funded by the Company as needed. Anticipated benefit payments for the postretirement medical plan are expected to be paid in future years as follows:

Year ending December 31,
(amounts in thousands)
2008	$	67
2009		68
2010		68
2011		61
2012		52
2013-2017		273
	$	589

47

The rate of increase in healthcare costs is assumed to be 10% for medical, 6% for dental, and 8% for Medicare Part B in 2007, gradually declining to 5% by the year 2013 and remaining at that level thereafter. Increasing the assumed healthcare cost trend rate by one percentage point would increase the accrued postretirement benefit obligation by $44,800 at December 31, 2007, and the net periodic postretirement benefit cost by $2,700 for the year. A one-percentage-point decrease in the healthcare cost trend would decrease the accrued postretirement benefit obligation by $40,000 at December 31, 2007, and the net periodic postretirement benefit cost by $2,400 for the year.

Employee Health Insurance

The Company provides various health insurance plans for its employees, including a self-insured plan for its employees in the U.S.

9. Shareholders’ Equity

Employee Stock Purchase Plan

Under the Company’s First Employee Stock Purchase Plan (Plan), employees may apply up to 10% of their compensation to purchase the Company’s common stock. Shares are purchased at the closing market price on the business day preceding the date of purchase. As of December 31, 2007, approximately 121,000 shares remain unissued under the Plan, of the total of 11.5 million shares that had been authorized under the Plan. During 2007, 2006, and 2005, approximately 28,000, 35,000, and 39,000 shares, respectively, were purchased under the plan at an average price of $4.63, $4.20, and $3.66 per share, respectively.

Shareholder Rights Plan

The Board of Directors adopted a Shareholder Rights Plan in January 1989. Under the plan, one right was distributed for each share of common stock outstanding on January 27, 1989, and on each additional share of common stock issued after that date and prior to the date the rights become exercisable if they do so. The rights become exercisable if and when 20% or more of the Company’s outstanding common stock is acquired by a person or group, other than Company-provided employee benefit plans, and when an offer to acquire the Company is made. Each right entitles the holder to purchase Series A preferred stock (which is essentially equivalent to common stock) at a 50% discount from the then-market price of the common stock or, in the event of a merger, consolidation, or sale of a major part of the Company’s assets, to purchase common stock of the acquiring company at a 50% discount from its then-market price. The Shareholder Rights Plan was amended in 1999 to provide that the rights expire in November 2008. The rights may be redeemed by the Company at a price of $.01 per right.

Stock Trusts

The Company maintains a Stock Employee Compensation Trust (SECT) to provide funding for existing employee stock plans and benefit programs. Shares of the Company’s common stock are purchased by and released from the SECT by the trustee of the SECT at the request of the compensation committee of the Board of Directors. As of December 31, 2007, all shares remaining in the SECT were unallocated and, therefore, are not considered outstanding for purposes of calculating earnings per share.

48

SECT activity for the years ended December 31, 2007, 2006, and 2005 is as follows:

(amounts in thousands)	2007		2006		2005
Share balance at beginning of year	3,564		3,881		3,999
Shares released:
Stock option plans	(131	)	(185	)	(79	)
Employee Stock Purchase Plan	(28	)	(35	)	(39	)
Restricted stock issuance	(87	)	(97	)	–
Share balance at end of year	3,318		3,564		3,881

During 1999, the Company created an Omnibus Stock Trust (OST) to provide funding for various employee benefit programs. During 1999, the OST purchased 59,000 shares for $1.0 million. Shares of the Company’s common stock are released from the OST by the trustee at the request of the compensation committee of the Board of Directors. During 2007, 2006, and 2005, no shares were purchased or released by the OST.

Preferred Stock

At December 31, 2007 and 2006, the Company has 2,500,000 shares of par value $0.01 preferred stock authorized for issuance, but none outstanding.

10. Equity-Based Compensation

On January 1, 2006, the Company adopted the provisions of FAS 123R, “Share-Based Payment” and related interpretations on a modified prospective basis, which required the Company to record equity-based compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards outstanding as of the date of adoption. The FAS established standards for the accounting for transactions in which the Company exchanges its equity instruments for goods or services. The standard requires the Company to measure the cost of employee services received in exchange for awards of equity instruments based upon the grant date fair value of the award. Currently, the Company issues stock options and restricted stock in exchange for employee and director services. With the adoption of the standard, the calculated cost of its equity-based compensation awards is recognized in the Company’s consolidated statements of income over the period in which an employee or director is required to provide the services for the award. Compensation cost will not be recognized for employees or directors that do not render the requisite services. The Company recognizes the expense for equity-based compensation in its consolidated income statements on a straight-line basis based upon awards that are ultimately expected to vest. As part of the adoption of the standard, the Company is required to estimate forfeitures. These estimates will be revised, as applicable, in subsequent periods if actual forfeitures differ from those estimates. In the Company’s pro forma financial information related to stock-based compensation for periods prior to January 1, 2006 (see note 1, “Summary of Significant Accounting Policies” for “Equity-Based Compensation”), the Company accounted for forfeitures as they occurred.

For the years ended December 31, 2007 and 2006, the Company recognized compensation expense of $863,000 and $856,000, respectively, in its consolidated statements of income as selling, general and administrative expenses. The tax benefit recorded for this compensation expense was $294,000 and $260,000, respectively, resulting in a net after tax cost to the Company of $569,000 in 2007 and $596,000 in 2006. No compensation cost was recognized in the consolidated statements of income for 2005 as the Company continued to apply the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” (APB No. 25) and related interpretations, as all options granted by the Company had an exercise price that was equal to or greater than the underlying common stock at the date of grant.

49

On April 26, 2000, the shareholders approved the Company’s Equity Award Plan (Equity Plan). Under the provisions of the plan, stock options, restricted stock, stock appreciation rights, and other awards may be granted or awarded to employees and directors of the Company. The compensation committee of the Board of Directors determines the nature, amount, pricing, and vesting of the grant or award. All options and awards remain in effect until the earlier of the expiration, exercise, or surrender date. For the most part, options generally become exercisable in three or four equal annual installments, beginning one year from the date of grant. In certain limited instances, options granted with market price conditions are expected to vest nine and one-half years from the date of grant. As of December 31, 2007, a total of 3,500,000 shares may be awarded under this plan, and 370,375 shares are available for grant as of that date.

On April 24, 1991, the shareholders approved the Company’s 1991 Employee Stock Option Plan (1991 Plan). Under the provisions of the plan, options may be granted to employees and directors of the Company. The option price for options granted under this plan is equal to or greater than the fair market value of the Company’s common stock on the date the option is granted. Incentive stock options generally become exercisable in four annual installments of 25% of the shares covered by the grant, beginning one year from the date of grant, and expire six years after becoming exercisable. Nonqualified stock options generally become exercisable in either four or five annual installments of 20 or 25% of the shares covered by the grant, beginning one year from the date of grant, and expire up to 15 years from the date of grant. All options remain in effect until the earlier of the expiration, exercise, or surrender date. There are no options available for grant under this plan as of December 31, 2007.

Under the Company’s 1991 Restricted Stock Plan, 800,000 shares of restricted stock may be granted to certain key employees.

The Company utilizes the Black-Scholes option-pricing model to estimate the fair value of stock options granted on the date of grant. The per-option weighted-average fair value on the date of grant of stock options granted in 2007, 2006, and 2005 was $1.72, $2.17, and $2.12, respectively. The fair value of the options at the date of grant was estimated using the following weighted-average assumptions for the years ended December 31, 2007, 2006 and 2005:

	2007		2006		2005
Expected life (years)	3.4		4.0		3.4
Dividend yield	0.0	%	0.0	%	0.0	%
Risk-free interest rate	4.7	%	5.0	%	3.7	%
Expected volatility	47.4	%	55.2	%	68.0	%

The Company used historical volatility calculated using daily closing prices for its common stock over periods that match the expected term of the option granted to estimate the expected volatility for the grants made in 2005, 2006 and 2007. The risk-free interest rate assumption was based upon U.S. Treasury yields appropriate for the expected term of the Company’s stock options based upon the date of grant. The expected term of the stock options granted was based upon the options expected vesting schedule and historical exercise patterns. The expected dividend yield was based upon the Company’s recent history of paying dividends, and the expectation of paying dividends in the foreseeable future.

During 2007, the Company issued restricted stock to certain employees and its independent directors. For the employees, the stock vests over a period of four years, with 25% of the stock issued vesting one year from the date of grant, and another 25% vesting each year thereafter until the stock is fully vested to the employee. The Company is recognizing compensation expense for these shares ratably over the expected term of the restricted stock, or four years. For the independent directors, the issued stock vests at retirement. As the directors are eligible for retirement from the Company’s Board of Directors at any point, the Company recognized the expense associated with these shares on the date of grant. The shares of restricted stock issued are considered outstanding, and are eligible to receive dividends, if any are paid, and can be voted. However, only vested shares of outstanding restricted stock are included in the calculation of basic earnings per share.

50

As of December 31, 2007, total remaining stock-based compensation expense for non-vested equity-based compensation is approximately $1.5 million, which is expected to be recognized on a weighted-average basis over the next 18 months. Historically, the Company has issued shares out of its Stock Employee Compensation Trust to fulfill the share requirements from stock option exercises and restricted stock grants.

A summary of stock option activity under these plans is as follows:

	Equity Plan Options		Weighted- Average Exercise Price		1991 Plan Options		Weighted- Average Exercise Price
Outstanding at December 31, 2004	2,734,000		$	3.62	950,038		$	13.74
Granted	733,500		$	4.18	–			–
Exercised	(69,500	)	$	2.89	(9,375	)	$	2.87
Canceled and forfeited	(173,250	)	$	3.71	(18,625	)	$	12.92
Expired	–			–	(53,074	)	$	20.94
Outstanding at December 31, 2005	3,224,750		$	3.76	868,964		$	13.43
Granted	473,000		$	4.54	–			–
Exercised	(172,750	)	$	2.78	(12,000	)	$	2.88
Canceled and forfeited	(176,125	)	$	3.94	(27,000	)	$	17.87
Expired	–			–	(177,138	)	$	16.75
Outstanding at December 31, 2006	3,348,875		$	3.91	652,826		$	12.55
Granted	475,500		$	4.52	–			–
Exercised	(87,750	)	$	3.83	(42,750	)	$	2.87
Canceled and forfeited	(122,750	)	$	4.58	(60,875	)	$	21.74
Expired	–			–	(65,654	)	$	20.18
Outstanding at December 31, 2007	3,613,875		$	3.97	483,547		$	11.21
Options exercisable at December 31, 2007	2,739,500		$	3.92	483,547		$	11.21
For 2007, 2006 and 2005, the intrinsic value of the options exercised under the Equity Plan was approximately $101,300, $279,000 and $72,900, respectively, while the intrinsic value of the options exercised under the 1991 Plan for the same years was $72,100, $19,800 and $8,900, respectively. A summary of restricted stock activity for the year-to-date period ended December 31, 2007 under the Equity Plan and the 1991 Restricted Stock Plan is as follows:
	Equity Plan Restricted Stock		Weighted- Average Fair Value		1991 Restricted Stock Plan		Weighted- Average Fair Value
Outstanding at December 31, 2005	–			–	–			–
Granted	97,500		$	4.40	–			–
Canceled and forfeited	(2,000	)	$	4.65	–			–
Outstanding at December 31, 2006	95,500		$	4.39	–			–
Granted	45,000		$	4.70	41,500		$	4.52
Canceled and forfeited	(1,500	)	$	4.65	(4,500	)	$	4.52
Outstanding at December 31, 2007	139,000		$	4.49	37,000		$	4.52

At December 31, 2007, there are 763,000 shares available for grant under the 1991 Restricted Stock Plan. At December 31, 2007, 112,875 and 0 shares of outstanding restricted stock are vested under the Equity Plan and the 1991 Restricted Stock Plan, respectively.

51

A summary of options outstanding as of December 31, 2007 for the Equity and 1991 Plans is as follows:

Range of Exercise Prices	Number Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Equity Plan
$1.40	180,000	$	1.40	10.0	$	743,400
$2.24 - $3.26	1,198,500	$	3.09	8.1	$	2,928,125
$3.48 - $4.90	1,776,375	$	4.41	7.8	$	1,987,045
$5.30 - $5.94	459,000	$	5.56	9.8	$	61,400
	3,613,875				$	5,719,970
1991 Plan
$2.88	49,875	$	2.88	1.9	$	132,418
$5.13 - $6.13	245,500	$	5.94	5.3	$	3,038
$16.19 - $21.94	167,172	$	19.27	1.7	$	–
$26.06 - $30.31	21,000	$	28.29	4.7	$	–
	483,547				$	135,456

A summary of options exercisable at December 31, 2007 for the Equity Plan and the 1991 Plan is as follows:

Range of Exercise Prices	Number Exercisable	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Equity Plan
$1.40	180,000	$	1.40	10.0	$	743,400
$2.24 - $3.26	968,500	$	3.11	8.2	$	2,342,725
$3.48 - $4.90	1,132,000	$	4.35	6.8	$	1,335,170
$5.30 - $5.94	459,000	$	5.56	7.0	$	61,400
	2,739,500				$	4,482,695
1991 Plan
$2.88	49,875	$	2.88	1.9	$	132,418
$5.13 - $6.13	245,500	$	5.94	5.3	$	3,038
$16.19 - $21.94	167,172	$	19.27	1.7	$	–
$26.06 - $30.31	21,000	$	28.29	4.7	$	–
	483,547				$	135,456

The aggregate intrinsic values as calculated in the above charts are based upon the Company’s closing stock price on December 31, 2007 of $5.53 per share.

52

11. Significant Customer

International Business Machines (IBM) is the Company’s largest customer. IBM accounted for $104.6 million or 32.2%, $115.4 million or 35.3%, and $105.5 million or 35.8% of consolidated 2007, 2006, and 2005 revenue, respectively. The Company’s accounts receivable from IBM at December 31, 2007 and 2006 amounted to $10.3 million and $10.9 million, respectively. The Company expects to continue to derive a significant portion of its revenue from IBM in 2008 and in future years. However, a significant decline in revenue from IBM would have a significant negative effect on the Company’s revenue and profits. No other customer accounted for more than 10% of revenue in 2007, 2006, or 2005.

12. Litigation

The Company and its subsidiaries are involved from time to time in various legal proceedings arising in the ordinary course of business. Although the outcome of lawsuits or other proceedings involving the Company and its subsidiaries cannot be predicted with certainty and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, management does not expect these matters, if any, to have a material adverse effect on the financial position, results of operations, or cash flows of the Company.

13. Enterprise -Wide Disclosures

The Company operates in one industry segment, providing information technology (IT) professional services to its clients. The services provided include flexible and strategic staffing and the planning, design, implementation, and maintenance of comprehensive IT solutions. All of the Company’s revenue is generated from these services. CTG’s reportable information is based on geographical areas. The accounting policies of the individual geographical areas are the same as those described in note 1, “Summary of Significant Accounting Policies.”

Financial Information About Geographic Areas
(amounts in thousands)	2007		2006		2005
Revenue from External Customers
United States	$	250,097	$	265,386	$	243,223
Belgium		50,786		41,500		32,940
Other European countries		21,311		17,447		15,384
Other countries		3,091		2,920		2,918
Total revenue	$	325,285	$	327,253	$	294,465
Long-lived Assets
United States	$	4,513	$	5,102	$	5,950
Belgium		921		519		452
Other European countries		307		297		214
Total long-lived assets	$	5,741	$	5,918	$	6,616
Deferred Tax Assets, Net of Valuation Allowance
United States	$	6,297	$	6,260	$	6,274
Europe		146		189		325
Other countries		98		21		161
Total deferred tax assets, net	$	6,541	$	6,470	$	6,760

53

14. Quarterly Financial Data (Unaudited)

	Quarters
(amounts in thousands, except per-share data)	First			Second			Third			Fourth			Total
2007
Revenue	$	80,016		$	80,140		$	80,625		$	84,504		$	325,285
Direct costs		62,586			62,173			62,347			65,783			252,889
Gross profit		17,430			17,967			18,278			18,721			72,396
Selling, general, and administrative expenses		16,150			16,206			16,644			16,872			65,872
Operating income		1,280			1,761			1,634			1,849			6,524
Interest and other expense, net		514			(127	)		(161	)		59			285
Income before income taxes		1,794			1,634			1,473			1,908			6,809
Provision for income taxes		672			635			559			697			2,563
Net income	$	1,122		$	999		$	914		$	1,211		$	4,246
Basic net income per share	$	0.07		$	0.06		$	0.06		$	0.08		$	0.26
Diluted net income per share	$	0.07		$	0.06		$	0.06		$	0.07		$	0.25
	Quarters
(amounts in thousands, except per-share data)	First			Second			Third			Fourth			Total
2006
Revenue	$	83,643		$	85,765		$	79,830		$	78,015		$	327,253
Direct costs		65,525			67,058			61,595			58,923			253,101
Gross profit		18,118			18,707			18,235			19,092			74,152
Selling, general, and administrative expenses		16,557			17,164			16,493			17,084			67,298
Operating income		1,561			1,543			1,742			2,008			6,854
Interest and other expense, net		(322	)		(149	)		(143	)		(91	)		(705	)
Income before income taxes		1,239			1,394			1,599			1,917			6,149
Provision for income taxes		452			586			767			849			2,654
Net income	$	787		$	808		$	832		$	1,068		$	3,495
Basic net income per share	$	0.05		$	0.05		$	0.05		$	0.07		$	0.21
Diluted net income per share	$	0.05		$	0.05		$	0.05		$	0.06		$	0.21

54

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management has evaluated, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operations of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act) as of the end of the period covered by this annual report. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this annual report.

(a) Management’s Annual Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions, effectiveness of internal control over financial reporting may deteriorate.

Management of the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, the Company’s management did not identify any control deficiencies it considered to be material weaknesses under the rules specified by the Public Company Accounting Oversight Board’s Auditing Standard No. 5, and therefore concluded that its internal control over financial reporting was effective as of December 31, 2007.

Our independent registered public accounting firm has issued an audit report on our effectiveness of internal control over financial reporting. Their report appears in Item 9A (b), Attestation Report of the Registered Public Accounting Firm.

55

(b) Attestation Report of the Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Computer Task Group, Incorporated:

We have audited Computer Task Group, Incorporated’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Computer Task Group, Incorporated’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting (Item 9A(a)). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Computer Task Group, Incorporated maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Computer Task Group, Incorporated as of December 31, 2007 and 2006, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2007, and our report dated March 7, 2008 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Buffalo, New York

March 7, 2008

56

(c) Changes in Internal Control Over Financial Reporting

The Company continues to review, revise and improve the effectiveness of the Company’s internal controls on a continuous basis. There have been no significant changes in the Company’s internal controls over financial reporting in connection with the Company’s fourth quarter evaluation that would materially affect, or are reasonably likely to materially affect the Company’s internal controls over financial reporting.

Item 9B. Other Information

None

57

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required in response to this item is incorporated herein by reference to the information set forth under “Election of Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “The Board of Directors and Committees” in relation to the “Audit Committee” subsection, and “Corporate Governance and Website Information” in the Company’s Proxy Statement for the Annual Meeting of Stockholders scheduled to be held on May 14, 2008 (the Proxy Statement) to be filed with the SEC not later than 120 days after the end of the year ended December 31, 2007, except insofar as information with respect to executive officers is presented in Part I, Item 1 of this report hereof pursuant to General Instruction G(3) of Form 10-K.

Item 11. Executive Compensation

The information required in response to this item is incorporated herein by reference to the information under the caption “Executive Compensation and Other Information” presented in the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Except as set forth below, the information required in response to this item is incorporated herein by reference to the information under the caption “Security Ownership of the Company’s Common Shares by Certain Beneficial Owners and by Management” presented in the Proxy Statement.

The following table sets forth, as of December 31, 2007, certain information related to the Company’s compensation plans under which shares of its common stock are authorized for issuance:

Equity Compensation Plan Information as of December 31, 2007

	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by security holders-
Equity Award Plan	3,613,875	$	3.97	370,375
1991 Stock Option Plan	483,547	$	11.21	–
Equity compensation plans not approved by security holders -
None	–		–	–
Total	4,097,422	$	4.82	370,375

At December 31, 2007, the Company did not have any outstanding rights or warrants. All awards outstanding are either stock options or restricted stock.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required in response to this item is incorporated herein by reference to the information under the caption “Certain Relationships and Related Transactions, and Director Independence” presented in the Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required in response to this item is incorporated herein by reference to the information under the caption “Independent Public Accountants and Fees” presented in the Proxy Statement.

58

PART IV

Item 15. Exhibits and Financial Statement Schedule

(A) Index to Consolidated Financial Statements and Financial Statement Schedule

(1)	Financial Statements:
	Report of Independent Registered Public Accounting Firm	27
	Consolidated Statements of Income	28
	Consolidated Balance Sheets	29
	Consolidated Statements of Cash Flows	30
	Consolidated Statements of Changes in Shareholders’ Equity	31
	Notes to Consolidated Financial Statements	32
(2)	Index to Consolidated Financial Statement Schedule
	Report of Independent Registered Public Accounting Firm on Financial Statement Schedule	60
	Financial statement schedule:
	Schedule II - Valuation and Qualifying Accounts	61

(B) Exhibits

      The Exhibits to this annual report on Form 10-K are listed on the attached Exhibit Index appearing on pages 63 to 65.

59

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Computer Task Group, Incorporated:

Under date of March 7, 2008, we reported on the consolidated balance sheets of Computer Task Group, Incorporated and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2007, which are included in the Form 10-K. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedule as listed in the accompanying index. This financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion on this financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ KPMG LLP

Buffalo, New York

March 7, 2008

60

COMPUTER TASK GROUP, INCORPORATED

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

(amounts in thousands)

Description	Balance at January 1		Additions			Deductions			Balance at December 31
2007
Accounts deducted from accounts receivable Allowance for doubtful accounts	$	866	$	303	(A)	$	(214	) (A)	$	955
Accounts deducted from deferred tax assets Deferred tax asset valuation allowance	$	2,768	$	619	(B)	$	(895	) (B)	$	2,492
Accounts deducted from other assets Reserves	$	575	$	–		$	–		$	575
2006
Accounts deducted from accounts receivable Allowance for doubtful accounts	$	1,087	$	306	(A)	$	(527	) (A)	$	866
Accounts deducted from deferred tax assets Deferred tax asset valuation allowance	$	2,559	$	387	(B)	$	(178	) (B)	$	2,768
Accounts deducted from other assets Reserves	$	575	$	–		$	–		$	575
2005
Accounts deducted from accounts receivable Allowance for doubtful accounts	$	1,327	$	179	(A)	$	(419	) (A)	$	1,087
Accounts deducted from deferred tax assets Deferred tax asset valuation allowance	$	3,899	$	195	(B)	$	(1,535	) (B)	$	2,559
Accounts deducted from other assets Reserves	$	575	$	–		$	–		$	575

^(A) Reflects additions charged principally to costs and expenses, less deductions for accounts written off or collected, and foreign currency translation

^(B) Reflects additions and deductions for foreign currency translation, and deductions credited to expense

61

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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,
	Chairman and Chief Executive Officer

Dated: March 7, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature		Title	Date
(i)	Principal Executive Officer	Chairman and Chief Executive Officer	March 7, 2008
	/s/ James R. Boldt
	James R. Boldt
(ii)	Principal Accounting and Principal Financial Officer	Chief Financial Officer	March 7, 2008
	/s/ Brendan M. Harrington
	Brendan M. Harrington
(iii)	Directors
	/s/ Thomas E Baker	Director	March 7, 2008
	Thomas E. Baker
	/s/ George B. Beitzel	Director	March 7, 2008
	George B. Beitzel
	/s/ James R. Boldt	Director	March 7, 2008
	James R. Boldt
	/s/ Randall L. Clark	Director	March 7, 2008
	Randall L. Clark
	/s/ Randolph A. Marks	Director	March 7, 2008
	Randolph A. Marks
	/s/ William D. McGuire	Director	March 7, 2008
	William D. McGuire
	/s/ John M. Palms	Director	March 7, 2008
	John M. Palms
	/s/ Daniel J. Sullivan	Director	March 7, 2008
	Daniel J. Sullivan

62

EXHIBIT INDEX

Exhibit		Description	Page Number or (Reference)
2.		Plan of acquisition, reorganization, arrangement, liquidation or succession	*
3.	(a)	Restated Certificate of Incorporation of Registrant	66
	(b)	Restated By-laws of Registrant	(1)
4.	(a)	Specimen Common Stock Certificate	74
	(b)	Rights Agreement dated as of January 15, 1989, and amendment dated June 28, 1989, between Registrant and The First National Bank of Boston, as Rights Agent	(2)
	(c)	Form of Rights Certificate	(1)
9.		Voting Trust Agreement	*
10.	(a)	Non-Compete Agreement, dated as of March 1, 1984, between Registrant and Randolph A. Marks	(1) +
	(b)	Stock Employee Compensation Trust Agreement, dated May 3, 1994, between Registrant and Thomas R. Beecher, Jr., as trustee	(1) +
	(c)	Demand Grid Note, dated October 29, 1997, between Registrant and Computer Task Group, Incorporated Stock Employee Compensation Trust	(1) +
	(d)	Pledge Agreement, between the Registrant and Thomas R. Beecher, Jr., as Trustee of the Computer Task Group, Incorporated Stock Employee Compensation Trust	(1) +
	(e)	Stock Purchase Agreement, dated as of February 25, 1981, between Registrant and Randolph A. Marks	(3) +

* None or requirement not applicable

+ Management contract or compensatory plan or arrangement

(1) Filed as an Exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2006, and incorporated herein by reference

(2) Filed as an Exhibit to the Registrant’s Form 8-A/A filed on January 13, 1999, and incorporated herein by reference

(3) Filed as an Exhibit to the Registrant’s Registration Statement No. 2 - 71086 on Form S-7 filed on February 27, 1981, and incorporated herein by reference

63

EXHIBIT INDEX (Continued)

Exhibit		Description	Page Number or (Reference)
10.	(f)	Description of Disability Insurance and Health Arrangements for Executive Officers	(4) +
	(g)	2007 Key Employee Compensation Plans	(5) +
	(h)	Computer Task Group, Incorporated Non-Qualified Key Employee Deferred Compensation Plan	(1) +
	(i)	1991 Restricted Stock Plan	77 +
	(j)	Computer Task Group, Incorporated 2000 Equity Award Plan	(6) +
	(k)	Executive Supplemental Benefit Plan 1997 Restatement	81 +
	(l)	First Amendment to the Computer Task Group, Incorporated Executive Supplemental Benefit Plan 1997 Restatement	95 +
	(m)	Compensation Arrangements for the Named Executive Officers	98 +
	(n)	Change in Control Agreement, dated July 16, 2001, between the Registrant and James R. Boldt	99 +
	(o)	Employment Agreement, dated July 16, 2001, between the Registrant and James R. Boldt	109 +
	(p)	First Employee Stock Purchase Plan (Eighth Amendment and Restatement)	121 +
	(q)	Loan Agreement By and Among Manufacturers and Traders Trust Company and Computer Task Group, Incorporated	(7)
	(4)	Filed as an Exhibit to Amendment No. 1 to Registration Statement No. 2-71086 on Form S-7 filed on March 24, 1981, and incorporated herein by reference
	(5)	Included in the Registrant’s definitive Proxy Statement dated April 2008 under the caption entitled “Annual Cash Incentive Compensation,” and incorporated herein by reference
	(6)	Included in the Registrant’s definitive Proxy Statement dated April 2008 as Exhibit A, and incorporated herein by reference
	(7)	Filed as an Exhibit to the Registrants Form 8-K on April 21, 2005, and incorporated herein by reference

64

EXHIBIT INDEX (Continued)

Exhibit		Description	Page Number or (Reference)
11.		Statement re: computation of per share earnings	*
12.		Statement re: computation of ratios	*
13.		Annual Report to Shareholders	*
14.		Code of Ethics	(8)
16.		Letter re: change in certifying accountant	*
18.		Letter re: change in accounting principles	*
21.		Subsidiaries of the Registrant	124
22.		Published report regarding matters submitted to a vote of security holders	*
23.		Consent of experts and counsel	125
24.		Power of Attorney	*
31.	(a)	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	126
	(b)	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	127
32.		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	128
33.		Report on assessment of compliance with servicing criteria for asset backed securities	*
34.		Attestation report on assessment of compliance with servicing criteria for asset backed securities	*
35.		Service compliance statement	*
	(8)	Included in the Registrant’s definitive Proxy Statement dated April 2008 under the caption entitled “Corporate Governance and Website Information,” and incorporated herein by reference

65

EX-3.(A)

EXHIBIT 3 (a)

The Restated Certificate of Incorporation

of

Computer Task Group, Incorporated

(the “Corporation”)

1. The name of the Corporation is COMPUTER TASK GROUP, INCORPORATED.

2. The purposes for which the Corporation is formed are to do any or all things stated below in any part of the world, either as principal or agent, and either alone or associated with other corporations, firms or individuals or by organization of subsidiary corporations or by any combination of these methods; but to engage in no activity which is illegal under any applicable law at the time when and the place where it occurs or which is not permitted to a corporation formed under said Business Corporation Law.

(a) To provide general services with respect to data processing equipment including but not limited to systems design and programming, programmer training, systems engineering, installation management, and consulting services with respect to equipment selection, implementation and evaluation.

(b) To develop, manufacture, assemble, repair, buy or otherwise acquire, sell or otherwise dispose of, handle, store and deal in materials, products and articles of every kind.

(c) To buy or otherwise acquire, sell, mortgage or otherwise dispose of, hold, manage, deal in and invest in real property and interests in real property; and to build, maintain, improve, rebuild, enlarge, alter, control, operate, buy or otherwise acquire, sell, mortgage, pledge or otherwise dispose of, deal in and invest in all kinds of buildings, structures, equipment, inventories and other tangible property, whether real or personal, and interests in the foregoing.

(d) To buy or otherwise acquire, sell, pledge, or otherwise dispose of, hold, vote, use, deal in and invest in shares, stocks, bonds, evidences of indebtedness, receipts, receivables, patents, trademarks, trade secrets, trade names, good will and other forms of intangible personal property of every nature.

(e) To do any or all things stated in preceding paragraphs (c) and (d) in connection with the acquisition or disposition of any business, as well as in the course of its own business.

3. The city and county within the State of New York in which the office of the Corporation is to be located are the City of Buffalo and the County of Erie.

4. The total number of shares of all classes of stock which the Corporation shall have authority to issue is 152,500,000 consisting of (1) 150,000,000 shares of Common Stock, par value $.01 per share (“Common Stock”), and (2) 2,500,000 shares of Preferred Stock, $.01 par value per share (“Preferred Stock”).

(a) The shares of authorized Common Stock of the Corporation shall be identical in all respects and shall have equal rights and privileges.

(b) The Board of Directors shall have authority by resolution to issue the shares of Preferred Stock from time to time on such terms as it may determine and to divide the Preferred Stock into one or more classes or series and, in connection with the creation of any such class or series, to determine and fix by the resolution or resolutions providing for the issuance of shares thereof the designation, powers (including voting power) and relative, participating, optional, or other special rights of such class or series, and the qualifications, limitations, or restrictions thereof, to the full extent now or hereafter permitted by law. Except as may be required by law, the shares in any class or series of Preferred Stock need not be identical.

66

(c) There is hereby established a series of the Corporation’s authorized Preferred Shares, to be designated as the Series A Participating Cumulative Preferred Shares, par value $.01 per share. The relative rights, preferences and limitations of the Series A Preferred Shares, insofar as not already fixed by any other provision of this Restated Certificate of Incorporation shall, as fixed by the Board of Directors of the Corporation in the exercise of authority conferred by this Restated Certificate of Incorporation, and as permitted by Section 502 of the New York Business Corporation Law, be as follows:

(i) Designation and Number of Shares. The shares of such series shall be designated as ‘Series A Participating Cumulative Preferred Shares’ (the “Series A Preferred Shares”). The par value of each share of the Series A Preferred Shares shall be $0.01. The number of shares initially constituting the Series A Preferred Shares shall be 120,000; provided, however, that the number of Series A Preferred Shares may be increased, by an amendment of this paragraph (i) of this Section c approved by the Board of Directors of the Corporation, if within the authority of the Board of Directors of the Corporation under Article 4 of the Restated Certificate of Incorporation, to such greater number of Series A Preferred Shares as are at any time issuable upon exercise of the Rights (the “Rights”) issued pursuant to the Rights Agreement dated as of January 16, 1989, as amended, between the Corporation and BankBoston, N.A. (as successor to The First National Bank of Boston), as Rights Agent (the “Rights Agreement”).

(ii) Dividends or Distributions.

(A) Subject to the prior and superior rights of the holders of shares of any other series of Preferred Shares or other class or series of capital stock of the Corporation ranking prior and superior to the Series A Preferred Shares with respect to dividends, the holders of shares of the Series A Preferred Shares shall be entitled to receive, when, as and if declared by the Board of Directors, out of the assets of the Corporation legally available therefor, (1) quarterly dividends payable in cash on the fifteenth day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or a fraction of a share of the Series A Preferred Shares, in the amount of $10 per whole share (rounded to the nearest cent) less the amount of all cash dividends declared on the Series A Preferred Shares pursuant to the following clause (2) since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of the Series A Preferred Shares, and (2) dividends payable in cash on the payment date for each cash dividend declared on the Common Shares in an amount per whole share (rounded to the nearest cent) equal to the Formula Number then in effect times the cash dividends then to be paid on each Common Share. In addition, if the Corporation shall pay any dividend or make any distribution on the Common Shares payable in assets, securities or other forms of noncash consideration (other than dividends or distributions solely in Common Shares), then, in each such case, the Corporation shall simultaneously pay or make on each outstanding whole share of the Series A Preferred Shares a dividend or distribution in like kind equal to the Formula Number then in effect times such dividend or distribution on each Common Share. As used in this Section (c), the “Formula Number” shall be 1000; provided, however, that if at any time after November 20, 1998, the Corporation shall (i) declare or pay any dividend on the Shares payable in Common Shares or make any distribution on the Common Shares in Common Shares, (ii) subdivide (by a stock split or otherwise) the outstanding Common Shares into a larger number of Common Shares or (iii) combine (by a reverse stock split or otherwise) the outstanding Common Shares into a smaller number of Common Shares, then in each such event the Formula shall be adjusted to a number determined by multiplying the Formula Number in effect immediately prior to such event by a fraction, the numerator of which is the number of Common Shares that are outstanding immediately after such event and the denominator of which is the number of Common Shares that are outstanding immediately prior to such event (and rounding the result to the nearest whole number); and provided, further, that if at any time after November 20, 1998, the Corporation shall issue any shares of its capital stock in a reclassification or change of the outstanding Common Shares (including any such reclassification or change in connection with a merger in which the Corporation is the surviving corporation), then in each such event the Formula Number shall be appropriately adjusted to reflect such reclassification or change.

(B) The Corporation shall declare a dividend or distribution the Series A Preferred Shares as provided in paragraph (ii)(a) above immediately prior to or at the same time it declares a dividend or distribution on the

67

Common Shares (other than a dividend or distribution solely in Common Shares); provided, however, that, in the event no dividend or distribution (other than a dividend or distribution in Common Shares) shall have been declared on the Common Shares during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $10 per share on the Series A Preferred Shares shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Shares entitled to receive a dividend or distribution declared thereon, which record date shall be the same as the record date for any corresponding dividend or distribution on the Common Shares.

(C) Dividends shall begin to accrue and be cumulative on outstanding Series A Preferred Shares from and after the Quarterly Dividend Payment Date next preceding the date of original issue of such Series A Preferred Shares; provided, however, that dividends on Series A Preferred Shares which are originally issued after the record date for the determination of holders of Series A Preferred Shares entitled to receive a quarterly dividend and on or prior to the next succeeding Quarterly Dividend Payment Date shall begin to accrue and be cumulative from and after such Quarterly Dividend Payment Date. Notwithstanding the foregoing, dividends on Series A Preferred Shares which are originally issued prior to the record date for the first Quarterly Dividend Payment shall be calculated as if cumulative from and after the March 15, June 15, September 15 or December 15, as the case may be, next preceding the date of original issuance of such Series A Preferred Shares. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Shares in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding.

(D) So long as any shares of the Series A Preferred Shares are outstanding, no dividends or other distributions shall be declared, paid or distributed, or set aside for payment or distribution, on the Common Shares unless, in each case, the dividend required by this paragraph (ii) to be declared on the Series A Preferred Shares shall have been declared and paid or set apart.

(E) The holders of the shares of Series A Preferred Shares shall not be entitled to receive any dividends or other distributions except as provided herein.

(iii) Voting Rights. The holders of shares of Series A Preferred Shares shall have the following voting rights:

(A) Each holder of Series A Preferred Shares shall be entitled to a number of Votes equal to the Formula Number then in effect, for each share of the Series A Preferred Shares held of record on each matter on which holders of the Common Shares or shareholders generally are entitled to vote, multiplied by the number of votes per share which the holders of the Common Shares or shareholders generally then have with respect to such matter.

(B) Except as otherwise provided herein or by applicable law, the holders of shares of Series A Preferred Shares and the holders of shares of Common Shares shall vote together as one class for the election of directors of the Corporation and on all other matters submitted to a vote of shareholders of the Corporation.

(C) If at the time of any annual meeting of shareholders for the election of directors, the equivalent of six quarterly dividends (whether or not consecutive) payable on any share or shares of Series A Preferred Shares are in default, the number of directors constituting the board of Directors of the Corporation shall be increased by two. In addition to voting together with the holders of Common Shares for the election of other directors of the Corporation, the holders of record of the Series A Preferred Shares, voting separately as a class to the exclusion of the holders of Common Shares, shall be entitled at said meeting of shareholders (and at each subsequent annual meeting of shareholders), unless all dividends in arrears have been paid or declared and set apart for payment prior thereto, to vote for the election of such additional directors, if any, of the Corporation, the holders of any Series A Preferred Shares being entitled to cast a number of votes per share of the Series A Preferred Shares equal to the Formula Number. Until the default in payments of all dividends which permitted the election of said directors shall cease to exist, any director who shall have been so elected pursuant to the next preceding sentence may be removed at any time by, and removed

68

without cause only by, the affirmative vote of the holders of the Series A Preferred Shares at the time entitled to cast a majority of the votes entitled to be cast for the election of any such director at a special meeting of such holders called for that purpose, and any vacancy thereby created may be filled by the vote of such holders. If and when such default shall cease to exist, the holders of the Series A Preferred Shares shall be divested of the foregoing special voting rights, subject to revesting in the event of each and every subsequent like default in payments of dividends. Upon the termination of the foregoing special voting rights, the terms of office of all persons who may have been elected directors pursuant to said special voting rights shall forthwith terminate, and the number of directors constituting the Board of Directors shall be reduced by two or such other number of directors as shall have been added pursuant to the provisions of this subsection (C). The voting rights granted by this subsection (C) shall be in addition to any other voting rights granted to the holders of the Series A Preferred Shares in this paragraph (iii).

(D) Except as provided herein, in paragraph (xi) or by applicable law, holders of Series A Preferred Shares shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Shares as set forth herein) for authorizing or taking any corporate action.

(iv) Certain Restrictions.

(A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Shares as provided in paragraph (ii) of this Section (c) are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Shares outstanding shall have been paid in full, the Corporation shall not

(1) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Shares;

(2) declare or pay dividends on or make other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Shares, except dividends paid ratably on the Series A Preferred Shares and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(3) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Shares, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Shares; or

(4) purchase or otherwise acquire for consideration any shares of Series A Preferred Shares, or any shares of stock ranking on a parity with the Series A Preferred Shares, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

69

(B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under sub-paragraph (A) of this paragraph (iv), purchase or otherwise acquire such shares at such time and in such manner.

(v) Liquidation Rights. Upon the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution, or winding up) to the Series A Preferred Shares unless, prior thereto, the holders of Series A Preferred Share shall have received an amount equal to the accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, plus an amount equal to the greater of (x) $250 per share and (y) an aggregate amount per share equal to the Formula Number then in effect times the aggregate amount to be distributed per share to holders of Common Shares, or (2) to the holders of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Shares, except distributions made ratably on the Series A Preferred Shares and all other such parity stock in proportion to the total amounts as to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up.

(vi) Consolidation, Merger, etc. In each the Corporation shall enter into any consolidation, merger, combination or other transaction in which the Common Shares are exchanged for or changed into other stock or securities, cash or any other property, then in any such case the then outstanding shares of Series A Preferred Shares shall at the same time be similarly exchanged or changed in an amount per share equal to the Formula Number then in effect times the aggregate amount of stock, securities, cash or any other property (payable in kind), as the case may be, into which or for which each Common Share is exchanged or changed.

(vii) Redemption; No Sinking Fund.

(A) The Series A Preferred Shares shall not be subject to redemption by the Corporation or at the option of any holder of Series A Preferred Stock; provided, however, that the Corporation may purchase or otherwise acquire outstanding shares of Series A Preferred Stock in the open market or by offer to any holder or holders of shares of Series A Preferred Stock.

(B) The Series A Preferred Shares shall not be subject to or entitled to the operation of a retirement or sinking fund.

(viii) Ranking. The Series A Preferred Shares shall rank equally and on a parity with all other series of Preferred Shares of the Corporation with respect to the payment of dividends and the distribution of assets upon the liquidation, dissolution or winding up of the Corporation.

(ix) Fractional Shares. The Series A Preferred Shares shall be issuable upon exercise of the Rights issued pursuant to the Rights Agreement in whole shares or in any fraction of a share that is one one-thousandth (1/1000th) of a share or any integral multiple of such fraction which shall entitle the holder, in proportion to such holder’s fractional shares, to receive dividends, exercise voting rights, participate in distributions and to have the benefit of all other rights of holders of Series A Preferred Shares. The Corporation, prior to the first issuance of a share or a fraction of a share of Series A Preferred Shares, may elect (1) to issue certificates evidencing such authorized fraction of a share of Series A Preferred Shares or (2) to issue depository receipts evidencing such authorized fraction of a share of Series A Preferred Shares pursuant to an appropriate agreement between the Corporation and a depository selected by the Corporation, provided that such agreement shall provide that the holders of such depository receipts shall have all the rights, privileges and preferences to which they are entitled as holders of the Series A Preferred Shares.

70

(x) Reacquired Shares. Any Series A Preferred Shares purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancelation become authorized but unissued shares of Preferred Shares, without designation as to series until such shares are once more designated as part of a particular series by resolution of the Board of Directors.

(xi) Amendment. None of the powers, preferences and relative, participating, optional and other special rights of the Series A Preferred Shares as provided herein shall be amended in any manner which would alter or change the powers, preferences, rights or privileges of the holders of Series A Preferred Shares so as to affect them adversely without the affirmative vote of the holders of at least 66-2/3% of the outstanding Series A Preferred Shares, voting as a separate class; provided, however, that no such amendment approved by the holders of at least 66-2/3% of the outstanding Series A Preferred Shares shall be deemed to apply to the powers, preferences, rights or privileges of any holder of Series A Preferred Shares originally issued upon exercise of the Rights after the time of such approval without the approval of such holder and provided further, however, that the Board of Directors of the Corporation, prior to the earlier of (i) the Distribution Date and (ii) the Expiration Date (as such terms are defined in the Rights Agreement) may amend the powers, preferences and relative participating, optional and other terms of the Series A Preferred Shares in any manner.”

5. The Secretary of State is hereby designated as agent of the Corporation upon whom process against it may be served. The post office address within or without the State of New York to which the Secretary of State shall mail a copy of any process against it served upon him is 800 Delaware Avenue, Buffalo, New York 14209.

6. The following provisions, relating to the business of the Corporation, its affairs, its rights and powers, and the rights and powers of its shareholders, directors and officers are set forth pursuant to paragraph (b) of Section 402 of said Business Corporation Law:

(a) Subject to any limitation provided in any statute of the State of New York, the Corporation in furtherance of its corporate purposes shall have all the powers now or hereafter conferred by statute upon, or otherwise legally attributable to, corporations formed under said Business Corporation Law.

(b) A majority vote of the entire Board shall be necessary for the Board to designate any committee of the Board. “Entire Board” means the total number of directors (assuming no vacancies) which the Corporation would have under or pursuant to the By-laws in effect at the time such vote is taken.

(c) No holder of shares of the Corporation of any class, now or hereafter authorized, shall have any preferential or preemptive right to subscribe for, purchase or receive any shares of the Corporation of any class, now or hereafter authorized, or any options or warrants for such shares, or any rights to subscribe to purchase any shares, or any securities convertible into or exchangeable for such shares, which may at any time be issued, sold or offered for sale by the Corporation.

7. (a) Subject to the rights of the holders of any class or series of capital stock having a preference over the Common Stock as to dividends or upon liquidation, the number of the directors of the Corporation shall be fixed from time to time by or pursuant to the By-laws of the Corporation. The directors, other than those who may be elected by the holders of any class or series of capital stock having a preference over the Common Stock as to dividends or upon liquidation, shall be classified, with respect to the time for which they severally hold office, into two classes, as nearly equal in number as possible (but with not less than three directors in each class or such lesser numbers as may be permitted by law), as shall be provided in or pursuant to the By-laws of the Corporation, one class to be originally elected for a term expiring at the annual meeting of shareholders to be held in 1987 and another class to be originally elected for a term

71

expiring at the annual meeting of shareholders to be held in 1988, with each class to hold office until its successors are elected and qualified. At each annual meeting of the shareholders of the Corporation, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of shareholders held in the second year following the year of their election. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director or cause, directly or indirectly, a decrease in the number of classes of directors, except as required by law.

(b) Notwithstanding paragraph (a) of this Article 7, in the event that the number of directors of the Corporation (i) shall be fixed at nine or a greater number or (ii) shall be fixed at a number that would, under law, permit the directors to be divided into three classes, then, at the next succeeding annual meeting of the shareholders of the Corporation (the “Three-Class Annual Meeting”), the directors, other than those who may be elected by the holders of any class or series of capital stock having a preference over the Common Stock as to dividends or upon liquidation, shall be divided into three classes, as nearly equal in number as possible (but with no less than three directors in each class or such lesser number as may be permitted by law) as shall be provided in or pursuant to the By-laws of the Corporation. At the Three-Class Annual Meeting, one class shall be originally elected for a term expiring at the second succeeding annual meeting and another class shall be originally elected for a term expiring at the third succeeding annual meeting. The class of directors whose term, pursuant to paragraph (a) of this Article 7, would not have expired until the annual meeting next succeeding the Three-Class Annual Meeting shall complete the term for which such class was originally elected. At each annual meeting of the shareholders subsequent to the Three-Class Annual Meeting, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring in the third year following the year of their election.

(c) Subject to the rights of the holders of any class or series of capital stock having a preference over the Common Stock as to dividends or upon liquidation, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled by the vote of the Board of Directors; provided, that, if the number of directors then in office is less than a quorum, such newly-created directorshipsand vacancies shall be filled by the vote of a majority of the remaining directors then in office. Any director elected in accordance with the preceding sentence shall hold office until the next meeting of shareholders at which the election of directors is in the regular order of business and until such director’s successor shall have been elected and qualified.

(d) Shareholder nominations of director candidates and shareholder proposals shall be made in the manner provided in the By-laws.

8. In furtherance and not in limitation of the powers conferred upon it by law, the Board of Directors of the Corporation is expressly authorized to adopt, repeal, alter or amend the By-laws of the Corporation, provided that the vote of a majority of the entire Board of Directors shall be required for any amendment to the By-laws increasing or decreasing the number of directors of the Corporation. In addition to any requirements of law and any other provisions of this Certificate of Incorporation or any resolution or resolutions of the Board of Directors adopted pursuant to Article 4 of this Certificate of Incorporation (and notwithstanding the fact that a lesser percentage may be specified by law, this Certificate of Incorporation or any such resolution or resolutions), the affirmative vote of the holders of 66 2/3% or more of the combined voting power of the then outstanding shares of all classes and series of the Corporation entitled to vote generally in the election of directors (“Voting Stock”), voting together as a single class, shall be required to adopt, amend, alter or repeal any provision of the By-laws.

9. In addition to any requirements of law and any other provisions of this Certificate of Incorporation or any resolution or resolutions of the Board of Directors adopted pursuant to Article 4 of this Certificate of Incorporation (and notwithstanding the fact that a lesser percentage may be specified by law, this Certificate of Incorporation or any such resolution or resolutions), the affirmative vote of the holders of 66 2/3% or more of the combined voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to amend, alter or repeal, or adopt any provision inconsistent with, this Article 9, or Articles 7 or 8 of this Certificate of Incorporation. Subject to the foregoing provisions of this Article 9,

72

the Corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon shareholders herein are subject to this reservation.

10. No director of the corporation shall be personally liable to the corporation or its shareholders for damages for any breach of duty in such capacity occurring after the adoption of this Article 10, except as otherwise provided by law.

73

EX-4.(A)

EXHIBIT 4 (a)

    74

016570| 003590|127C|RESTRICTED|4|057-423

COMMON STOCK

PAR VALUE $.01

COMMON STOCK

THIS CERTIFICATE IS TRANSFERABLE IN CANTON, MA AND JERSEY CITY, NJ AND NEW YORK, NY

CERTIFICATE Number

ZQ 000000

Shares

* * 600620* * * * * *

* * * 600620* * * * *

* * * * 600620* * * *

* * * * * 600620* * *

* * * * * * 600620* *

COMPUTER TASK GROUP, INCORPORATED

INCORPORATED UNDER THE LAWS OF THE STATE OF NEW YORK

THIS CERTIFIES THAT

MR. SAMPLE & MRS. SAMPLE &

MR. SAMPLE & MRS. SAMPLE

CUSIP 205477 10 2

SEE REVERSE FOR CERTAIN DEFINITIONS

is the owner of

* * * SIX HUNDRED THOUSAND SIX HUNDRED AND TWENTY * * *

FULLY-PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF THE PAR VALUE OF $.01 EACH OF Computer Task Group, Incorporated transferable on the books of the Corporation in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. This certificate and the shares represented hereby, are issued and shall be held subject to all of the provisions of the Corporation’s Certificate, of Incorporation, as amended, and By-Laws, as amended, and the holder hereof, by accepting this Certificate, expressly assents thereto. This Certificate is not valid until countersigned and registered by the Transfer Agent and Registrar.

Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.

Chairman and Chief Executive Officer

Senior Vice President and Chief Financial Officer

Senior Vice President and Secretary

Treasurer

Dated <<Month Day, Year>>

COUNTERSIGNED AND REGISTERED

COMPUTERSHARE TRUST COMPANY, N.A.

TRANSFER AGENT AND REGISTRAR,

By

AUTHORIZED SIGNATURE

COMPUTER TASK GROUP, INCORPORATED

SEAL 1995 NEW YORK

SECURITY INSTRUCTIONS ON REVERSE

1234567

COMPUTER TASK GROUP, INCORPORATED

75

THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT DATED AS OF JANUARY 16, 1989, AS AMENDED (THE “RIGHTS AGREEMENT”), BETWEEN COMPUTER TASK GROUP, INCORPORATED AND COMPUTERSHARE TRUST COMPANY, N.A. (FORMERLY KNOWN AS EQUISERVE TRUST COMPANY, N.A.) AS RIGHTS AGENT, THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF COMPUTER TASK GROUP, INCORPORATED. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATE AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. COMPUTER TASK GROUP, INCORPORATED WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM -as tenants in common UNIF GIFT MIN ACT- . . . . . . . . . .Custodian . . . . . . . . . . . . . . .

(Cust) (Minor)

TEN ENT -as tenants by the entireties under Uniform Gifts to Minors Act . . . . . . . . . . . . .

(State)

JT TEN -as joint tenants with right of survivorship and not as tenants in common

UNIF TRF MIN ACT . . . . . . . . . . . . . . .Custodian (until age. . . ). . . . . . . . . . .

(Cust) (Minor)

under Uniform Transfers to Minors Act. . . . . . . . . .

(State)

Additional abbreviations may also be used though not in the above list.

THE CORPORATION WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE, A FULL STATEMENT OF THE DESIGNATION, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF THE SHARES OF EACH CLASS AUTHORIZED TO BE ISSUED, AND WITH RESPECT TO ANY CLASS OF PREFERRED SHARES IN SERIES, THE DESIGNATION, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF EACH SUCH SERIES SO FAR AS THE SAME HAVE BEEN FIXED AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO DESIGNATE AND FIX THE RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF OTHER SERIES OF PREFERRED SHARES.

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

For value received,             hereby sell, assign and transfer unto

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF ASSIGNEE)

            Shares

of the stock represented by the within Certificate, and do hereby irrevocably constitute and appoint             Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises.

Dated:             20             Signature(s) Guaranteed: Medallion Guarantee Stamp

76

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15.

Signature:

Signature:

Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever.

SECURITY INSTRUCTIONS

THIS IS WATERMARKED PAPER, DO NOT ACCEPT WITHOUT NOTING WATERMARK HOLD TO LIGHT TO VERIFY WATERMARK

EX-10.(I)

EXHIBIT 10 (i)

COMPUTER TASK GROUP, INCORPORATED

1991 RESTRICTED STOCK PLAN

ARTICLE I

Definitions

1.1. For purposes of this Plan:

(a) The term “Award” shall mean a grant of Restricted Shares of the Company’s Common Stock to a Recipient.

(b) The term “Board” shall mean the Board of Directors of the Company.

(c) The term “Code” shall mean the Internal Revenue Code of 1986, as amended.

(d) The term “Committee” shall mean the Compensation Committee of the Board. When taking action with respect to the Plan or Awards granted under the Plan, the Committee shall composed solely of two or more Non-Employee Directors.

(e) The term “Common Stock” shall mean the common stock, par value $.01 per share, of the Company and any shares of stock or other securities received as a result of the adjustments contemplated in this Plan.

(f) The term “Company” shall mean Computer Task Group, Incorporated.

(g) The term “Disability” shall mean permanent and total disability as defined in Section 22(e)(3) of the Code.

(h) The term “Non-Employee Director” shall mean a director who:

(i) is not currently an officer (as defined in Rule 16a-(f) of the Securities and Exchange Commission (the “SEC”) of the Company or parent or subsidiary of the Company, or otherwise currently employed by the Company or a parent or subsidiary of the Company;

(ii) does not receive compensation, either directly or indirectly, from the Company or a parent or subsidiary of the Company, for services rendered as a consultant or in a capacity other than as a director, except for an amount that does not exceed the dollar amount for which disclosures would be required pursuant to Item 404(a) of Regulation S-K of the SEC;

(iii) does not posses an interest in any other transaction for which disclosures would be required pursuant to Item 404(a) of Regulation S-K of the SEC; and

(iv) is not engaged in a business relationship for disclosures would be required pursuant to Item 404(b) of Regulation S-K of the SEC.

(i) The term “Plan” shall mean the Computer Task Group, Incorporated 1991 Restricted Stock Plan, as amended from time to time.

(j) The term “Recipient” shall mean an employee of the Company or its Subsidiaries who receives an Award pursuant to this Plan.

(k) The term “Restricted Period” shall mean the period established by the Committee commencing on the date an Award is granted to a Recipient during which the restrictions set forth in this Plan or a Restricted Stock Agreement shall be applicable.

77

(l) The term “Restricted Shares” or “Restricted Stock” shall mean shares of Common Stock granted to a Recipient, subject to the restrictions set forth in Section 7.3 hereof and in each Award.

(m) The term “Restricted Stock Agreement” shall mean an agreement entered into by the Recipient and the Company setting forth the terms of the Award as set forth in Article VII.

(n) The term “Subsidiary” shall have the meaning as set forth in Section 424 of the Code or any successor provision and shall include any corporation which becomes a subsidiary after the date of adoption of the Plan.

ARTICLE II

Purpose

2.1. The purpose of the Computer Task Group, Incorporated 1991 Restricted Stock Plan is to promote the growth and profitability of the Company and its Subsidiaries by providing the incentive of long- term equity rewards consisting of Common Stock, subject to certain restrictions as provided herein, to key employees of the Company and its Subsidiaries who have had, and who are expected to continue to have a significant impact on the performance of the Company, to encourage such employees to remain with the Company and to further identify their interests with those of the Company’s stockholders.

ARTICLE III

Effective Date and Expiration of Plan

3.1. This Plan has been adopted by the Board effective as of January 25, 1991. If this Plan is not approved within one year after the date of its adoption by the Board by the vote at a meeting of the stockholders of the Company of the holders of a majority of the shares of Common Stock present or represented at such meeting, this Plan and all Awards shall terminate at the time of such meeting or, if no such meeting is held, after the passage of one year from the date the Plan was adopted by the Board. Unless earlier terminated by the Board or the Committee, the Plan shall terminate when all Awards authorized under the Plan have been granted and all shares subject to such Awards have been issued and are no longer subject to forfeiture under the terms hereof.

ARTICLE IV

Eligibility

4.1. Participation in and Awards under the Plan shall be limited to key employees of the Company and its Subsidiaries. Key employees will, in general, be those employees of the Company and its Subsidiaries in positions of responsibility whose business decisions, in the sole judgment of the Committee, contribute to the overall success of the Company and its Subsidiaries.

ARTICLE V

Shares Subject to the Plan

5.1. The total number of Restricted Shares of Common Stock of the Company for which Awards may be granted under this Plan shall not exceed 400,000 shares, subject to adjustment in accordance with Article VIII hereof. Such shares shall be treasury shares of the Company. Shares of Common Stock issued as Restricted Shares under the Plan that are subsequently forfeited pursuant to Article VII hereof shall be available for grants of future Awards.

78

ARTICLE VI

Administration

6.1. The Committee shall have full and exclusive authority to administer, construe and interpret the Plan, and to adopt such rules, regulations and guidelines and perform such other acts relating to the Plan, including the delegation of administrative responsibilities which it believes reasonable and proper.

6.2. The Committee shall have the exclusive right to grant Awards pursuant to the terms of this Plan and shall, in its sole discretion, determine which employees of the Company and its Subsidiaries shall be granted Awards, the number of Restricted Shares of Common Stock subject to any Award, the times at which Awards will be granted and subject to forfeiture, and any other terms and conditions of such Awards. All claims by Recipients arising under this Plan shall be presented to the Committee. The acts and decisions of the Committee with respect to any questions arising in connection with the administration and interpretation of this Plan, including the severability of any and all of the provisions hereof shall be conclusive, final and binding. Employees of the Company and its Subsidiaries shall not have any claim or right to be granted an Award and there shall be no obligation on the part of the Committee, in granting Awards, to treat eligible employees uniformly.

ARTICLE VII

Terms and Conditions of Awards

7.1 Awards of Restricted Shares. The Committee shall have the exclusive right and power to grant Awards of Restricted Shares at any time either alone or in connection with options or securities granted pursuant to other Company plans. Subject to the terms and conditions of this Plan, an Award shall be effective for the Restricted Period and shall not be revoked. Once an Award has been granted to a Recipient, share certificates representing the number of Restricted Shares shall be registered in the name of the Recipient but shall be held by the Company for the account of the Recipient. Each certificate evidencing the Restricted Shares subject to an Award may bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award.

7.2 Restricted Stock Agreement. Awards granted pursuant to this Plan shall be evidenced by a written agreement executed by both the Company and the Recipient which shall state the number of Restricted Shares granted, the Restricted Period, and such other terms, conditions and restrictions as the Committee shall approve.

7.3 Restricted Period. The Committee shall establish the Restricted Period for each Award or portion thereof at the time an Award is granted and may establish a different Restricted Period for each Award or portion thereof. The Committee shall have the power, in its sole discretion, to accelerate the expiration of the Restricted Period with respect to any part or all of the Restricted Shares awarded to a Recipient, and may require, as a condition of any such Award, that the Recipient shall have delivered a stock power endorsed in blank relating to the shares covered by such Award. Stock powers delivered to the Company in connection with any Award shall be returned in accordance with the provisions of Section 7.6 hereof. A Recipient may be granted more than one Award.

7.4 Termination of Employment. Except as may otherwise be set forth in the grant of an Award, if a Recipient ceases to be an employee of the Company or its Subsidiaries prior to the expiration of the applicable Restricted Period by reason of death or Disability, all restrictions set forth in this Plan and Restricted Stock Agreement(s) shall terminate as to any Restricted Shares granted to such Recipient which are still subject to restriction, and certificates for the proper number of shares of Common Stock free of all restrictions described herein shall be delivered to a Recipient or his beneficiary or estate, as the case may be, in accordance with Section 7.6 hereof. If a Recipient ceases to be an employee prior to the end of the Restricted Period for any other reason, such Recipient shall immediately forfeit all Restricted Shares.

7.5 Shareholder Rights. During the Restricted Period, the Recipient of an Award shall be entitled to receive all dividends and shall have the right to vote such Restricted Shares as the record owner thereof.

7.6 Delivery of Shares. Certificates for the proper number of shares of Common Stock free of the restrictions set forth in this Plan and any Restricted Stock Agreement, registered in the name of a Recipient, shall be delivered to a Recipient or his or her beneficiary or estate, as the case may be, upon termination of the Restricted Period or at such earlier time as provided for in accordance with Section 7.4 hereof.

79

7.7 Designation of Beneficiary. Recipients shall have the right to designate one or more persons to receive, in the event of his or her death, any rights to which he or she would be entitled under this Plan. Designations shall be made in writing and filed with the Committee on a form to be provided by the Company. The designation of a beneficiary may be changed or revoked by a Recipient at any time by filing a written statement of such change or revocation with the Committee. A Recipient’s estate shall be deemed to be his or her beneficiary in the event a beneficiary is not otherwise designated.

7.8. Taxes. The Company may make such provisions and take such steps as it deems necessary or appropriate for the withholding of any taxes which the Company is required by law or regulation of any governmental authority to withhold in connection with any Award pursuant to this Plan.

7.9. Restrictions on Transferability. The Restricted Shares granted pursuant to an Award shall not be sold, transferred, assigned, pledged or otherwise disposed of by a Recipient during the Restricted Period.

ARTICLE VIII

Adjustments

8.1. In the event that at any time the Company shall enter into a transaction described in Section 424(a) of the Code, declare a stock dividend, stock split or otherwise enter into a transaction which in the sole judgment of the Committee requires action to adjust the terms of outstanding Awards, the Committee may take such action to preserve a Recipient’s rights substantially proportionate to the rights existing prior to such event. To the extent that such action shall include an increase or decrease in the number of shares of Common Stock subject to outstanding Awards, the number of shares available under this Plan shall be proportionately increased or decreased. Any adjustment may provide for the elimination of any fractional share which might otherwise become subject to an Award.

ARTICLE IX

Miscellaneous

9.1. Continued Employment. Nothing in this Plan or any document describing or referring to this Plan shall be deemed to confer on any Recipient of an Award the right to continue in the employ of the Company or its Subsidiaries or affect the right of the Company or its Subsidiaries to terminate the employment of any such person with or without cause.

9.2. Governing Law. This Plan and all actions taken hereunder shall be governed by the laws of the State of New York and all Awards granted pursuant thereto shall be subject to all applicable federal and state laws, rules and regulations and to such approval by any regulatory or governmental agency as may be required.

ARTICLE X

Amendment or Termination of Plan

The Committee may, from time to time, amend, suspend, or terminate this Plan or any provision thereof; provided, however, that no amendment to this Plan shall be made which would, without the prior approval of the Shareholders of the Company: (i) materially increase the benefits accruing to participants under the Plan, (ii) materially increase the number of securities which may be issued under the Plan, or (iii) materially modify the requirements as to eligibility for participation in the Plan.

80

EX-10.(K)

EXHIBIT 10 (k)

COMPUTER TASK GROUP, INCORPORATED

EXECUTIVE SUPPLEMENTAL BENEFIT PLAN

1997 RESTATEMENT

COMPUTER TASK GROUP, INCORPORATED

EXECUTIVE SUPPLEMENTAL BENEFIT PLAN

PURPOSE

The purpose of the Executive Supplemental Benefit Plan of Computer Task Group, Incorporated is to provide specified benefits to a select group of management and highly-compensated Employees who contribute materially to the continued growth, development and future business success of the Company.

I TITLE AND EFFECTIVE DATE

.1 Title. This Plan shall be known as the Computer Task Group, Incorporated Executive Supplemental Benefit Plan, (hereinafter referred as the “Plan”).

.2 Effective Date. The effective date of this Plan was March 3, 1984. The effective date of this Plan as restated by this instrument is January 31, 1997.

.3 Plan Year. The Plan Year of this Plan is the calendar year, except that the first Plan Year began March 3, 1984 and ended December 31, 1984.

II DEFINITIONS

For purposes hereof, unless otherwise clearly apparent from the context, the following phrases or terms shall have the indicated meanings:

.1 “Basic Compensation” shall mean the annual base salary of the Employee, exclusive of bonus, incentive payments or other extraordinary compensation, at the date of death, Total and Permanent Disability, Retirement or Voluntary Termination, divided by twelve (12).

.2 “Beneficiary” shall mean the person or entity entitled to receive any benefits under this Plan, as determined under Article XI.

.3 “Committee” shall mean the Compensation Committee of the Board, which Committee shall manage and administer the Plan in accordance with the provisions of Article XVII hereof.

.4 “Company” shall mean Computer Task Group, Incorporated.

81

.5 “Pre-retirement Death Benefit” shall mean a monthly benefit equal to 50% of a Member’s Basic Compensation. This benefit shall be paid for a period of 180 months.

.6 “Disability Benefit” shall mean a monthly benefit equal to 50% of a Member’s Basic Compensation, reduced by disability benefits paid under the Company-provided portion of the Company’s basic and supplemental disability plans.

.7 “Employee” shall mean any person who is in the regular full-time employment of the Company, as determined by the personnel rules and practices of the Company.

.8 “Member” shall mean an Employee who is selected and elects to participate in the Plan as provided in Article III hereof.

.9 “Plan” shall mean the Computer Task Group, Incorporated Executive Supplemental Benefit Plan.

.10 “Plan Participation Agreement” shall mean the form of written acceptance which is executed by an Employee selected to become a Member as a condition to membership in the Plan.

.11 “Normal Retirement Age” shall mean the later of (a) the completion of five years of service from the date the Employee becomes a Member of the Plan, or, (b) (i) in the case of a Member whose benefits become nonforfeitable under Section 2.13 prior to December 1, 1994 and who does not participate in any plan that is a successor to this Plan, age 60, or, (ii) in the case of any other Member, age 65.

.12 “Retirement Benefit Percentage” shall mean that portion of the Basic Compensation expressed in the form of a percentage, that a Member is entitled to receive at Normal Retirement. The percentage shall be based upon the yearly percentage credits earned for past and future services indicated in each Member’s Plan Participation Agreement. A Member shall not earn credits for services during the period the Member is Totally and Permanently Disabled. The maximum retirement benefit for any one Member shall not exceed 50% of Basic Compensation.

.13 “Level Classification” shall mean the classifications indicated by the following schedule designating the percentage credits earned by a Member for each year of Prior Service or Future Service and their forfeitability. The Level Classification assignments shall be determined on an individual basis by the Committee and are specified in Exhibit 1.

Level	Prior Service	Future Service	Forfeitability
I	3%/yr.	3%/yr.

All retirement benefits shall be nonforfeitable at the later of the inception of the Plan, or the date an Employee becomes a Member of the Plan.

II 2-1/4%/yr. 3%/yr.

All retirement benefits representing prior service shall be nonforfeitable at the later of the inception of the Plan or the date an Employee becomes a Member of the Plan. Benefits attributable to future service become nonforfeitable after five years of service from the date an Employee becomes a Member of the Plan.

III 1%/yr. 2-1/2%/yr.

All retirement benefits, whether based upon past service or service rendered after admission to the Plan, shall become nonforfeitable after five years of service from the date an Employee becomes a Member of the Plan, or if earlier, the date the Member is Totally and Permanently Disabled. Notwithstanding the preceding, all retirement benefits of any Member who is actively employed by the Company on December 1, 1994 shall become nonforfeitable on December 1, 1994 if the Member has at least three years of service on such date.

82

Notwithstanding the preceding, all benefits in the Plan shall be frozen as of December 1, 1994; that is, no benefits that have not accrued as of close of business on November 30, 1994 shall accrue on or after that date and any compensation taken into account for any purpose under this Plan shall not be increased after November 30, 1994.

.14 “Normal Retirement” shall mean severance from employment with the Company at or after attaining Normal Retirement Age, or, in the case of a Member who is receiving Disability Benefits immediately prior to Normal Retirement Age, Normal Retirement Age.

.15 “Normal Retirement Benefit” shall mean a monthly benefit beginning at Normal Retirement and continuing for 180 months or the life of the Member, whichever is the greater. The monthly benefit is an amount calculated by multiplying the Retirement Benefit Percentage times the Member’s Basic Compensation at the Member’s date of retirement and is not offset by benefits in the Company’s qualified thrift plan or Section 401(k) plan, nor by a Member’s primary Social Security benefits. However, in the event a defined benefit pension plan is implemented by the Company, the monthly benefits payable under this Plan to those Members who are eligible for benefits under a defined benefit pension plan shall be reduced by the Member’s monthly benefits under such pension plan.

.16 “Board” shall mean the Company’s Board of Directors.

.17 “Total and Permanent Disability” or “Totally and Permanently Disabled” shall mean a physical or mental condition arising after the Effective Date that prevents the Member from engaging in any gainful occupation in which the Member might reasonably be expected to engage, with due regard for the Member’s education, training, experience, and prior economic status. The determination shall be made on medical evidence by a licensed physician assigned by the Committee. Total and Permanent Disability shall exclude disabilities arising from: (a) intentionally self-inflicted injury or intentionally self-induced sickness, (b) a proven unlawful act or enterprise on the part of the Member, or (c) military service where the Member is eligible to receive a government military disability pension. In all cases, the Committee shall make the final determination whether a Member is Totally and Permanently Disabled for purposes of this Plan.

.18 “Prior Service” shall mean the actual years and fractions thereof (rounded up to the nearest year) for which the Member is employed by the Company prior to becoming a Member.

.19 “Future Service” shall mean the number of years (rounded up to the nearest year) an Employee is a Member, beginning with the date on which an Employee becomes a Member and ending no later than the Member’s Normal Retirement Age.

.20 “Post-retirement Death Benefit” shall mean that benefit payable to a Member’s Beneficiary if the Member dies prior to separation from service with the Company but after Normal Retirement Age, or if the Member dies after Normal Retirement and the Member has not received any or all of the Retirement Benefit payments provided for under this Plan.

.21 “Voluntary Termination” shall mean severance from employment with the Company before attaining the Normal Retirement Age for reasons other than cause, as defined in Section 9.3.

83

III ELIGIBILITY AND MEMBERSHIP

.1 To be eligible for membership in the Plan, an Employee must be recommended by the Chairman of the Board and the Chief Executive Officer, and approved by the Committee. The Committee, in its sole discretion, shall determine eligibility for membership in accordance with the purposes of the Plan.

.2 An Employee, after having been approved for membership by the Committee, shall, as a condition to membership, complete and return to the Committee a duly-executed Plan Participation Agreement.

IV PRE-RETIREMENT DEATH BENEFIT

.1 Except as provided in Article VII, in the event a Member dies before Normal Retirement while employed by the Company, the Company will pay or cause to be paid a Pre-retirement Death Benefit to such Member’s Beneficiary, commencing within 60 days following the date of the death of the Member.

.2 If a Member is receiving a Disability Benefit at the date of death, the Member’s Disability Benefit shall cease, the Member shall be considered employed by the Company at death for purposes of Section 4.1, and the Beneficiary shall receive the Pre-retirement Death Benefit based on the Member’s Basic Compensation immediately preceding the date of disability. This monthly benefit shall continue until a total of 180 payments (including both Disability Benefits and Pre-retirement Death Benefits) have been made.

.3 Notwithstanding the foregoing, if a Member dies as a result of suicide during the first two years of the Member’s membership in the Plan, the Member and the Beneficiary will forfeit all interest in the Plan.

.4 Any payments of the Pre-retirement Death Benefit shall be made in the form and manner such payments would have been paid to the Member had the Member survived.

.5 Notwithstanding the foregoing, a Pre-retirement Death Benefit payable to a Member’s Beneficiary under this Article shall be subject to the cashout provisions of Article XIX.

V VOLUNTARY TERMINATION BENEFIT

.1 Subject to the forfeitability rules of Article IX and Section 2.13, for a Member whose benefits first become nonforfeitable under Section 2.13 prior to December 1, 1994, and who does not participate in any plan that is a successor to this Plan, if the Member separates from service before Normal Retirement Age, the Company will pay or cause to be paid to the Member the Member’s Normal Retirement Benefit, commencing within 60 days after the Member’s attainment of age 60.

.2 Subject to the forfeitability rules of Article IX and Section 2.13, for a Member whose benefits first become nonforfeitable under Section 2.13 after November 30, 1994 or a Member who participates in any plan that is a successor to this Plan, if the Member separates from service before age 65, the Company will pay or cause to be paid to the Member the Member’s Normal Retirement Benefit, commencing within 60 days after the Member’s attainment of age 65.

.3 Notwithstanding Sections 5.1 and 5.2, benefits accrued under the Plan for a Member who separates from service and is entitled to benefit payments under this Article shall be subject to the cashout provisions of Article XIX.

84

VI NORMAL RETIREMENT BENEFIT

.1 Subject to the forfeitability rules of Article IX and Section 2.13, the Company will pay or cause to be paid to the Member a Normal Retirement Benefit, commencing within 60 days after the date of the Member’s separation from service at or after Normal Retirement Age. This benefit will not be increased as a result of continued employment beyond Normal Retirement Age.

.2 Notwithstanding Section 6.1, a Normal Retirement Benefit payable under this Article to a Member who is not presently in the employ of the Company shall be subject to the cashout provisions of Article XIX.

VII POST-RETIREMENT DEATH BENEFIT

.1 If a Member shall die after the commencement of Normal Retirement Benefit payments but before 180 payments have been made, the Normal Retirement Benefit payments then remaining unpaid to a Member shall continue to be paid to the Member’s Beneficiary as a Post-retirement Death Benefit in the form and manner such payments would have continued to be paid to the Member.

.2 If a Member shall die prior to separation from service with the Company but after attaining Normal Retirement Age, 180 Retirement Benefit payments shall be paid to a Member’s Beneficiary as a Post-retirement Death Benefit in the form and manner such payments would have been paid to the Member. The benefit shall commence within 60 days following the date of death of such Member and continue for 180 months.

.3 If a Member shall die under the circumstances set forth in Sections 7.1 and 7.2 above, a Member’s Beneficiary shall not receive a Pre-retirement Death Benefit as provided for in Article IV.

.4 Notwithstanding the foregoing, a post-retirement Death Benefit payable to a Member’s Beneficiary under this Article shall be subject to the cashout provisions of Article XIX.

VIII DISABILITY BENEFIT

.1 If a Member becomes Totally and Permanently Disabled while employed by the Company and before Normal Retirement, the Company shall pay, or cause to be paid, a Disability Benefit. This benefit shall commence on the later of (a) the date immediately following the expiration of the Member’s Company-provided short-term disability benefit or (b) within 60 days following the date upon which the Committee determines a Member to be Totally and Permanently Disabled.

.2 The Disability Benefit shall be paid until the Member’s Normal Retirement Age or, if earlier, until the Total and Permanent Disability shall cease to exist. If Total and Permanent Disability continues to the Member’s Normal Retirement Age, a Normal Retirement Benefit shall commence as of the first day of the month following the month in which the Member attains Normal Retirement Age. This monthly benefit shall continue until a total of 180 payments (including both Disability Benefits and Normal Retirement Benefits) have been made, or for the life of the Member, if greater.

.3 If a Member is not an Employee and becomes Totally and Permanently Disabled, there shall be no Disability Benefit payable hereunder to any person.

.4 Notwithstanding the foregoing, a Disability Benefit payable to a Member under this Article shall be subject to the cashout provisions of Article XIX.

85

IX CONDITIONS PRECEDENT TO BENEFITS

.1 A Member’s right to a Normal Retirement Benefit shall be forfeitable in accordance with the Level Classification assigned to the Member by the Committee. All forfeitable benefits will be forfeited upon Normal Retirement, Voluntary Termination or termination of employment for cause or for other reasons, as provided in this Article IX.

.2 A Member or Beneficiary shall not be entitled to any duplication of benefits under this Plan under any circumstances.

.3 Notwithstanding any other provisions of the Plan, a Member shall forfeit all benefits from the Plan if the Committee determines that the Member’s employment with the Company is terminated for cause. Cause is defined as:

1. Embezzlement from the Company

2. Theft from the Company

3. Defrauding the Company

4. Drug addiction

5. Habitual intoxication

6. Use or disclosure of Company or client confidential or proprietary information

7. Engaging in activities or businesses which are substantially in competition with the Company

8. Any other action, activity or course of conduct which is substantially detrimental to the Company’s business or business reputation

9. Violation of the provision of the terms of any nondisclosure and nonsolicitation, noncompetition, or other contractual agreement between the Member and the Company.

.4 Notwithstanding any other provision of the Plan, a Member shall forfeit all future benefits under the Plan if the Committee determines the Member to be engaged in any of the following activities:

1. Use or disclosure of Company or client confidential or proprietary information

2. Engaging in activities or businesses which are substantially in competition with the Company

3. Any other action, activity or course of conduct which is substantially detrimental to the Company’s business or business reputation

4. Violation of the provision of the terms of any nondisclosure and nonsolicitation, noncompetition, or other contractual agreement between the Member and the Company.

86

X MODIFICATION OF PAYOUT PERIOD

.1 The Committee may shorten the time period over which any benefit provided for under this Plan is to be paid. However, any modification of the time period over which a benefit is to be paid must result in a benefit which is the actuarial equivalent of that benefit when paid over the time periods specifically detailed in the benefit provisions of this Plan.

.2 (a) Upon a Change of Control, as defined in Section 10.3, the benefit of a Member who is actively employed by the Company immediately prior to the Change of Control shall be increased by treating the Member as though he or she had earned the maximum Prior Service and Future Service credits under the Plan at his or her level, taking into account Basic Compensation immediately prior to the Change of Control. The benefit of a member who is actively employed by the Company immediately prior to the Change of Control shall be paid in cash on or immediately following the Change of Control in a single lump sum, actuarially equivalent to the benefit otherwise payable on the Change of Control. Such lump sum shall be determined based on (i) an interest rate equal to the lesser of (A) 5% or (B) the rate that would be used by the Pension Benefit Guaranty Corporation for purposes of valuing a lump sum distribution on a plan termination on the January 1 of the calendar year in which the single lump sum is paid and (ii) the mortality assumptions of the Unisex Pension 1984 Mortality Table.

(b) After a Change of Control, in the event any Member, whether active or inactive, and the Company shall disagree as to his, her or its respective rights and obligations under this Plan, and the Member is successful in establishing, privately or otherwise, that his or her position is substantially correct, or that the Company’s position is substantially wrong or unreasonable, or in the event that the disagreement is resolved by settlement, the Company shall pay all costs and expenses, including counsel fees, which the Member may incur in connection therewith. The Company shall not delay or reduce the amount of any payment provided for hereunder or set off or counterclaim against any such amount for any reason whatever; it is the intention of the Company and the Member that the amounts payable to the Member hereunder shall continue to be paid in all events in the manner and at the times herein provided. All payments made by the Company hereunder shall be final and the Company shall not seek to recover all or any part of any such payments for any reason whatsoever.

.3 A “Change of Control” shall be deemed to have occurred if:

(i) any Person, which shall mean a “person” as such term is used in Sections 13(d) and 24(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding voting securities;

(ii) during any period of 24 consecutive months, individuals who at the beginning of such period constitute the Board, and any new director whose election by the Board, or whose nomination for election by the Company’s stockholders, was approved by a vote of at least two-thirds (2/3) of the directors (other than in connection with a contested election) before the beginning of the period cease, for any reason, to constitute at least a majority thereof;

(iii) the stockholders of the Company approve (1) a plan of complete liquidation of the Company or (2) the sale or disposition by the Company of all or substantially all of the Company’s assets unless the acquirer of the assets or its directors shall meet the conditions for a merger or consolidation in subparagraphs (iv)(a) or (iv)(b); or

(iv) the stockholders of the Company approve a merger or consolidation of the Company with any other company other than:

87

(a) such a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 70% of the combined voting power of the Company’s or such surviving entity’s outstanding voting securities immediately after such merger of consolidation; or

(b) such a merger or consolidation which would result in the directors of the Company who were directors immediately prior thereto continuing to constitute more than 50% of the directors of the surviving entity immediately after such merger or consolidation.

In this paragraph (iv), “surviving entity” shall mean only an entity in which all of the Company’s stockholders immediately before such merger or consolidation become stockholders by the terms of such merger or consolidation, and the phrase “directors of the Company who were directors immediately prior thereto” shall include only individuals who were directors of the Company at the beginning of the 24 consecutive month period preceding the date of such merger or consolidation, or who were new directors (other than any director nominated in connection with a contested election or designated by a Person who has entered into an agreement with the Company to effect a transaction described in paragraph (i), (iii)(2), (iv)(a) or (iv)(b) of this Section) whose election by the Board, or whose nomination for election by the Company’s stockholders, was approved by a vote of at least two-thirds (2/3) of the directors before the beginning of such period.

.4 Except as otherwise provided in Section 10.2, for purposes of determining actuarial equivalents, factors published by the Pension Benefit Guaranty Corporation for determining sufficiency of defined benefit plans in effect on the date of such modification shall be used.

XI BENEFICIARY

.1 A Member may designate the beneficiary or beneficiaries (“Beneficiary”) for the death benefits provided under this Plan. Such designation may be changed from time to time. All designations shall be filed with the Company on forms provided by it.

In the absence of an effective designation, death benefits shall be payable under this Plan in the following order or priority:

(1) to the Member’s surviving spouse, as hereinafter defined, if any; or

(2) to the Member’s estate.

For purposes of this Article XI, the term “surviving spouse” shall mean the spouse to whom the Member was married throughout the one-year period ending on the date of the Member’s death.

.2 If the Company has any doubt as to the proper Beneficiary to receive payments hereunder, the Company shall have the right to withhold such payments until the matter is finally adjudicated.

.3 Any payment made by the Company, in good faith and in accordance with this Plan, shall fully discharge the Company from all further obligations with respect to that payment.

XII NATURE OF COMPANY’S OBLIGATION

.1 The Company’s obligations under this Plan shall be an unfunded and unsecured promise to pay. The Company shall not be obligated under any circumstances to fund its financial obligations under this Plan.

.2 Any assets which the Company may acquire to help cover its financial liabilities are and remain general assets of the Company subject to the claims of its creditors. The Company does not give, and the Plan does not give, any beneficial ownership interest in any asset of the Company to a Member or Beneficiary. All rights of ownership in any assets are and remain in the Company.

88

.3 The Company’s liability for payment of benefits shall be determined only under the provisions of this Plan, as they may be amended from time to time, and each Plan Participation Agreement entered into between the Company and a Member.

XIII EMPLOYEE RIGHT TO ASSETS

.1 The rights of a Member, any Beneficiary of the Member, or any other person claiming through the Member under this Plan, shall be solely those of an unsecured general creditor of the Company. A Member, the Beneficiary of the Member, or any other person claiming through the Member, shall have the right to receive those payments specified under this Plan only from the Company. The parties have no right to look to any specific or special property separate from the Company to satisfy a claim for benefit payments.

.2 A Member agrees that the Member, the Member’s Beneficiary, or any other person claiming through the Member shall have no right, claim, security interest, or any beneficial ownership interest whatsoever in any general asset that the Company may acquire or use to help support its financial obligations under this Plan. Any general asset used or acquired by the Company in connection with the liabilities it has assumed under this Plan shall not be deemed to be held under any trust for the benefit of the Member or the Member’s Beneficiary. Nor shall any such general asset be considered security for the performance of the obligations of the Company. Any such asset shall remain a general, unpledged, and unrestricted asset of the Company.

.3 A Member also understands and agrees that the Member’s participation in the acquisition of any general asset for the Company shall not constitute a representation to the Member, the Member’s Beneficiary, or any person claiming through the Member that any of them has a special or beneficial interest in any general asset.

XIV EMPLOYMENT RIGHTS

.1 Neither the Plan nor the Plan Participation Agreement, either singly or collectively, obligate the Company in any way to continue the employment of a Member with the Company or prohibit the Company from terminating a Member’s employment. Nor does this Plan or the Plan Participation Agreement prohibit or restrict the right of a Member to terminate employment with the Company. Termination of a Member’s employment with the Company, whether by action of the Company or by the Member, shall immediately terminate the Member’s future participation in the Plan. All further obligations of either party shall be determined under the provisions of this Plan according to the nature of the termination.

XV TERMINATION, AMENDMENT, MODIFICATION OR SUPPLEMENTATION OF PLAN

.1 The Committee retains the sole and unilateral right to terminate, amend, modify or supplement this Plan, in whole or in part, at any time. This right includes the right to make retroactive amendments. However, no Company action under this right shall reduce or diminish the benefits of any disabled, retired, or deceased Member or the Member’s Beneficiary, or those benefits which are nonforfeitable under the provisions of the Plan.

XVI RESTRICTIONS ON ALIENATION OF BENEFITS

.1 No right or benefit under the Plan or a Plan Participation Agreement shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to such benefit. If any Member or Beneficiary under the Plan should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right to a benefit under this Plan, then such right or benefit, in the discretion of the

89

Committee, shall cease. In these circumstances, the Committee may hold or apply the benefit or any part thereof for the benefit of the Member or Beneficiary, the Member’s spouse, children, or other dependents, or any of them, in such manner and in such portion as the Committee may deem proper.

XVII ADMINISTRATION OF THE PLAN

.1 The named fiduciary of the Plan is the Company.

.2 The general administration of this Plan, as well as construction and interpretation thereof, shall be vested in the Committee, the number and members of which shall be designated and appointed from time to time by, and shall serve at the pleasure of the Board. Any such member of the Committee may resign by notice in writing filed with the Secretary of the Board. Vacancies shall be filled promptly by the Board.

.3 The Board may designate one of the members of the Committee as Chairman and may appoint a Secretary who need not be a member of the Committee and may be a Member of the Plan. The Secretary shall keep minutes of the Committee’s proceedings and all data, records and documents relating to the Committee’s administration of the Plan. The Committee may appoint from its number such subcommittees with such powers as the Committee shall determine and may authorize one or more members of the Committee or any agent to execute or deliver any instrument or make any payment on behalf of the Committee.

.4 All resolutions or other actions taken by the Committee shall be by vote of a majority of those present at a meeting at which a majority of the members are present, or in writing by all the members at the time in office if they act without a meeting.

.5 Subject to the Plan, the Committee shall, from time to time, establish rules, forms and procedures for the administration of the Plan. Except as herein otherwise expressly provided, the Committee shall have the exclusive right to interpret the Plan and to decide any and all matters arising thereunder or in connection with the administration of the Plan, and it shall endeavor to act, whether by general rules or by particular decisions, so as not to discriminate in favor of or against any person. The decisions, actions and records of the Committee shall be conclusive and binding upon the Company and all persons having or claiming to have any right or interest in or under the Plan.

.6 The members of the Committee and the officers and directors of the Company shall be entitled to rely on all certificates and reports made by any duly appointed accountants, and on all opinions given by any duly appointed legal counsel, which legal counsel may be counsel for the Company.

.7 No member of the Committee shall be liable for any act or omission of any other member of the Committee, nor for any act or omission on his own part. The Company shall indemnify and save harmless each member of the Committee against any and all expenses and liabilities arising out of his membership on the Committee. Expenses against which a member of the Committee shall be indemnified hereunder shall include, without limitation, the amount of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted, or a proceeding brought or settlement thereof. The foregoing right of indemnification shall be in addition to any other rights to which any such member on the Committee may be entitled as a matter of law.

.8 In addition to the powers specified above, the Committee shall have the power to compute and certify under the Plan the amount and kind of benefits from time to time payable to Members and their Beneficiaries and to authorize all disbursements for such purposes.

.9 To enable the Committee to perform its functions, the Company shall supply full and timely information to the Committee on all matters relating to the compensation of all Members, their retirement, death or other termination of employment, and such other pertinent facts as the Committee may require.

90

XVIII MISCELLANEOUS

.1 All notices, distributions and payments (to the extent feasible), and other communications under this Agreement shall be in writing and shall be deemed given when (a) delivered by hand, (b) transmitted by telex or telecopier (provided that a copy is sent at about the same time as in (c)), (c) received by the addressee, if sent by registered or certified mail, return receipt requested, or by Express Mail, Federal Express, or other express delivery service, to the addressee at the addresses, telex numbers or telecopier numbers as a party may specify by notice given to the other party pursuant to this provision. No communication shall be binding until received. If no address shall have been furnished, the Company shall make distribution to the Member or Beneficiary in care of the Company.

.2 Any party may, from time to time, change the address to which notices shall be mailed by giving written notice of such new address.

.3 In making any payments to or for the benefit of any minor or an incompetent Beneficiary or Member, the Committee, in its sole and absolute discretion, may make a distribution to a legal or natural guardian or other relative of a minor or court appointed committee of such incompetent. Or, it may make a payment to any adult with whom the minor or incompetent temporarily or permanently resides. The receipt by a guardian, committee, relative or other person shall be a complete discharge to the Employer. Neither the Committee nor the Company shall have any responsibility to see to the proper application of any payments so made.

.4 The Company may, in its sole discretion, permit the Member to take a leave of absence for a period not to exceed one year. During such leave, the Member will still be considered to be in the continuous employment of this Company for purposes of benefit service credits under this Plan.

.5 The Plan shall be binding upon the Company and any successor company through merger, acquisition or consolidation, and upon a Member, the Member’s Beneficiary, assigns, heirs, executors and administrators.

.6 This Plan shall be governed by the laws of the State of New York without regard to principles of conflicts of law.

.7 Any controversy arising out of or relating to this Agreement shall be adjudicated in a court of competent jurisdiction located in the State of New York. A Member or Beneficiary hereby submits to the personal jurisdiction of any court of competent jurisdiction located in the State of New York

.8 Any provision of this Plan prohibited by law shall be ineffective to the extent of any such prohibition without invalidating the remaining provisions hereof.

.9 Titles to the Sections of this of this Plan are included for convenience only and shall not control the meaning or interpretation of any provision of this Plan.

.10 Simultaneous Death. If the Member and the Member’s Beneficiary shall die in a common accident or disaster or under such circumstances that it is difficult to determine who died first, then for all purposes of this Plan such Beneficiary shall be treated as having predeceased the Member.

91

XIX CASHOUT OF BENEFITS

.1 Benefits Eligible for Cashout. Benefits accrued under the Plan with respect to a Member not presently in the employ of the Company, in the sole discretion of the Committee, may be paid out to a Member or the Member’s Beneficiary on a lump sum distribution basis.

.2 Present Value. The determination of the lump sum present value of a Member’s or Beneficiary’s remaining benefits under the Plan shall be made by the Committee in its sole discretion, using for all purposes interest rates and mortality factors as selected by the Committee in its sole discretion. Such factors may include, but are not limited to, the factors used by the accountants regularly employed by the Company to determine the balance sheet entries for such benefits.

.3 No Further Benefits. Upon receipt of the lump sum cashout described in this Article, neither the Member nor his Beneficiary shall have any further rights to benefits or obligations under this Plan.

.4 Withholding. The Company may withhold from any payment under the Plan any federal, state or local taxes required by laws to be withheld with respect to the payment and any sum the Company may reasonably estimate as necessary to cover any taxes for which the Company may be liable and that may be assessed with regard to the payment.

EXHIBIT 1

Level I: G. David Baer - Active

Randolph A. Marks - Inactive

Level II: David N. Campbell - Inactive

John P. Courtney - Inactive

Level III:

Benefits Nonforfeitable Prior to 12/1/94	Benefits Nonforfeitable After 11/30/94	Participating in Successor Plan
ACTIVE:
Samuel Horgan	Gale Fitzgerald
John Lozan	Stephen Hoffman
Joseph Makowski	James Joyce
Gerald Selzer	John Nale

92

INACTIVE:

Clifford Baer

David Ehlke

Paul Fjelsted

Paul Hessinger

Vincent Lamb

Craig Newbold

Philip Paul

Thomas Peca

Richard Trautman

Maureen Waindle

GUARANTY:189675_1

COMPUTER TASK GROUP, INCORPORATED

EXECUTIVE SUPPLEMENTAL BENEFIT PLAN

TABLE OF CONTENTS

		PAGE
ARTICLE I	TITLE AND EFFECTIVE DATE	1
ARTICLE II	DEFINITIONS	2
ARTICLE III	ELIGIBILITY AND MEMBERSHIP	6
ARTICLE IV	PRE-RETIREMENT DEATH BENEFIT	7
ARTICLE V	VOLUNTARY TERMINATION BENEFIT	8
ARTICLE VI	NORMAL RETIREMENT BENEFIT	9
ARTICLE VII	POST-RETIREMENT DEATH BENEFIT	10
ARTICLE VIII	DISABILITY BENEFIT	11
ARTICLE IX	CONDITIONS PRECEDENT TO BENEFIT	12
ARTICLE X	MODIFICATION OF PAYOUT PERIOD	14

93

ARTICLE XI	BENEFICIARY	17
ARTICLE XII	NATURE OF COMPANY’S OBLIGATION	18
ARTICLE XIII	EMPLOYEE RIGHT TO ASSETS	19
ARTICLE XIV	EMPLOYMENT RIGHTS	20
ARTICLE XV	TERMINATION, AMENDMENT, MODIFICATION OR SUPPLEMENTATION OF PLAN	21
ARTICLE XVI	RESTRICTIONS ON ALIENATION OF BENEFITS	22
ARTICLE XVII	ADMINISTRATION OF THE PLAN	23
ARTICLE XVIII	MISCELLANEOUS	25
ARTICLE XIX	CASHOUT OF BENEFITS	27

94

EX-10.(L)

EXHIBIT 10 (l)

FIRST AMENDMENT TO THE

COMPUTER TASK GROUP, INCORPORATED

EXECUTIVE SUPPLEMENTAL BENEFIT PLAN

1997 RESTATEMENT

WHEREAS, pursuant to Article 15.1 of the Computer Task Group, Incorporated Executive Supplemental Benefit Plan 1997 Restatement (the “Plan”), the Compensation Committee of the Board of Directors reserved the right to amend the Plan.

NOW, THEREFORE, the Plan is hereby amended as follows:

1. The following provisions are added at the end of Article 2 of the Plan:

2.22 “Early Retirement Age” shall mean the later of (a) the completion of five years of service from the date the Employee becomes a Member of the Plan, or (b) (i) in the case of a Member whose benefits became nonforfeitable under Section 2.13 prior to December 1, 1994 and who does not participate in any plan that is a successor to this Plan, age 55, or (ii) in the case of any other Member, age 60.

2.23 “Early Retirement” shall mean severance from employment with the Company at or after attaining Early Retirement Age, but before attaining Normal Retirement Age.

2.24 “Early Retirement Benefit” shall mean a monthly benefit beginning earlier than Normal Retirement Age and for a Member whose benefit became nonforfeitable under Section 2.13 prior to December 1, 1994 and who does not participate in any plan that is a successor to this Plan, at age 55 or later, and, for any other Member, at age 60 or later, and continuing for 180 months or the life of the Member, whichever is the greater. The monthly benefit is an amount calculated in the same manner as the Normal Retirement Benefit and then actuarially reduced for commencement prior to a Member’s Normal Retirement Age based on the following factors:

Mortality:	1994 Group Annuity Mortality
Pre and Post Retirement     Interest:	The annual interest rate on 10-year Treasury securities for the month that is two months before the month in which the benefit commences

2. Section 2.20, “Post-retirement Death Benefit”, is amended and restated in its entirety to read as follows:

2.20 “Post-retirement Death Benefit” shall mean that benefit payable to a Member’s Beneficiary if the Member dies prior to separation from service with the Company but after Normal Retirement Age, or if the Member dies after Normal or Early Retirement, and the Member has not received any or all of the Retirement Benefit payment provided for under this Plan.

3. Section 2.21, “Voluntary Termination”, is amended and restated in its entirety to read as follows:

2.21 “Voluntary Termination” shall mean severance from employment with the Company before attaining the Normal or Early Retirement Age for reasons other than cause, as defined in Section 9.3.

4. The caption heading for Article V, “Voluntary Termination Benefit”, is amended and restated in its entirety to read as follows:

95

ARTICLE V

EARLY RETIREMENT - VOLUNTARY TERMINATION BENEFITS

5. Section 5.3 is amended and restated in its entirety as follows:

5.3 Notwithstanding Section 5.1, a Member whose benefits first became nonforfeitable under Section 2.13 prior to December 1, 1994 and who does not participate in any plan that is a successor to this Plan can apply to the Committee for an earlier distribution of the Member’s Early Retirement Benefit, if the Member has attained at least age 55 as of the date of the first payment. The application must be submitted to the Committee not less than six months before the first payment date, and first payment date will be available only on the Member’s attainment of age 55, 56, 57, 58 or 59. The payment of a benefit before age 60 shall be permitted solely in the discretion of the Committee. The requirement of six months application may be waived by the Committee in its discretion.

6. The following provisions are added at the end of Article 5 of the Plan:

5.4 Notwithstanding Section 5.2, a Member whose benefits first became nonforfeitable under Section 2.13 after November 30, 1994, or a Member who participates in any plan that is a successor to this Plan can apply to the Committee for an earlier distribution of the Member’s Early Retirement Benefit, if the Member has attained at least age 60 as of the date of first payment. The application must be submitted to the Committee not less than six months before the first payment date, and first payment date will be available only on the Member’s attainment of age 60, 61, 62, 63 or 64. The payment of a benefit before age 65 shall be permitted solely in the discretion of the Committee. The requirement of six months application may be waived by the Committee in its sole discretion.

5.5 The amount of the nonforfeitable Early Retirement Benefit shall be determined based on the forfeitability provision of Section 2.13 and Article IX.

7. Section 7.1 is amended and restated in its entirety to read as follows:

7.1 If a Member shall die after the commencement of Normal or Early Retirement Benefit payments, but before 180 payments have been made, the Retirement Benefit payments then remaining unpaid to a Member shall continue to be paid to the Member’s Beneficiary as a Post-retirement Death Benefit in the form and manner such payments would have continued to be paid to the Member.

8. Section 7.2 is amended and restated in its entirety to read as follows:

7.2 If a Member shall die after attaining Early Retirement Age and benefits have not commenced, 180 Retirement Benefit payments shall be paid to a Member’s Beneficiary as a Post-retirement Death Benefit in the form and manner such payments would have been paid to the Member. The benefit shall commence within 60 days following the date of death of such Member and continue for 180 months.

9. The following provision is added at the end of Article 7 of the Plan:

7.5 If a Member shall die before Early Retirement Age, is not employed by the Company on the date of death, and is not otherwise entitled to a Death Benefit under Article IV, the Early Retirement Benefit to which the Member otherwise would have been entitled shall be paid to the Member’s Beneficiary, commencing within 60 days of the date of the Member would have reached Early Retirement Age based on the Member’s Basic Compensation immediately preceding the Member’s separation from service with the Company, and reduced in accordance with Section 2.24 for early payment of such benefit.

10. Section 9.1 of Article IX, “Conditions Precedent to Benefits”, is amended and restated in its entirety to read as follows:

9.1 A Member’s right to a Retirement Benefit shall be forfeitable in accordance with the level Classification assigned to the Member by the Committee. All forfeitable benefits will be forfeited upon Early Retirement, Normal Retirement, Voluntary Termination or termination of employment for cause or for other reasons, as provided in this Article IX.

96

The effective date of this amendment is December 1, 2000. In all other respects, the Plan provisions remain in full force and effect.

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer this 17^th day of November, 2000.

Computer Task Group, Incorporated

By

97

EX-10.(M)

EXHIBIT 10 (m)

COMPUTER TASK GROUP, INCORPORATED

COMPENSATION ARRANGEMENTS FOR THE NAMED EXECUTIVE OFFICERS

Set forth below is a summary of the annual and incentive compensation paid by Computer Task Group, Incorporated (the Company) to its named executives (defined in Regulation S-K Item 402(a)(3)) in their current positions as of the date of the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2007. All of the Company’s executive officers are at-will employees whose compensation and employment status may be changed at any time at the discretion of the Company’s Board of Directors, subject only to the terms of employment agreements, as applicable, between the Company and these executive officers.

Effective January 1, 2008, the named executive officers are scheduled to receive the following annual base salaries in their current positions:

	Current Annual Salary
James R. Boldt	$	437,750
Chairman, President and Chief Executive Officer
Brendan M. Harrington	$	206,000
Senior Vice President, Chief Financial Officer
Filip J.L. Gyde (1)	$	294,931
Senior Vice President, General Manager, CTG Europe
Michael J. Colson	$	239,000
Senior Vice President, Solutions
Arthur W. Crumlish	$	232,000
Senior Vice President and General Manager, Strategic Staffing Solutions

Executive officers are also eligible to receive incentive compensation each year primarily based upon the achievement of certain targets. These targets may include specific levels of revenue growth, gross profit, operating income or earnings per share. Bonuses were awarded to the named executives for 2007 as follows:

	2007 Bonus
James R. Boldt	$	368,365
Brendan M. Harrington	$	86,674
Filip J.L. Gyde	$	65,500
Michael J. Colson	$	122,535
Arthur W. Crumlish	$	82,509

(1) Mr. Gyde is paid in Euros. This amount represents his base pay of 200,328 Euros translated into U.S. dollars at the January 1, 2008 exchange rate.

98

EX-10.(N)

EXHIBIT 10 (n)

CHANGE IN CONTROL AGREEMENT

THIS AGREEMENT, effective as of July 16, 2001 (the “Effective Date”), is between Computer Task Group, Incorporated, a New York corporation with its executive offices at 800 Delaware Avenue, Buffalo, New York 14209 (the “Corporation”), and James R. Boldt, an individual residing at 142 Audubon Drive, Amherst, New York 14226 (the “Executive”).

RECITALS:

WHEREAS, the Executive is employed as the President and Chief Executive Officer of the Corporation; and

WHEREAS, it is in the best interests of the Corporation to reinforce and encourage the Executive’s continued disinterested full attention and undistracted dedication to the duties of the Executive currently and in the potentially disturbing circumstances of a possible change in control of the Corporation by providing some degree of personal financial security to the Executive; and

WHEREAS, it is in the best interests of the Corporation to enable the Executive, without being influenced by the uncertainties of the Executive’s own situation, to assess and advise the Corporation whether proposals concerning any potential change in control are in the best interests of the Corporation and its shareholders and to take other action regarding these proposals as the Corporation might determine to be appropriate; and

WHEREAS, to induce the Executive to remain in the employ of the Corporation, the Board of Directors has determined it is desirable to pay the Executive the compensation set forth below if the Executive’s employment with the Corporation terminates in one of the circumstances described below in connection with a change in control of the Corporation.

NOW, THEREFORE, in consideration of the promises and of the covenants contained in this Agreement, the Corporation and the Executive agree as follows:

1. Definitions. The following definitions apply for purposes of this Agreement.

(a) “Aggregate Exercise Price” means:

(i) in the case of options to acquire common stock of the Corporation owned by the Executive, the total amount of cash or immediately available funds the Executive would be required to pay to the Corporation to purchase all of the common stock of the Corporation that, on the date as of which the Aggregate Exercise Price is to be determined, the Executive is entitled to purchase under the terms of all issued, outstanding and unexercised options to purchase common stock of the Corporation that are outstanding and exercisable on the date as of which the Aggregate Exercise Price of those options is to be determined; and

(ii) in the case of options to acquire Successor Equity, the total amount of cash or immediately available funds the Executive would be required to pay to the Successor to purchase all the Successor Equity that, on the date as of which the Aggregate Exercise Price is to be determined, the Executive is entitled to purchase under the terms of all issued, outstanding and unexercised options to purchase Successor Equity that are outstanding and exercisable on the date as of which the Aggregate Exercise Price of those options is to be determined.

99

(b) “Built in Gain” means an amount equal to:

(i) the Highest Sale Price as of the date of a Change in Control multiplied by the total number of shares of common stock of the Corporation that the Executive could acquire by exercising all of the options to acquire common stock of the Corporation that, as of the date of the Change in Control, were issued to the Executive, outstanding and unexercised, minus

(ii) the Aggregate Exercise Price of those options.

(c) “Board of Directors” or “Board” means the Board of Directors of the Corporation.

(d) “Cause” means a finding by the Board of Directors, with notice in writing to the Executive setting forth in reasonable detail its reasons, that any of the following conditions exist:

(i) The Executive’s willful and continued failure to substantially perform his duties as President and Chief Executive Officer (other than as a result of the Executive’s Disability).

(ii) A willful act or omission by the Executive constituting fraud or other malfeasance, including without limitation acts of dishonesty constituting a felony offense under the laws of the United States or any state thereof, and any act or omission by the Executive constituting immoral conduct, which in any such case is injurious to the financial condition or business reputation of the Corporation.

(iii) A material breach by the Executive of the Employment Agreement dated as of July 16, 2001.

For purposes of this definition, an act or failure to act will be deemed “willful” only if it is effected by the Executive not in good faith and without a reasonable belief that his action or failure to act was in or not opposed to the Corporation’s best interests.

(e) “Change in Control” means any one of the following occurrences:

(i) Approval by the stockholders of the Corporation of the dissolution or liquidation of the Corporation;

(ii) Approval by the stockholders of the Corporation of an agreement to merge or consolidate, or otherwise reorganize, with or into one or more entities that are not Subsidiaries or other affiliates, as a result of which less than 50% of the outstanding voting securities of the surviving or resulting entity immediately after the reorganization are, or will be, owned, directly or indirectly, by stockholders of the Corporation immediately before such reorganization (assuming for purposes of such determination that there is no change in the record ownership of the Corporation’s securities from the record date for such approval until such reorganization and that such record owners hold no securities of the other parties to such reorganization, but including in such determination any securities of the other parties to such reorganization held by affiliates of the Corporation);

100

(iii) Approval by the stockholders of the Corporation of the sale of substantially all of the Corporation’s business and/or assets to a person or entity that is not a Subsidiary or other affiliate; or

(iv) Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended from time to time, but excluding any person described in and satisfying the conditions of Rule 13d-1(b)(1) thereunder), other than the Corporation, any Subsidiary of the Corporation, any employee benefit plan of the Corporation or of any of its Subsidiaries or any Person holding common shares of the Corporation for or pursuant to the terms of any such employee benefit plan, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing more than 20% of the combined voting power of the Corporation’s then outstanding securities entitled to then vote generally in the election of directors of the Corporation; or

(v) During any period not longer than two consecutive years, individuals who at the beginning of such period constituted the Board cease to constitute at least a majority thereof, unless the election, or the nomination for election by the Corporation’s stockholders, of each new Board member was approved by a vote of at least three-quarters of the Board members then still in office who were Board members at the beginning of such period (including for these purposes, new members whose election or nomination was so approved).

(f) “Code” means the Internal Revenue Code of 1986, as amended.

(g) “Conversion Options” means an option or options to purchase Successor Equity, which option or options may be granted by the Successor to the Executive and are exercisable in full immediately following the Change in Control for an Aggregate Exercise Price that does not exceed the Aggregate Exercise Price of the options to purchase common stock of the Corporation owned by the Executive on the date of the Change in Control and which options, if exercised by the Executive in full immediately following that Change in Control, would provide for the ownership by the Executive of Successor Equity that, immediately following the acquisition of that Successor Equity by the Executive, may be sold by the Executive, free of any restrictions imposed on the sale of securities by the Securities Act of 1933, for a price that exceeds the Aggregate Exercise Price of those options by an amount not less than the Built in Gain. Under no circumstances is the Executive required to accept a grant of Conversion Options from the Successor.

(h) “Corporation” means Computer Task Group, Incorporated.

(i) “Disability” means a disability that exists for a period of at least 12 months and because of which the Executive is physically or mentally unable to substantially perform his regular duties as President or Chief Executive Officer of the Corporation, as the case may be.

(j) “Good Reason” means any of the following occurrences, with notice to the Corporation from the Executive setting forth in reasonable detail his reasons:

(i) A material diminution in the Executive’s responsibilities, duties, title, reporting responsibilities within the business organization, status, role or authority.

(ii) A reduction by the Corporation in the Executive’s annual base salary as in effect on the date of a Change in Control or as in effect thereafter if that base salary has been increased.

101

(iii) A reduction by the Corporation in the aggregate value of benefits provided to the Executive, as in effect on the date of a Change in Control or as in effect after that date if those benefits have been increased. “Benefits” includes all profit sharing, 401(k), retirement, pension, health, medical, dental, disability, insurance, automobile, severance, vacation, leave, reimbursement, and similar benefits.

(iv) A failure to continue in effect any stock option or other equity-based or non-equity based incentive compensation plan in effect immediately prior to the Change in Control, or a reduction in the Executive’s participation in any such plan, unless the Executive is afforded the opportunity to participate in alternative incentive compensation plans or agreements of reasonably equivalent value.

(v) A material breach by the Corporation of any provision of this Agreement or of any stock option or other equity-based plan or agreement with the Executive.

(vi) Removal from, or failure to re-elect, the Executive to the position of President or Chief Executive Officer.

(vii) A requirement, in the Executive’s reasonable judgment, that the services required to be performed by the Executive would necessitate the Executive moving his residence from the Buffalo, New York area.

The Corporation will have 20 business days from the date of notice from the Executive stating his claim of Good Reason to cure the circumstances stated that create the Good Reason cited by the Executive in the notice. If the Corporation does not, or cannot, cure the Good Reason to the Executive’s reasonable satisfaction, the Good Reason will be deemed to have occurred at the end of the 20-day period.

(k) “Highest Sale Price” means:

(i) with respect to the common stock of the Corporation, the highest closing sale price at which common stock of the Corporation has been sold, in an established securities market, during the 12 consecutive month period ending on the date as of which the Highest Sale Price of the common stock of the Corporation is to be determined; and

(ii) with respect to Successor Equity, the highest closing sale price at which Successor Equity has been sold, in an established securities market, during the 12 consecutive month period ending on the date of which the Highest Sale Price of the Successor Equity is to be determined.

(l) “Subsidiary” means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Corporation.

(m) “Successor” means, the person, firm, corporation or other entity that, as a result of a Change in Control, has succeeded, directly or indirectly, to all or substantially all the assets, rights, properties, liabilities and obligations of the Corporation.

(n) “Successor Equity” means capital stock or any other equity interest in the Successor.

2. Benefits upon Change in Control. The Corporation will provide the benefits listed below in subsections (a) through (c) on a Change in Control. All amounts payable on a Change in Control under all subsections of this Section will be made by bank check or wire transfer at the Change in Control, or, if that is not

102

within the control of the Corporation, not later than the tenth business day following the Change in Control. For purposes of this Section, references to payments by the Corporation include payments from any entity related to the Corporation, such as the Corporation’s Stock Employee Compensation Trusts.

(a) Stock Rights. As of the date of the Change in Control, the Executive will become fully vested in, and entitled to exercise immediately all stock-related awards he has been granted under any plans or agreements of the Corporation, including without limitation, awards under the 1991 Stock Option Plan and the 2000 Equity Award Plan. Unless otherwise required to be limited for an option to qualify as an Incentive Stock Option under the Code or unless otherwise terminated by the maximum limits of the applicable plan, the Executive will be entitled to exercise all these awards for a period of not less than 12 months following the Change in Control. The acceleration of vesting and exercisability under this Section will apply notwithstanding any provision in the 2000 Equity Award Plan or any other plan or agreement that would prevent the acceleration and vesting of the awards or cause them to be canceled, rescinded or otherwise impaired.

(b) Deferred Compensation. All deferred or otherwise contingent compensation of the Executive will become (i) vested and (ii) immediately payable in cash. For purposes only of (ii) in the preceding sentence, a Change in Control under Section 1(e)(ii) will be determined only by substituting 70% for 50% in that Section 1(e)(ii).

(c) Conversion Rights. If, following the Change in Control (or, in the case of a Change in Control event described in Section 1(e)(ii) or (iii), following the merger or sale transaction referred to in those paragraphs (the consummation of that merger or sale transaction is referred to as a “Merger or Sale Event”)):

(i) the Corporation’s legal existence continues but the number of shares of common stock of the Company the Executive is entitled to purchase pursuant to the exercise of all options to purchase the Corporation’s common stock owned by the Executive immediately following the Change in Control for a price not more than the Aggregate Exercise Price of his unexercised options immediately prior to the Change in Control, is not, on a fully diluted basis, at least equal to the same proportion, on a fully diluted basis, of the issued and outstanding shares of common stock of the Corporation that could have been purchased by the Executive pursuant to the exercise of all of his options immediately prior to the Change in Control; or

(ii) the common stock of the Corporation is no longer listed for trading on an established securities market and the Successor, effective as of the date of the Change in Control, has not offered to grant Conversion Options to the Executive in lieu of the options of the Executive to purchase common stock of the Corporation; or

(iii) the common stock of the Corporation is no longer listed for trading on an established securities market and the Successor has offered to grant Conversion Options to the Executive, effective as of the date of the Change in Control (in lieu of the Executive’s options to purchase common stock of the Corporation), but the Executive has elected not to accept that grant of Conversion Options; then

the Executive will be paid, in one lump sum payment not later than 20 business days following the Change in Control (or, in the case of a Change in Control event described in Section 1(e)(ii) or (iii), not later than 20 business days following the Merger or Sale Event), the Built in Gain on the options to purchase common stock of the Corporation that were issued to the Executive and outstanding and unexercised on the date of the Change in Control and, after that, all those options will be canceled and will be deemed and construed to be null and void for all purposes.

For purposes of this subsection, references to options include all equity-based compensation, including without limitation, restricted stock and stock appreciation rights. In the case of these types of equity-based compensation held by the Executive as of the Change in Control, the formulas and payouts under this subsection will be adjusted to reflect the equivalents under those types of equity-based compensation.

103

3. Benefits upon Termination. The Corporation will provide the benefits listed below in subsections (a) through (f) on the termination of the Executive’s employment (i) by the Corporation without Cause or by the Executive with Good Reason in either case within 24 months following or in anticipation of or in connection with a Change in Control, or (ii) by the Executive for any reason within 6 months after a Change in Control. Payments under subsections (a), (b), (c), (e) and (f) of this Section will be made by the tenth business day following the termination of the Executive’s employment. For purposes of this Section, references to payments by the Corporation include payments from any entity related to the Corporation, such as the Stock Employee Compensation Trusts. Also, references to payments by the Successor include payments from the Corporation’s Stock Employee Compensation Trusts if those trusts are permitted to make the payments.

(a) Salary. The Executive will receive 2.99 times his full rate of salary in effect, including directors’ fees, if any, (whether or not deferred) on the date immediately prior to the Change in Control or, if greater, the amount in effect at any date after the Change in Control.

(b) Bonus. The Executive will receive a cash bonus equal to 2.99 times the highest annual bonus payable (whether or not deferred) to him in the 3 calendar years preceding the year in which the Change in Control occurs.

(c) Fringe Benefits. The Executive will receive a lump sum payment equal to 25% of the sum of (i) one times his full rate of salary, as defined in (a), and (ii) highest annual bonus, as defined in (b). This payment represents the value to which the parties agree the Executive otherwise would be entitled with respect to fringe benefits (including without limitation profit sharing, 401(k), retirement, pension, health, medical, dental, disability, insurance, automobile, severance, vacation, leave, reimbursement, and similar benefits) for 36 months.

(d) Indemnification. For a 60-month period following the date of the Executive’s termination of employment, the Corporation will continue any indemnification agreement with the Executive and will provide directors’ and officers’ liability insurance insuring the Executive that coverage will have limits and scope of coverage not less than that in effect immediately prior to the Change in Control.

(e) Cash-Out of Stock Options and Other Equity-Related Compensation.

(i) In Corporation. If the options to purchase common stock of the Corporation have not been canceled as provided for in Section 2(c), to the extent that the Executive has any unexercised options to purchase common stock of the Corporation that are exercisable at the time of the termination of the Executive’s employment under this Section, the Executive will receive an amount equal to:

(A) the Highest Sale Price of the common stock of the Corporation determined as of the date of the termination of the Executive’s employment under this Section; multiplied by

(B) the aggregate number of shares of common stock of the Corporation the Executive is entitled to purchase pursuant to the terms of all options to purchase any common stock of the Corporation owned by the Executive and exercisable on the date of the termination of the Executive’s employment under this Section; minus

(C) the Aggregate Exercise Price of the issued and outstanding unexercised options to purchase common stock of the Corporation owned by the Executive as of the date of the termination of the Executive’s employment under this Section, to the extent that those options are exercisable as of that date.

104

(ii) In Successor. If the Executive has elected to accept a grant of Conversion Options from the Successor and, at the time of the termination of the Executive’s employment under this Section, the Executive owns Conversion Options or any other options to acquire any Successor Equity that are exercisable at the time of the termination of the Executive’s employment under this Section, and any of those Conversion Options and other options to purchase Successor Equity have not been exercised by the Executive, the Executive will receive an amount equal to:

(A) the Highest Sale Price, determined as of the date of the termination of the Executive’s employment under this Section, of each unit of Successor Equity that could be acquired by the Executive on the exercise of all outstanding Conversion Options and other options to purchase Successor Equity on the date of the termination of the Executive’s employment under this Section; multiplied by

(B) the aggregate number of units of Successor Equity the Executive is entitled to purchase pursuant to the terms of all options to purchase Successor Equity owned by the Executive and exercisable on the date of the termination of the Executive’s employment under this Section; minus

(C) the Aggregate Exercise Price of the issued and outstanding unexercised Conversion Options and other options to purchase Successor Equity owned by the Executive and exercisable as of the date of the termination of the Executive’s employment under this Section.

For purposes of this subsection, references to options and to Successor Equity include all equity-based compensation, including without limitation, restricted stock and stock appreciation rights. In the case of these types of equity-based compensation held by the Executive as of the Change in Control or as of the termination of the Executive’s employment under this Section, the formulas and payouts under this subsection will be adjusted to reflect the equivalents under those types of equity-based compensation.

(f) Deferred Compensation. The Executive will receive all deferred or otherwise contingent compensation not paid out as of the date of the termination of the Executive’s employment.

4. Withholding. The Corporation will deduct or withhold from all salary and bonus payments, and from all other payments made to the Executive pursuant to this Agreement, all amounts that may be required to be deducted or withheld under any applicable Social Security contribution, income tax withholding or other similar law now in effect or that may become effective during the term of this Agreement.

5. Other Termination. Upon termination of the Executive’s employment for Cause or because of death or Disability, or not within the time related to a Change in Control as described in Section 3, no benefits will be payable under this Agreement.

6. Additional Payments. Notwithstanding anything in this Agreement, the 2000 Equity Award Plan, or any other agreement or plan to the contrary, in the event it is determined that any payments or distributions by the Corporation or any affiliate (as defined under the Securities Act of 1933, as amended, and the

105

regulations thereunder) thereof or any other person to or for the benefit of the Executive, whether paid or payable pursuant to the terms of this Agreement, or pursuant to any other agreement or arrangement with the Corporation or any such affiliate (“Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, or any successor provision, or any interest or penalties with respect to the excise tax (the excise tax, together with any interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive will be entitled to receive an additional payment from the Corporation (a “Gross-Up Payment”) in an amount that after payment by the Executive of all taxes (including, without limitation, any interest or penalties imposed with respect to such taxes and any Excise Tax) imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. The amount of the Gross-Up Payment will be calculated by the Corporation’s independent accounting firm, engaged immediately prior to the event that triggered the payment, in consultation with the Corporation’s outside legal counsel. For purposes of making the calculations required by this Section, the accounting firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code, provided that the accounting firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code). The Gross-Up Payment will be paid on the Executive’s last day of employment or on the occurrence of the event that results in the imposition of the Excise Tax, if later. If the precise amount of the Gross-Up Payment cannot be determined on the date it is to be paid, an amount equal to the best estimate of the Gross-Up Payment will be made on that date and, within 10 days after the precise calculation is obtained, either the Corporation will pay any additional amount to the Executive or the Executive will pay any excess amount to the Corporation, as the case may be. If subsequently the Internal Revenue Service (the “IRS”) claims that any additional Excise Tax is owing, an additional Gross-Up Payment will be paid to the Executive within 30 days of the Executive providing substantiation of the claim made by the IRS. After payment to the Executive of the Gross-Up Payment, the Executive will provide to the Corporation any information reasonably requested by the Corporation relating to the Excise Tax, the Executive will take those actions as the Corporation reasonable requests to contest the Excise Tax, cooperate in good faith with the Corporation to effectively contest the Excise Tax and permit the Corporation to participate in any proceedings contesting the Excise Tax. The Corporation will bear and pay directly all costs and expenses (including any interest or penalties on the Excise Tax), and indemnify and hold the Executive harmless, on an after-tax basis, from all such costs and expenses related to such contest. Should it ultimately be determined that any amount of an Excise Tax is not properly owed, the Executive will refund to the Corporation the related amount of the Gross-Up Payment.

7. Non-Exclusivity of Rights. Except as otherwise specifically provided, nothing in this Agreement prevents or limits the Executive’s continued or future participation in any benefit, incentive, or other plan, practice, or program provided by the Corporation and for which the Executive may qualify. Any amount of vested benefit or any amount to which the Executive is otherwise entitled under any plan, practice, or program of the Corporation will be payable in accordance with the plan, practice, or program, except as specifically modified by this Agreement. However, if the Executive receives the payments under Section 3, the Executive will not be entitled to any severance payments (which excludes for this purpose all types of equity-based compensation not cashed out under Section 2(c) or 3(e)) otherwise payable under any other agreement, plan, or practice providing for severance compensation.

8. No Obligation to Seek Other Employment. The Executive will not be obligated to seek other employment or to take other action to mitigate any amount payable to him under this Agreement.

9. Successors. This Agreement is personal to the Executive and may not be assigned by the Executive other than by will or the laws of descent and distribution. This Agreement will inure to the benefit of and be enforceable by the Executive’s legal representatives or successors in interest. Notwithstanding any other provision of this Agreement, the Executive may designate a successor or successors in interest to receive any amounts due under this Agreement after the Executive’s death. A designation of a successor in interest must be made in writing, signed by the Executive, and delivered to the Corporation. Except as otherwise provided in this Agreement, if the Executive has not designated a successor in interest, payment of benefits under this Agreement will be made to the Executive’s estate. This Section will not supersede any designation of beneficiary or successor in interest made by the Executive or provided for under any other plan, practice, or program of the Corporation.

This Agreement will inure to the benefit of and be binding upon the Corporation and its successors and assigns.

106

The Corporation will require any successor (whether direct or indirect, by acquisition of assets, merger, consolidation or otherwise) to all or substantially all of the operations or assets of the Corporation or any successor, and without regard to the form of transaction used to acquire the operations or assets of the Corporation, to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no succession had taken place. As used in this Agreement, “Corporation” means the Corporation and any successor to its operations or assets as set forth in this Section that is required by this clause to assume and agree to perform this Agreement or that otherwise assumes and agrees to perform this Agreement.

10. Benefit Claims. In the event the Executive, or his beneficiaries, as the case may be, and the Corporation disagree as to their respective rights and obligations under this Agreement, and the Executive or his beneficiaries are successful in establishing, privately or otherwise, that his or their position is substantially correct, or that the Corporation’s position is substantially wrong or unreasonable, or in the event that the disagreement is resolved by settlement, the Corporation will pay all costs and expenses, including counsel fees, that the Executive or his beneficiaries may incur in connection therewith directly to the provider of the services or as may otherwise be directed by the Executive or his beneficiaries. The Corporation will not delay or reduce the amount of any payment provided for hereunder or setoff or counterclaim against any such amount for any reason whatsoever; it is the intention of the Corporation and the Executive that the amounts payable to the Executive or his beneficiaries hereunder will continue to be paid in all events in the manner and at the times herein provided. All payments made by the Corporation hereunder will be final and the Corporation will not seek to recover all or any part of any portion of any payments hereunder for any reason.

11. Failure, Delay or Waiver. No course of action or failure to act by the Corporation or the Executive will constitute a waiver by the party of any right or remedy under this Agreement, and no waiver by either party of any right or remedy under this Agreement will be effective unless made in writing.

12. Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be enforceable under applicable law. However, if any provision of this Agreement is deemed unenforceable under applicable law by a court having jurisdiction, the provision will be unenforceable only to the extent necessary to make it enforceable without invalidating the remainder thereof or any of the remaining provisions of this Agreement.

13. Notice. All written communications to parties required hereunder must be in writing and (a) delivered in person, (b) mailed by registered or certified mail, return receipt requested, (such mailed notice to be effective 4 days after the date it is mailed) or (c) sent by facsimile transmission, with confirmation sent by way of one of the above methods, to the party at the address given below for the party (or to any other address as the party designates in a writing complying with this Section, delivered to the other party):

If to the Corporation:

Computer Task Group, Incorporated
800 Delaware Avenue Buffalo, New York 14209
Attention:	General Counsel
Telephone:	716-882-8000
Telecopier:	716-887-7370

with a copy to:
Hodgson, Russ, Andrews, Woods & Goodyear, LLP One M&T Plaza, Suite 2000 Buffalo, New York 14203
Attention:	Dianne Bennett, Esq. and Ward B. Hinkle, Esq.
Telephone:	716-856-4000
Telecopier:	716-849-0349

107

If to the Executive:

James R. Boldt 142 Audubon Drive Amherst, New York 14226
Telephone:	716-839-0907

14. Miscellaneous. This Agreement (a) may not be amended, modified or terminated orally or by any course of conduct pursued by the Corporation or the Executive, but may be amended, modified or terminated only by a written agreement duly executed by the Corporation and the Executive, (b) is binding upon and inures to the benefit of the Corporation and the Executive and each of their respective heirs, representatives, successors and assignees, except that the Executive may not assign any of his rights or obligations pursuant to this Agreement, (c) except as otherwise specifically provided in this Agreement, constitutes the entire agreement between the Corporation and the Executive with respect to the subject matter of this Agreement, and supersedes all oral and written proposals, representations, understandings and agreements previously made or existing with respect to such subject matter, including that certain employment agreement dated October 17, 2000 and any similar agreements, and (d) will be governed by, and interpreted and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of law.

15 Term.

(a) Except as provided in (b), this Agreement will not be terminated earlier than 36 months after its Effective Date. The Agreement will be extended automatically for additional 12-month periods unless one party notifies the other prior to the beginning of the successive 36 month period that it is terminating the Agreement. The intention of the preceding sentence is that if a party does not give notice, at least 36 months remain in the Agreement.

(b) This Agreement will terminate when the Corporation has made the last payment provided for under it, including without limitation, any payments payable at any time under Sections 9 and 10. However, the obligations under Section 3(d) will survive any termination and will remain in full force and effect for the period specified.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

CORPORATION:
By
Name:	Randolph A. Marks
Title:	Chairman of the Board of Directors
EXECUTIVE:
	James R. Boldt

108

EX-10.(O)

EXHIBIT 10 (o)

EMPLOYMENT AGREEMENT

THIS AGREEMENT, effective as of July 16, 2001 is between Computer Task Group, Incorporated, a New York corporation with its executive offices at 800 Delaware Avenue, Buffalo, New York 14209 (the “Corporation”), and James R. Boldt, an individual residing at 142 Audubon Drive, Amherst, New York 14226 (the “Executive”).

RECITALS:

WHEREAS, the Executive will be employed as the President and Chief Executive Officer of the Corporation; and

WHEREAS, the Corporation and the Executive desire to set forth the terms upon which the Executive will be employed by the Corporation.

NOW, THEREFORE, in consideration of the promises and of the covenants contained in this Agreement, the Corporation and the Executive agree as follows:

1. Definitions. The following definitions apply for purposes of this Agreement.

(a) “Board of Directors” or “Board” means the Board of Directors of the Corporation.

(b) “Cause” means a finding by the Board of Directors that any of following conditions exist:

(i) The Executive’s willful and continued failure to substantially perform his material duties under this Agreement (other than as a result of his Disability) if such failure is not substantially cured within 15 days after written notice is provided to the Executive.

(ii) The Executive’s willful breach in a substantive and material manner of his fiduciary duty or duty of loyalty to the Corporation which is injurious to the financial condition in more than a de minimus manner or the business reputation of the Corporation.

(iii) The Executive’s indictment for a felony offense under the laws of the United States or any state thereof (other than for a violation of motor or vehicular laws).

(iv) Material breach by the Executive of any restrictive covenant contained in Sections 10 and 11 of this Agreement.

For purposes of this definition, no act or failure to act will be deemed “willful” unless effected by the Executive not in good faith and without a reasonable belief that his action or failure to act was in or not opposed to the Corporation’s best interests.

109

(c) “Code” means the Internal Revenue Code of 1986, as amended.

(d) “Corporation” means Computer Task Group, Incorporated.

(e) “Disability” means a disability that has existed for a period of 6 consecutive months and because of which the Executive is physically or mentally unable to substantially perform his regular duties as President or Chief Executive Officer of the Corporation, as the case may be.

(f) “Effective Date” means July 16, 2001.

(g) “Good Reason” means:

(i) There has been a material diminution in the Executive’s responsibilities, duties, title, reporting responsibilities within the business organization, status, role or authority which is not restored within 15 days after written notice is provided to the Corporation.

(ii) Removal from, or failure to re-elect, the Executive to the position of President or Chief Executive Officer.

(iii) A material breach by the Corporation of any of the material terms of this Agreement if such breach is not substantially cured within 15 days after written notice is provided to the Corporation.

2. Employment; Duties. Subject to the terms and conditions set forth in this Agreement, the Corporation hereby agrees to employ the Executive, and the Executive hereby will assume the positions of President and Chief Executive Officer of the Corporation, in full charge of the operation of its business and affairs, subject to the provisions of the by-laws of the Corporation in respect of the duties and responsibilities assigned from time to time by the Board of Directors to the President and Chief Executive Officer, and subject also at all times to the control of the Board of Directors. Subject to the yearly election by the Board of Directors in the exercise of its judgment, it is contemplated that the Executive will continue to be elected to the positions of President and Chief Executive Officer. The Executive will perform those duties and discharge those responsibilities as are commensurate with his position, and as the Board of Directors may from time to time reasonably direct, that are commensurate with his position. The Executive agrees to perform his duties and discharge his responsibilities in a faithful manner and to the best of his ability and to use all reasonable efforts to promote the interests of the Corporation. The Executive may not accept other gainful employment except with the prior consent of the Board of Directors of the Corporation. With the prior consent of the Board of Directors of the Corporation, the Executive may become a director, trustee or other fiduciary of other corporations, trusts or entities. Notwithstanding the foregoing, the Executive may manage his passive investments and be involved in charitable, civic and religious interests so long as they do not materially interfere with the performance of the Executive’s duties hereunder.

110

3. Compensation.

(a) During the term of the Executive’s employment under this Agreement, the Executive will receive a base salary at the rate of Four Hundred Thousand ($400,000.00) Dollars per year, payable in equal bi-weekly installments. On an annual basis, the Compensation Committee of the Board of Directors will, in good faith, review the base salary of the Executive to consider appropriate increases (but not decreases) in the base salary. If the Executive dies during the period of time of his service under this Agreement, service for any part of the month of his death will be considered service for the entire month.

(b) During the term of the Executive’s employment under this Agreement, the Executive will be eligible to receive an annual cash incentive from the Corporation as determined by the Board of Directors. The annual cash incentive plan for 2001 is attached hereto as Exhibit 3(b). Notwithstanding anything herein to the contrary, the Executive is hereby guaranteed to receive a minimum cash incentive of $50,000 for the year 2001.

(c) As of the Effective Date, the Executive shall receive 400,000 stock options with respect to the Corporation’s common stock. The price of the options will be the closing share price of the Corporation’s common stock, as reported by the New York Stock Exchange, as of the Effective Date or if there is no closing price for that date, then on the next business day on which such closing price is reported. The options will vest in accordance with the vesting schedule set forth in Exhibit 3(c).

(d) The Corporation will deduct or withhold from all salary and incentive payments, and from all other payments made to the Executive pursuant to this Agreement, all amounts that may be required to be deducted or withheld under any applicable Social Security contribution, income tax withholding or other similar law now in effect or that may become effective during the term of this Agreement.

4. Other Benefits And Terms. During the term of the Executive’s employment under this Agreement, the Executive will be entitled to the following additional benefits:

(a) The Executive will be entitled to participate in, the Corporation’s health and medical benefit plans, any pension, profit sharing and retirement plans, and any insurance policies or programs from time to time generally offered to all or substantially all executive employees who are employed by the Corporation. These plans, policies and programs are subject to change at the sole discretion of the Corporation.

111

(b) The Executive will also receive the following:

(i) Life insurance benefits will be provided at an amount not less than three times base salary (subject to a physical examination);

(ii) Disability insurance in an amount equal to two-thirds anticipated total annual cash compensation;

(iii) Executive Supplemental Medical Plan which will provide up to $10,000.00 per year in supplemental medical and dental coverage for items not covered under other CTG medical and dental plans or HMOs (but not including voluntary cosmetic surgery);

(iv) Travel insurance with aggregate coverage inclusive of the insurance provided under the Corporation’s American Express card program, in an amount equal to four times base compensation;

(v) Reimbursement of up to $4,000.00 per year for personal tax advice;

(vi) Participation in the Corporation’s Deferred Compensation Plan subject to the contribution rates as determined by the Compensation Committee; and

(vii) Annual luncheon club dues.

5. Vacations. The Executive will be entitled to five weeks of paid vacation and nine paid holidays each year. Unused vacation in any year may not be carried over to subsequent years.

6. Reimbursement For Expenses. The Corporation will reimburse the Executive in accordance with its expense reimbursement policy for expenses that the Executive may from time to time reasonably incur on behalf of the Corporation in the performance of his responsibilities and duties.

7. Period Of Employment. Subject to the provisions of this Section, the period of employment of the Executive under this Agreement will begin on the Effective Date and shall continue until either party provides 60 days prior written notice to the other party that it desires to terminate the Executive’s employment.

Notwithstanding the foregoing:

(a) The Executive’s employment will automatically terminate if the Corporation believes it has Cause, the Executive believes he has Good Reason or upon the death or Disability of the Executive.

(b) In the event the Executive’s employment is terminated for any reason, the Executive shall resign on the date of such termination of employment from any and all positions he may have as a director of the Corporation and its subsidiary corporations. The Executive understands and agrees that the Corporation shall be entitled to have such equitable relief, including the right to specific performance, to enforce the provisions of this paragraph.

112

Any notice of termination of employment given by a party must specify the particular termination provision of this Agreement relied upon by the party and must set forth in reasonable detail the facts and circumstances that provide a basis for the termination.

8. Indemnification. The Corporation agrees that if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is the Executive’s alleged action in an official capacity while serving as a director, officer, member, employee or agent, the Executive shall be indemnified and held harmless by the Corporation to the fullest extent legally permitted or authorized by the Corporation’s certificate of incorporation or bylaws or resolutions of the Corporation’s Board of Directors or, if greater, by the laws of the State of New York, against all cost, expense, liability and loss (including, without limitation, attorney’s fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive’s heirs, executors and administrators. The Corporation also agrees that if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding by reason of the termination of his employment with his prior employer or his accepting employment with the Corporation, he shall be indemnified and held harmless by the Corporation against all cost, expense, liability and loss (including attorney’s fees) reasonably incurred or suffered by the Executive in connection therewith.

9. Benefits Upon Termination. The Corporation will provide the following benefits upon the termination of the Executive’s employment with the Corporation.

(a) Upon Termination By The Corporation Other Than For Cause Or By The Executive With Good Reason. Upon the Executive’s termination of his employment for Good Reason or the Corporation’s termination of the Executive’s employment for other than Cause, the Corporation will provide, in exchange for the Executive signing a mutually acceptable release agreement, the following:

(i) Salary and Medical Benefits. The Executive will receive his full salary and fringe benefits through the effective date of termination together with any unpaid incentive for a prior period that is then due and owing to the Executive. Commencing with the day after the effective date of termination and for one year thereafter (the “Post-Termination Period”), the Executive will receive an amount equal to the average of the “annual total compensation” paid to the Executive in the prior three years (which shall include the current year) or lesser period of time if applicable. Such amount shall be paid in 26 consecutive bi-weekly installments in accordance with the Corporation’s payroll period. For purposes of this paragraph 9, the term “annual total compensation” shall mean only the base cash compensation paid to the Executive only in his capacity as President and Chief Executive Officer in bi-weekly amounts plus any cash incentive compensation actually paid to the Executive during such three year period. Such term shall not include any other form of compensation or benefit paid or provided to the Executive. During the Post-Termination Period, the Executive shall continue to receive medical and dental benefits pursuant to such plans as are in effect on the date of termination of employment.

113

(ii) Accrued Vacation. The Executive will receive payment for accrued but unused vacation, which payment will be equitably prorated based on the period of active employment for that portion of the fiscal year in which the Executive’s termination of employment becomes effective. Payment for accrued but unused vacation will be payable in one lump sum in the next payroll period following the date of termination of employment.

(b) Upon Termination By The Executive Absent Good Reason Or By The Corporation For Cause. Upon the Executive’s termination of employment absent Good Reason or by the Corporation for Cause, the Corporation will provide the following:

(i) Salary. The Executive will receive only his bi-weekly salary and fringe benefits through the effective date of termination together with any unpaid incentive for a prior period that is then due and owing to the Executive.

(ii) Accrued Vacation. The Executive will receive payment for accrued but unused vacation, which payment will be equitably prorated based on the period of active employment for that portion of the fiscal year in which the Executive’s termination of employment becomes effective. Payment for accrued but unused vacation will be payable in one lump sum in the next payroll period following the date of termination of employment.

(c) Upon Termination For Death or Disability. Upon termination of the Executive’s employment because of Disability, the Corporation will provide the amounts provided for in paragraph 9(a) above.

(d) Upon Termination Following A Change In Control. Upon the Executive’s termination of employment by the Corporation without cause or the Employee’s termination with good reason which, in either case, occurs in contemplation of or following a change in control, the Corporation will provide the Executive compensation and benefits under any change in control agreement entered into with the Executive.

(e) Determination Of Disability. Any question as to the existence of a physical or mental condition which would give rise to the Disability of the Executive upon which the Executive and the Corporation cannot agree will be determined by a qualified independent physician selected by the Executive and reasonably acceptable to the Corporation (or, if the Executive is unable to make a selection, the selection of the physician will be made by any adult member of his immediate family). The physician’s written determination to the Corporation and to the Executive will be final and conclusive for all purposes of this Agreement.

(f) Continuation of Healthcare Coverage. For purposes of COBRA continuation healthcare coverage, the “qualifying event” will be deemed to have occurred on the effective date of termination of the Executive’s employment.

10. Confidentiality\Assignment of Rights. During the course of his employment, the Executive will have access to confidential information relating to the lines of business of the Corporation, its trade secrets, marketing techniques, technical and cost data, information concerning customers and suppliers, information relating to product lines, and other valuable and confidential information relating to the business operations of the

114

Corporation not generally available to the public (the “Confidential Information”). The parties hereby acknowledge that any unauthorized disclosure or misuse of the Confidential Information could cause irreparable damage to the Corporation. The parties also agree that covenants by the Executive not to make unauthorized use or disclosures of the Confidential Information are essential to the growth and stability of the business of the Corporation. Accordingly, the Executive agrees to the confidentiality covenants set forth in this Section.

The Executive agrees that, except as required by his duties with the Corporation or as authorized by the Corporation in writing, he will not use or disclose to anyone at any time, regardless of whether before or after the Executive ceases to be employed by the Corporation, any of the Confidential Information obtained by him in the course of his employment with the Corporation. The Executive shall not be deemed to have violated this Section 10 by disclosure of Confidential Information that at the time of disclosure (a) is publicly available or becomes publicly available through no act or omission of the Executive, or (b) is disclosed as required by court order or as otherwise required by law, on the condition that notice of the requirement for such disclosure is given to the Corporation prior to make any disclosure.

The Executive agrees that since irreparable damage could result from his breach of the covenants in this Section, in addition to any and all other remedies available to the Corporation, the Corporation will have the remedies of a restraining order, injunction or other equitable relief to enforce the provisions thereof. The Executive consents to jurisdiction in Erie County, New York on the date of the commencement of any action for purposes of any claims under this Section. In addition, the Executive agrees that the issues in any action brought under this Section will be limited to claims under this Section, and all other claims or counterclaims under other provisions of this Agreement will be excluded.

The Executive hereby sells, assigns and transfers to the Corporation all of his right, title and interest in and to all inventions, discoveries, improvements and copyrightable subject matter (the “rights”) which during the term of the Executive’s employment are made or conceived by him, alone or with others and which are within or arise out of any general field of the Corporation’s business or arise out of any work he performs or information he receives regarding the business of the Corporation while employed by the Corporation. The Executive shall fully disclose to the Corporation as promptly as available all information known or possessed by him concerning the rights referred to in the preceding sentence, and upon request by the Corporation and without any further remuneration in any form to him by the Corporation, but at the expense of the Corporation, execute all applications for patents and for copyright registration, assignments thereof and other instruments and do all things which the Corporation may deem necessary to vest and maintain in it the entire right, title and interest in and to all such rights.

11. Non-competition. In consideration of the compensation and other benefits to be paid to the Executive under and in connection with this Agreement, the Executive agrees that, beginning on the Effective Date of this Agreement and continuing until the Covenant Expiration Date (as defined in Subsection (b) below), he will not, directly or indirectly, for his own account or as agent, employee, officer, director, trustee, consultant, partner, stockholder or equity owner of any corporation or any other entity (except that he may passively own securities constituting less than 1% of any class of securities of a public

115

company), or member of any firm or otherwise, (i) engage or attempt to engage, in the Restricted Territory (as defined in Subsection (d) below), in any business activity which is directly or indirectly competitive with the business conducted by the Corporation or any Affiliate at the Reference Date (as defined in Subsection (c) below), (ii) employ or solicit the employment of any person who is employed by the Corporation or any Affiliate at the Reference Date or at any time during the six-month period preceding the Reference Date, except that the Executive will be free to employ or solicit the employment of any such person whose employment with the Corporation or any Affiliate has terminated for any reason (without any interference from the Executive) and who has not been employed by the Corporation or any Affiliate for at least 6 months, (iii) canvass or solicit business in competition with any business conducted by the Corporation or any Affiliate at the Reference Date from any person or entity who during the six-month period preceding the Reference Date was a customer of the Corporation or any Affiliate or from any person or entity which the Executive has reason to believe might in the future become a customer of the Corporation or any Affiliate as a result of marketing efforts, contacts or other facts and circumstances of which the Executive is aware, (iv) willfully dissuade or discourage any person or entity from using, employing or conducting business with the Corporation or any Affiliate or (v) intentionally disrupt or interfere with, or seek to disrupt or interfere with, the business or contractual relationship between the Corporation or any Affiliate and any supplier who during the six-month period preceding the Reference Date shall have supplied components, materials or services to the Corporation or any Affiliate.

Notwithstanding the foregoing, the restrictions imposed by this Section shall not in any manner be construed to prohibit, directly or indirectly, the Executive from serving as an employee or consultant of the Corporation or any Affiliate.

For purposes of this Agreement, the following terms have the meanings given to them below:

a. “Affiliate” means any joint venture, partnership or subsidiary now or hereafter directly or indirectly owned or controlled by the Corporation. For purposes of clarification, an entity shall not be deemed to be indirectly or directly owned or controlled by the Corporation solely by reason of the ownership or control of such entity by shareholders of the Corporation.

b. “Covenant Expiration Date” means the date which is one (1) year after the Termination Date (as defined in this Section).

c. “Reference Date” means (A) for purposes of applying the covenants set forth in this Section at any time prior to the Termination Date, the then current date, or (B) for purposes of applying the covenants set forth in this Section at any time on or after the Termination Date, the Termination Date.

d. “Restricted Territory” means anywhere in the world where the Corporation or any Affiliate conducts or plans to conduct the Business or any other business activity, as the case may be, at the Reference Date.

e. “Termination Date” means the date of termination of the Executive’s employment with the Corporation; provided, however, that the Executive’s employment will not be deemed to have terminated so long as the Executive continues to be employed or engaged as an employee or consultant of the Corporation or any Affiliate, even if such employment or engagement continues after the expiration of the term of this Agreement, whether pursuant to this Agreement or otherwise.

116

12. Successors. This Agreement is personal to the Executive and may not be assigned by the Executive other than by will or the laws of descent and distribution. This Agreement will inure to the benefit of and be enforceable by the Executive’s legal representatives or successors in interest. Notwithstanding any other provision of this Agreement, the Executive may designate a successor or successors in interest to receive any amounts due under this Agreement after the Executive’s death. If he has not designated a successor in interest, payment of benefits under this Agreement will be made to his wife, if surviving, and if not surviving, to his estate. A designation of a successor in interest must be made in writing, signed by the Executive, and delivered to the Employer pursuant to Section 16. Except as otherwise provided in this Agreement, if the Executive has not designated a successor in interest, payment of benefits under this Agreement will be made to the Executive’s estate. This Section will not supersede any designation of beneficiary or successor in interest made by the Executive or provided for under any other plan, practice, or program of the Employer.

This Agreement will inure to the benefit of and be binding upon the Corporation and its successors and assigns. The Corporation will require any successor (whether direct or indirect, by acquisition of assets, merger, consolidation or otherwise) to all or substantially all of the operations or assets of the Corporation or any successor and without regard to the form of transaction used to acquire the operations or assets of the Corporation, to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no succession had taken place. As used in this Agreement, “Corporation” means the Corporation and any successor to its operations or assets as set forth in this Section that is required by this clause to assume and agree to perform this Agreement or that otherwise assumes and agrees to perform this Agreement.

13. Failure, Delay or Waiver. No course of action or failure to act by the Corporation or the Executive will constitute a waiver by the party of any right or remedy under this Agreement, and no waiver by either party of any right or remedy under this Agreement will be effective unless made in writing.

14. Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be enforceable under applicable law. However, if any provision of this Agreement is deemed unenforceable under applicable law by a court having jurisdiction, the provision will be unenforceable only to the extent necessary to make it enforceable without invalidating the remainder thereof or any of the remaining provisions of this Agreement.

15. Notice. All written communications to parties required hereunder must be in writing and (a) delivered in person, (b) mailed by registered or certified mail, return receipt requested, (such mailed notice to be effective 4 days after the date it is mailed) or (c) sent by facsimile transmission, with confirmation sent by way of one of the above methods, to the party at the address given below for the party (or to any other address as the party designates in a writing complying with this Section, delivered to the other party):

117

If to the Corporation:

Computer Task Group, Incorporated

800 Delaware Avenue

Buffalo, New York 14209

Attention: General Counsel

Telephone: 716-882-8000

Telecopier: 716-887-7370

If to the Executive:

James R. Boldt

142 Audubon Drive

Amherst, New York 14226

Telephone: 716-839-0907

16. Miscellaneous. This Agreement may not be amended, modified or terminated orally or by any course of conduct pursued by the Corporation or the Executive, but may be amended, modified or terminated only by a written agreement duly executed by the Corporation and the Executive and is binding upon and inures to the benefit of the Corporation and the Executive and each of their respective heirs, representatives, successors and assignees, except that the Executive may not assign any of his rights or obligations pursuant to this Agreement. Except as otherwise provided in this Agreement, this Agreement constitutes the entire agreement between the Corporation and the Executive with respect to the subject matter of this Agreement, and supersedes all oral and written proposals, representations, understandings and agreements previously made or existing with respect to such subject matter.

17. Termination Of This Agreement. This Agreement will terminate when the Corporation has made the last payment provided for hereunder; provided, however, that the obligations set forth under Sections 8, 9, 10 and 11 of this Agreement will survive any termination and will remain in full force and effect.

18. Multiple Counterparts. This Agreement may be executed in one or more counter parts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any party may execute this Agreement by facsimile signature and the other party shall be entitled to rely on such facsimile signature as evidence that this Agreement has been duly executed by such party. Any party executing this Agreement by facsimile signature shall immediately forward to the other party an original page by overnight mail.

19. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York without reference to principles of conflict of laws.

20. Representation by Executive. The Executive represents to the Corporation that he is not subject to any agreement between him and any other person, firm or organization that prevents or restricts in any way his ability to provide services to the Corporation pursuant to this Agreement or that would otherwise be violated by the performance of his obligations under this Agreement. The Executive understands and agrees that a breach of this representation shall be considered to be a material breach of this Agreement and shall be grounds for immediate termination of employment and shall be treated in the same manner as termination for Cause.

118

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

Computer Task Group, Incorporated		Executive
By:		By:
	Randolph A. Marks		James R. Boldt
	Chairman

Exhibit 3(b)

Incentive

Incentive: Targeted incentive @100% of plan = $300,000

Base		Target % of Plan		% of Base		Total Incentive		Total Compensation
$	400,000	@75	%	50	%	$	200,000	$	600,000
$	400,000	@100	%	75	%	$	300,000	$	700,000
$	400,000	@125	%	100	%	$	400,000	$	800,000
	Guaranteed Total Incentive Compensation of $50,000 for year 2001
	Incentive target will be based on a combination of revenue and EPS, or other business critical values the Compensation Committee may determine

119

Exhibit 3(c)

Stock Options

200,000 shares	@ market at Effective Date - vesting 25% per year
100,000 shares	@ market at Effective Date - effective when stock is above $12 for 30 days: minimum time from date of employment one year – vesting 25%/year over four years
100,000 shares	@ market at Effective Date - effective when stock is above $18 for 30 days; minimum time from date of employment two years – vesting 25%/year over four years
Above will cover 2001’s options. Subsequent grants may be made at the discretion of Compensation Committee

120

EX-10.(P)

EXHIBIT 10 (p)

COMPUTER TASK GROUP, INCORPORATED

FIRST EMPLOYEE STOCK PURCHASE PLAN (EIGHTH AMENDMEND AND RESTATEMENT)

1. Name and Purpose. The name of the plan is the Computer Task Group, Incorporated First Employee Stock Purchase Plan (the “Plan”). The Plan is intended to provide an opportunity for employees of Computer Task Group, Incorporated (the “Company”) and its subsidiaries (“Subsidiaries”) to purchase shares of common stock of the Company (“Shares”) and thereby provide an incentive for them to remain in the employ of the Company and its Subsidiaries and to give them a proprietary interest in its success. The term “Subsidiary” shall have the meaning set forth in Section 424 of the Internal Revenue Code of 1986, as amended (the “Code”). The Plan is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code and shall be interpreted and construed in accordance with such purpose.

2. Administration. The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) who shall not receive any compensation for administering the Plan. The Compensation Committee may from time to time interpret, construe and amend the Plan, adopt rules and regulations relating to its administration and appoint one or more agents to assist it in the administration of the Plan. Any interpretation or construction of any provision of the Plan by the Compensation Committee shall be final, conclusive and binding. The Company shall pay all expenses of the administration of the Plan.

3. Duration of Plan. The Plan shall remain in effect until terminated by the Compensation Committee or as otherwise set forth herein. Each calendar year shall be a Plan Year.

4. Shares Subject to Plan. The maximum aggregate number of Shares which can be purchased pursuant to the Plan by all employees of the Company and its subsidiaries shall be 11,500,000, except as adjusted pursuant to Section 15 hereof.

5. Eligibility. All employees of the Company and its Subsidiaries shall be eligible to participate in the Plan and to purchase Shares as hereafter set forth, except that no employee may participate in the Plan, if immediately after an option is granted to him or her hereunder, he or she would own (as defined in Section 424 of the Code) Shares of the Company (including shares of the Company which he or she may purchase under outstanding options) possessing five (5%) percent or more of the total combined voting power or value of all classes of shares of the Company. In addition, no employee may participate in the Plan if the option granted to him or her under the Plan would permit him or her to purchase Shares under all employee stock purchase plans (as defined in Section 423 of the Code) of the Company and its Subsidiaries to accrue at a rate which exceeds $25,000 of the fair market value of such Shares (determined at the time the option hereunder is granted) in any Plan Year. For purposes of this paragraph, the rules set forth in Section 423(b)(8)(A), (B) and (C) of the Code shall be applicable.

6. Purchase of Shares; Grant of Options. Shares shall be purchased under the Plan by the exercise of options granted hereunder. Each employee who participates in the Plan (“Plan Participant”) shall be granted an option on each payday of the Company which shall entitle him or her to purchase Shares under the Plan up to the maximum number of Shares which he or she can purchase with no more than ten (10%) percent of the total compensation paid to him or her by the Company or any of its Subsidiaries. Such amount shall be proportionately reduced to reflect the employee’s maximum length of service with the Company or any of its subsidiaries in the Plan Year. The options shall be exercisable only in the manner set forth in Section 8 hereof.

7. Purchase Price. The purchase price for Shares purchased under this Plan shall be the fair market value of the Shares on the last day immediately preceding the payday on which the Shares are purchased (the “Price Date”). The term “fair market value” shall be the closing price for a Share as reported by the National Association of Securities

121

Dealers listing for New York Stock Exchange Composite Transactions at the close of business on the Price Date. In the event that there was no such report for such day, the fair market value shall be such closing price on the first preceding day for which there is such a report. In no event shall the purchase price for Shares purchased hereunder be less than the par value thereof.

8. Exercise of Options. The options granted hereunder shall be exercisable on each payday of the Company or if applicable, the relevant Subsidiary, but only by a payroll deduction authorized pursuant to Section 9 hereof, and only to purchase not more than the maximum number of Shares which, at the purchase price determined in accordance with Section 7 hereof, an employee can purchase pursuant to Section 6 hereof. If on any payday an employee fails to exercise an option, in whole or in part, the unexercised portion of the option shall lapse and cannot thereafter be exercised.

9. Commencement of Participation in the Plan. An employee may commence participation in the Plan at any time by completing and filing with the Company a “Payroll Deduction Authorization Form” authorizing payroll deductions from his or her pay. An employee who has withdrawn from the Plan may recommence participation in the Plan at any time by completing and filing a form with the Company. Participation in the Plan shall commence or recommence, as the case may be, on the first payday following receipt of the form by the Company’s Benefits Department in Buffalo, New York or, in the case of a Subsidiary, at the applicable Benefits Department.

10. Employee Accounts and Payroll Deductions. The Company shall maintain for each Plan Participant a separate bookkeeping account (“Account”) to which shall be credited all payroll deductions made for him or her and from which shall be deducted amounts used to purchase Shares hereunder.

On each payday a payroll deduction in the amount specified in the most recent Payroll Deduction Authorization Form filed with the Company or any of its Subsidiaries shall be made and the amount thereof shall be credited to the Plan Participant’s Account. All amounts in the Account shall then be used to purchase the maximum number of whole Shares which can be purchased at the purchase price determined in accordance with Section 7 hereof. Any amounts remaining in the Account shall be held by the Company without payment of interest thereon until the next payday and shall then be used to purchase additional whole Shares.

A Plan Participant may change the amount of his or her payroll deduction (subject always to the limitation set forth in this Plan) by completing and filing with the Company or the relevant Subsidiary a new Payroll Deduction Authorization Form with the Company’s Benefits Department in Buffalo, New York or the relevant benefits department of a Subsidiary.

11. Withdrawal from the Plan; Termination of Participation in the Plan. A Plan Participant may withdraw from the Plan at any time and for any reason by delivering a written notification of withdrawal to the Company or the relevant Subsidiary. Any withdrawal shall become effective immediately upon receipt of the written notification by the Company’s Benefits Department in Buffalo, New York or the relevant benefits department of a Subsidiary.

A Plan Participant’s participation in the Plan shall automatically terminate upon his or her ceasing to be an employee of the Company or Subsidiary for any reason. An employee who has withdrawn from the Plan may recommence participation in the Plan by completing and filing with the Company or the relevant Subsidiary a new Payroll Deduction Authorization Form.

Upon withdrawal or termination, all amounts held by the Company or a Subsidiary, if applicable, in the Account of an employee shall be returned to him or her or to his or her estate together with a certificate for Shares purchased hereunder, if requested.

12. Nontransferability. The options granted hereunder may not be assigned, transferred or hypothecated and are exercisable only by the Plan Participant.

13. Rights as a Shareholder. A Plan Participant shall have all the rights and privileges of a shareholder of the Company with respect to Shares purchased pursuant to the Plan (to the extent permitted by applicable law) on the date the Shares are purchased.

122

14. Reports; Issuance of Certificates for Shares. On or before the last business day of June, September, December and March, a report as to the status of each Plan Participant’s Account and certificates representing the Shares which he or she purchased in the first, second, third and fourth calendar quarters, if requested, will be sent to him or her. Shares issued hereunder shall be in the name of the Plan Participant.

15. Adjustments. If there is any change in the outstanding Shares of the Company as a result of a stock dividend, stock split or combination of Shares or any other change, or exchange for other securities, by reclassification, reorganization, redesignation, merger, consolidation, or recapitalization or otherwise, the Compensation Committee may make appropriate adjustments in the number and kind of shares and prices per share of Shares subject to outstanding options in order to preserve the relative benefits to optionees.

16. Amendment to the Plan. The Compensation Committee may amend the Plan at any time in its sole discretion; provided, however, that without shareholder approval, the Plan may not be amended; (a) to materially increase the number of Shares which may be purchased pursuant to the Plan; (b) materially modify the requirements as to eligibility for participation in the Plan; (c) materially increase the benefits accruing to Participants under the Plan; or (d) if the effect of the amendment is to cause the Plan to no longer be qualified as an “employee stock purchase plan” under Section 423 of the Code.

17. Termination of the Plan. The Plan may be terminated by the Compensation Committee at any time in its sole discretion and shall terminate automatically, without Compensation Committee action: (i) whenever a required registration statement under the Securities Act of 1933, as amended, is not in effect with respect to the Shares offered pursuant to the Plan or (ii) whenever the maximum number of Shares which may be purchased pursuant to the Plan have been purchased.

123

EX-21

EXHIBIT 21

COMPUTER TASK GROUP, INCORPORATED

SUBSIDIARIES OF COMPUTER TASK GROUP, INCORPORATED

The following is a list of all of the subsidiaries of the Registrant as of December 31, 2007. All financial statements of such subsidiaries are included in the consolidated financial statements of the Registrant, and all of the voting securities of each subsidiary are wholly-owned by the Registrant:

	State/Country or Jurisdiction of Incorporation
– Computer Task Group of Delaware, Inc.	Delaware
– CTG of Buffalo, Inc.	New York
– Computer Task Group (Holdings) Ltd.	United Kingdom
– Computer Task Group of Kansas, Inc. (a subsidiary of Computer Task Group (Holdings) Ltd.)	Missouri
– Computer Task Group of Canada, Inc.	Canada
– Computer Task Group International, Inc.	Delaware
– Computer Task Group Europe B.V. (a subsidiary of Computer Task Group International, Inc.)	The Netherlands
– Computer Task Group (U.K.) Ltd. (a subsidiary of Computer Task Group Europe B.V.)	United Kingdom
– Computer Task Group Belgium N.V. (a subsidiary of Computer Task Group Europe B.V.)	Belgium
– Rendeck Macro-4 Software B.V. (a subsidiary of Computer Task Group Europe B.V.)	The Netherlands
– Computer Task Group of Luxembourg PSF (a subsidiary of Computer Task Group, Incorporated)	Luxembourg
– Computer Task Group IT Solutions, S.A. (a subsidiary of Computer Task Group Europe B.V.)	Luxembourg
– CTG Deutschland GmbH	Germany

124

EX-23

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Computer Task Group, Incorporated:

We consent to the incorporation by reference in the Registration Statements No. 33-41995, 33-50160, 33-61493, 333-12237, 333-39936, 333-51162, 333-66766, 333-91148, 333-118314 and 333-143080 on Form S-8 and Registration Statement No. 333-43263 on Form S-3 of Computer Task Group, Incorporated of our reports dated March 7, 2008, with respect to the consolidated balance sheets of Computer Task Group, Incorporated and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2007, the related financial statement schedule, and assessment of the effectiveness of internal control over financial reporting as of December 31, 2007, which reports appear in the December 31, 2007 annual report on Form 10-K of Computer Task Group, Incorporated.

Our report refers to the Company’s adoption during 2006 of Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, and Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.

/s/ KPMG LLP

Buffalo, New York

March 7, 2008

125

EX-31.(A)

EXHIBIT 31 (a)

CERTIFICATION

I, James R. Boldt, certify that:

1. I have reviewed this report on Form 10-K of Computer Task Group, Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 7, 2008	/s/ James R. Boldt
	James R. Boldt
	Chairman and Chief Executive Officer

126

EX-31.(B)

EXHIBIT 31 (b)

CERTIFICATION

I, Brendan M. Harrington, certify that:

1. I have reviewed this report on Form 10-K of Computer Task Group, Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 7, 2008	/s/ Brendan M. Harrington
	Brendan M. Harrington
	Chief Financial Officer

127

EX-32

EXHIBIT 32

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Computer Task Group, Incorporated, a New York corporation (the “Company”), does hereby certify with respect to the Annual Report of the Company on Form 10-K for the year ended December 31, 2007 as filed with the Securities and Exchange Commission (the “Form 10-K”) that:

(1) the Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to Computer Task Group, Incorporated and will be retained by Computer Task Group, Incorporated and furnished to the Securities and Exchange Commission or its staff upon request.

Date: March 7, 2008	/s/ James R. Boldt
	James R. Boldt Chairman and Chief Executive Officer
Date: March 7, 2008	/s/ Brendan M. Harrington
	Brendan M. Harrington Chief Financial Officer

128