##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE
 COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal
    year ended March 31, 2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to  Commission File Number:
    000-22125
 Diamond Management &
    Technology Consultants, Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

36-4069408(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)875 N. Michigan Avenue, Suite 3000
    Chicago, Illinois

60611(Zip Code)(Address of Principal Executive
    Offices)  Registrants telephone number, including area code:
    (312) 255-5000
 Securities registered pursuant to Section 12(b) of the
    Act: None
 Securities registered pursuant to Section 12(g) of the
    Act:
 Common Stock, par value $.001 per share
 NASDAQ Global Select Market
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K




---



##### 





DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  Annual
    Report on
    Form 10-K
    for the Fiscal Year Ended
    March 31, 2010
  TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


2Item 1A.


Risk Factors


12Item 1B.


Unresolved Staff Comments


17Item 2.


Properties


17Item 3.


Legal Proceedings


17Item 4.


(Removed and Reserved)PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


18Item 6.


Selected Financial Data


21Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


22Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


34Item 8.


Financial Statements and Supplementary Data


35Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


35Item 9A.


Controls and Procedures


35Item 9B.


Other Information


37PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


37Item 11.


Executive Compensation


37Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


37Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


38Item 14.


Principal Accounting Fees and Services


38PART IVItem 15.


Exhibits, Financial Statement Schedules


38Signatures


40EX-10.8EX-14EX-21EX-23EX-31.1EX-31.2EX-32.1EX-32.2   1




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##### Table of Contents



PART I  Disclosure
    Regarding Forward-Looking Statements
  Form 10-K
  Form 10-K, ®
  Item 1.
    Business  Overview
       2




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##### Table of Contents



Form 10-K.
  Industry
    Background and Opportunity
        Our
    Services
       3




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##### Table of Contents




    Business Design and Performance Improvement evaluating and creating the needed business
    design and technology architecture to support a companys
    strategies, interface with markets and measure and achieve
    improvement objectives
    Information Advantage building a core
    competency in advancing information architecture and analytic
    skills to improve management decision making and economic
    performance
    Customer Impact creating a well designed,
    integrated market facing experience across 3 key areas critical
    to driving demand: customers, channels, and products/services
    Execution providing a rigorous approach to
    manage and measure progress and consistently deliver business
    and technology programs that produce economic results    Industries
    Served
    Financial Services Industry.
  Insurance Industry.
 4




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##### Table of Contents



Healthcare Industry.
  Enterprise Industry. e-commerce,
  Public Sector Industry.
  Our
    Competitive Strengths
    Objectivity.
  Collaborative and Multidisciplinary Model.
 5




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Delivery of Results.
  Strategic Vertical Industry Insight and
    Expertise.
  Ability to Quickly Evolve Our Offerings.
  Strong Culture.
  Continuous Innovation.
  Experienced and Motivated Management.
  Our
    Growth Strategy
   6




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##### Table of Contents



Continue to Diversify Across Industries, Service Lines and
    Geographic Locations.
  Focus on and Expand Relationships with Core
    Clients.
  Increase the Awareness of Our Brand through Intellectual
    Capital.
  Expand the Ratio of Partners to Staff.
  Continue to Develop Client Analytics
    Capability.
  Business
    Development
     7




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##### Table of Contents



www.diamondconsultants.com
    DiamondExchange. ®
  Diamond Network.
  
    Diamond Fellows.  The Diamond Fellows are a
    group of recognized business and technology leaders associated
    with Diamond. Diamond Fellows provide a source of intellectual
    capital, introduce us to prospective clients, author and
    contribute to industry publications, serve as faculty to the
    DiamondExchange program, and participate in client projects.
    Diamond Fellows are contractually committed to dedicate a
    certain number of days annually to Diamond to support marketing
    and client work. Diamond Fellows are compensated with a
    combination of equity and per diem payments for services
    provided to us, or to our clients, on our behalf. As of
    March 31, 2010, we had eleven Diamond Fellows. A biography
    for each Fellow may be viewed on the Companys website
    www.diamondconsultants.com. The names and titles of the
    Diamond Fellows are listed below:  Dan Ariely,
  Vincent Barabba,
  Gordon Bell, ,
  Dan Bricklin,
  Linda Hill,
  Alan Kay, Ph.D.,
  Andrew Lippman, Ph.D.,
  Chunka Mui,
  David P. Reed, Ph.D
  Larry Smarr, Ph.D.,
  Marvin Zonis, Ph.D.,
 8




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##### Table of Contents




    Independent Advisors executives who offer
    strategic industry oversight and guidance to our growth
    initiatives, intellectual capital development and client
    relationships. At March 31, 2010, we had relationships with
    three independent advisors.
    Industry Advisors  leaders spanning the
    gamut from industry to academia enhance Diamonds
    understanding of emerging marketplace developments in target
    industry practices and how they will impact clients in addition
    to providing brand awareness and new client introductions. At
    March 31, 2010, we had five industry advisors.
    Client Relationship Executives.  Client
    Relationship Executives, or CREs, provide an alternative
    business development channel for Diamond. Our CREs consist of
    retired executives,
    executives-in-transition,
    and independent consultants. The program leverages these
    executives senior-level contacts within our targeted
    vertical industries. The program is also designed to enhance
    brand awareness of our capabilities among industry sector senior
    executives. CREs do not directly offer Diamond services, but
    facilitate introductions to industry buyers of consulting
    services. Our CREs have non-exclusive contracts with Diamond and
    are typically paid on a commission basis. At March 31,
    2010, we had three CREs.
    Academic Networks  We have formal
    relationships with two academic groups that provide seminars and
    other content and networking opportunities: MIT CISR (Center for
    Information Systems Research) conducts field-based research on
    issues related to the management and use of information
    technology (IT) in complex organizations. This network is
    applicable across all of our vertical industries, and is focused
    on technology oriented functions. The second formal network is
    Duke Universitys Center for Behavioral Economics. The
    Center aims to create a partnership between practitioners and
    academics to share insights to enable businesses to design
    products and programs that improve ways that people actually
    reason and think. In general, behavioral economics in its
    application is particularly useful for companies that want to
    change their consumer behavior in domains related to complex
    decisions such as health, self-health, financial, and
    day-to-day
    consumer decision making.
    Alliances leading technology and services
    companies that support Diamond rapidly deliver high-performance
    business and technology solutions. We currently have non-revenue
    alliance relationships with four companies: International
    Business Machines Corporation, Oracle Corporation,
    Hewlett-Packard Company, and SAS Institute Inc.  Employees
    and Culture
  Employees.
  Culture.
  
    an environment that intellectually challenges our personnel
    through continuous training and innovative high-impact client
    work;
    consistent compensation and career paths across all competencies
    within Diamond; and
    participation by all of our employees in the continuing
    development and ownership of Diamond.  Recruiting.
 9




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Training and Professional Development.
  Compensation.
    Competition
    Traditional management and strategy consulting firms
  Systems integration and IT consulting firms
  Information technology product and service vendors
       10




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Executive
    Officers of the Registrant
    Name

Age

PositionAdam J. Gutstein


47


President, Chief Executive Officer and DirectorKarl E. Bupp


48


Chief Financial OfficerJohn J. Sviokla


52


Vice Chairman and DirectorStephen Warrington


48


Vice President and Managing Partner, United Kingdom and IndiaThomas E. Weakland


43


Vice President and Managing Partner, Healthcare   Adam J. Gutstein
  Karl E. Bupp
  John J. Sviokla Marketspace Managing in the Marketspace Exploiting the Virtual Value Chain, Harvard Business Review.
  Stephen Warrington
  Thomas E. Weakland
 11




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##### Table of Contents



Available
    Information
  (312) 255-5000. http://www.diamondconsultants.com Form 10-K, Form 10-Q, Form 8-K Form 10-K.
  1-800-SEC-0330. (http://www.sec.gov)
  Item 1A.
    Risk
    Factors    Our
    Profitability Will Suffer If We Are Not Able to Maintain Our
    Pricing and Chargeability and Control Our Costs.
    
    our clients perception of our ability to add value through
    our services;
    competition;
    introduction of new services or products by us or our
    competitors;
    pricing policies of our competitors; and
    general economic conditions that affect the demand for our
    services.    
    seasonal trends, primarily as a result of our hiring cycle and
    holiday vacations;
    our ability to transition employees from completed projects to
    new engagements; and
    our ability to forecast demand for our services and thereby
    maintain an appropriate headcount in the appropriate areas of
    our workforce.   12




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Our
    Inability to Attract and Retain Employees Could Have a Material
    Adverse Affect on our Business.
    Our
    Revenue Could Be Adversely Affected by the Loss of a Significant
    Client or the Failure to Collect a Large Account
    Receivable.
    A
    Significant or Prolonged Economic Downturn Could Have a Material
    Adverse Effect on Our Results of Operations.
    Our
    Quarterly Operating Results Will Vary From Quarter to Quarter,
    Which May Increase the Volatility of Our Stock Price.
      
    the business decisions of our clients regarding the use of our
    services;
    the timing of projects and their termination;
    the timing of revenue or income;
    the timing of hiring, compensation and benefits expenses;
    our ability to transition employees quickly from completed
    projects to new engagements;
    the introduction of new products or services by us or our
    competitors;
    changes in our pricing policies or those of our competitors;
    our ability to manage costs, including personnel costs and
    support services costs; and
    global economic and political conditions.   13




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Competition
    in Our Industry is Intense and Could Harm Our
    Business.
    
    results orientation;
    technical and industry expertise;
    perceived value;
    effectiveness of strategic business models;
    service delivery approach;
    diagnostic capabilities; and
    scope of services.      The
    Absence of Long-Term Contracts With Our Clients Reduces the
    Predictability of Our Revenue.
  and/or
  Failure
    to Meet Client Expectations Could Result in Losses and Negative
    Publicity.
     14




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The Price
    for Our Common Stock Has Been Volatile and
    Unpredictable.
    
    negative news about other publicly traded companies in our
    industry;
    general economic or stock market conditions unrelated to our
    operating performance;
    quarterly variations in our operating results;
    changes in earnings estimates by analysts;
    announcements of new contracts or service offerings by us or our
    competitors;
    financial performance of the Company; and
    other events or factors.    Inability
    to Keep Pace with Rapidly Changing Technology May Impair Our
    Ability to Remain Competitive.
    
    continue to develop our strategic and technical experience;
    develop new services that meet changing client needs; and
    effectively understand leading technologies.    If We Are
    Unable to Protect Our Intellectual Property Rights or If We
    Infringe Upon the Intellectual Property Rights of Others Our
    Business May Be Harmed.
     15




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We Must
    Continue to Build Recognition and Client Acceptance of Our
    Name.
  ®
    Our
    Global Operations Pose Complex Management, Business, Financial
    and Regulatory Risks, Which We May Not Adequately
    Address.
    
    the burdens of complying with a wide variety of national and
    local laws;
    multiple and possibly overlapping and conflicting tax laws;
    coordinating geographically separated organizations;
    restrictions on movement of cash;
    the absence in some jurisdictions of effective laws to protect
    our intellectual property rights;
    political instability;
    currency fluctuations and translation risk;
    longer payment cycles;  
    restrictions on our ability to operate in certain geographic
    markets and industries for a period of time pursuant to the
    non-compete provisions of the agreement to sell a portion of our
    international operations;  
    cultural differences; and
    trade barriers.  The
    Failure to Integrate or Negotiate Successfully Any Future
    Acquisitions Could Harm Our Business and Operating
    Results.
    We May
    Need to Raise Additional Capital in the Future Which May Not Be
    Available.
   16




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Future
    Sales of Our Common Stock in the Public Market Could Cause the
    Price of Our Stock to Decline.
    Our
    Charter Documents and Delaware Law May Discourage an Acquisition
    of Diamond.
    Certain
    of Our Contracts Pose Unique Risks.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings  Form 10-K,
 17




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    Sales Price PerShareHigh

LowFiscal year ended March 31, 2009:First Quarter

$
7.23


$
4.40Second Quarter


6.33



1.84Third Quarter


4.96



3.20Fourth Quarter


4.43



1.96Fiscal year ended March 31, 2010:First Quarter

$
4.71


$
2.10Second Quarter


6.86



4.16Third Quarter


7.88



5.58Fourth Quarter


8.24



6.66   Holders
    Dividends
    Three Months Ended

Three Months Ended

Three Months Ended

Three Months EndedJune 30, 2009

September 30, 2009

December 31, 2009

March 31, 2010Declaration date


June 1, 2009



August 19, 2009



November 11, 2009



February 16, 2010Per share dividend


$0.07



$0.07



$0.07



$0.07Record date


June 10, 2009



September 1, 2009



November 20, 2009



February 26, 2010Total amount (in thousands)


$1,921



$1,911



$1,892



$1,905Payment date


June 18, 2009



September 15, 2009



December 4, 2009



March 12, 2010     2009Declaration date


November 11, 2008Per share dividend


$0.35Record date


November 21, 2008Total amount (in thousands)


$9,032Payment date


December 5, 2008  18




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##### Table of Contents



Securities
    Authorized for Issuance Under Equity Compensation
    Plans
  Form 10-K.
  Shareholder
    Return Performance Graph
    COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN*
    Among Diamond Management & Technology Consultants
    Inc., The NASDAQ Composite Index
 And The Dow Jones US Business Support Services TSM Index
  
     3/05


3/06


3/07


3/08


3/09


3/10Diamond Management & Technology Consultants, Inc.


$
100.00



$
66.46



$
74.45



$
43.17



$
18.62



$
60.16NASDAQ Composite Index



100.00




119.97




134.27




118.46




85.30




142.80Dow Jones US Business Support Services TSM



100.00




122.60




137.59




121.00




83.07




115.62  19




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##### Table of Contents



Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers
    Issuer Purchases of Equity SecuritiesTotal Number of Shares

Maximum Approximate DollarTotal Number of

Average Price

Purchased as Part of

Value of Shares That May bePeriod

Shares Purchased(1)

Paid per Share(2)

Publicly Announced Plans

Purchased Under the PlanApril 1, 2009  June 30, 2009


72,100


$
3.88



72,100


$
26,652,894July 1, 2009  September 30, 2009


503,937


$
6.06



487,894


$
23,688,771October 1, 2009  December 31, 2009


278,659


$
6.74



245,327


$
22,060,589January 1, 2010  March 31, 2010













$
22,060,589     (1)
    
    In addition to purchases made under the Companys publicly
    announced Buy-back Program, included in this column are
    transactions under the Companys stock based compensation
    plans involving the delivery to the Company of
    49,375 shares of Common Stock to satisfy tax withholding
    obligations in connection with the vesting of restricted shares
    granted to Company employees.(2)
    
    Average price paid per share of stock repurchased under the
    Buy-Back Program is execution price, including commissions paid
    to brokers. 20




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K.
  Year Ended March 31,2006


2007


2008


2009


2010(Amounts in thousands, except per share data)Statement of Operations Data:Revenue:Net revenue

$
145,224


$
168,699


$
182,288


$
152,166


$
177,245Reimbursable expenses


18,444



21,574



22,768



22,812



32,699Total revenue


163,668



190,273



205,056



174,978



209,944Project personnel expenses:Project personnel costs before reimbursable expenses


99,111



118,596



125,772



113,703



126,926Reimbursable expenses


18,444



21,574



22,768



22,812



32,699Stock-based compensation acceleration  tender offer














14,290



Total project personnel expenses


117,555



140,170



148,540



150,805



159,625Gross margin


46,113



50,103



56,516



24,173



50,319Other operating expenses:Professional development and recruiting


6,689



8,838



9,420



6,716



5,580Marketing and sales


3,522



3,766



4,451



3,103



3,288Management and administrative support


25,328



27,499



26,947



25,846



25,798Stock-based compensation acceleration  tender offer














2,402



Restructuring charges (recovery)


400



(24
)






(284
)


Total other operating expenses


35,939



40,079



40,818



37,783



34,666Income (loss) from operations


10,174



10,024



15,698



(13,610
)


15,653Interest income, net


2,868



4,238



3,230



784



50Other income (expense), net


102



(139
)


180



(128
)


74Total other income, net


2,970



4,099



3,410



656



124Income (loss) from continuing operations before income taxes


13,144



14,123



19,108



(12,954
)


15,777Income tax expense (benefit)


11,151



6,908



8,873



(4,156
)


3,666Income (loss) from continuing operations after income taxes


1,993



7,215



10,235



(8,798
)


12,111Discontinued operations:Gain on disposal of discontinued operations, including income
    taxes






22,932



7,000







Income (loss) from discontinued operations, net of income taxes


(12,577
)


1,254



3,859



400



262Discontinued operations, net of income taxes


(12,577
)


24,186



10,859



400



262Net income (loss)

$
(10,584
)

$
31,401


$
21,094


$
(8,398
)

$
12,373Basic income (loss) per share of Common Stock(1) :Income (loss) from continuing operations


0.06



0.23



0.34



(0.34
)


0.45Income (loss) from discontinued operations, net of income taxes


(0.38
)


0.76



0.36



0.02



0.01Net income (loss)

$
(0.32
)

$
0.98


$
0.70


$
(0.32
)

$
0.46Diluted income (loss) per share of Common Stock(1):Income (loss) from continuing operations


0.06



0.21



0.33



(0.34
)


0.44Income (loss) from discontinued operations, net of income taxes


(0.36
)


0.71



0.34



0.02



0.01Net income (loss)

$
(0.31
)

$
0.92


$
0.67


$
(0.32
)

$
0.45Shares used in computing basic income (loss) per share of Common
    Stock(1)


32,963



31,951



30,200



26,209



27,139Shares used in computing diluted income (loss) per share of
    Common Stock(1)


34,682



34,076



31,492



26,209



27,632Cash dividends declared per share of Common Stock

$



$
0.30


$
0.35


$
0.35


$
0.28   21




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##### Table of Contents



March 31,2006


2007


2008


2009


2010(Amounts in thousands)Balance Sheet Data:Cash and cash equivalents

$
69,899


$
84,125


$
53,267


$
46,112


$
55,834Restricted cash


5,493



6,095



7,338



4,099



4,104Working capital


76,091



81,905



55,566



55,072



58,746Total assets


127,620



120,875



92,395



89,149



106,001Total stockholders equity(2)

$
91,888


$
95,927


$
74,852


$
70,040


$
69,710     (1)
    
    See Note (11) of the Notes to the Consolidated Financial
    Statements included elsewhere in this Annual Report on
    Form 10-K
    for an explanation of the methods used to compute basic and
    diluted income (loss) per share data.(2)
    
    Total stockholders equity includes the effect of the
    repurchase of the Companys Common Stock.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion and analysis should be read in
    conjunction with the information contained in the Consolidated
    Financial Statements and related Notes included elsewhere in
    this Annual Report on
    Form 10-K.
    This discussion and analysis also contains forward-looking
    statements that involve risks and uncertainties. See
    Disclosure Regarding Forward-Looking Statements and
    Risk Factors contained in this Annual Report on
    Form 10-K.
    We use the terms we, our,
    us, the Company, and Diamond
    in this report to refer to Diamond Management &
    Technology Consultants, Inc. and its wholly-owned
    subsidiaries.
  Overview
           22




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23




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Critical
    Accounting Policies and Estimates
   24




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Revenue
    Recognition
  out-of-pocket
    Allowance
    for Doubtful Accounts and Deferred Revenue
       25




---



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Stock-based
    Compensation
      Operating
    Expenses
      Valuation
    of Deferred Tax Assets
   26




---



##### Table of Contents



Recent
    Accounting Pronouncements
    Revenue
        Billed Fee Revenue


New Client RevenueIndustry

2008


2009


2010


2008


2009


2010Financial Services


30
%


30
%


31
%


20
%


32
%


24
%Insurance


23
%


24
%


26
%


12
%


7
%


39
%Healthcare


21
%


19
%


21
%


19
%


23
%


23
%Enterprise


23
%


23
%


18
%


46
%


30
%


8
%Public Sector


3
%


4
%


4
%


3
%


8
%


6
%100
%


100
%


100
%


100
%


100
%


100
%  27




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##### Table of Contents



Operating
    Expenses
  Project
    Personnel Costs
        2008

2009

2010Practice headcount


510



465



527Annualized net revenue per practice professional (in thousands)

$
358


$
315


$
367Chargeability


62
%


63
%


74
%Annualized voluntary attrition


16
%


12
%


11
%Total annualized attrition(1)


22
%


25
%


20
%     (1)
    
    Defined as voluntary attrition plus Company initiated attrition.  Stock-based
    compensation acceleration  tender offer (project
    personnel)
    Professional
    Development and Recruiting
     28




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##### Table of Contents



Marketing
    and Sales
    ®
  Management
    and Administrative Support
      Stock-based
    compensation acceleration  tender offer (other
    operating)
    Restructuring
    Charges (Recovery)
    Other
    Income, Net
  available-for-sale
   29




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##### Table of Contents



available-for-sale
  Income
    Tax Expense
        Discontinued
    Operations
       30




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##### Table of Contents



Liquidity
    and Capital Resources
    March 31,2009

2010(In millions)Working capital(1)

$
55.1


$
58.7Cash and cash equivalents(1)


46.1



55.8Restricted cash


4.1



4.1Stockholders equity(1)


70.0



69.7Unutilized bank credit facilities(2)

$
17.8


$
12.3     (1)
    
    The change in working capital, cash and cash equivalents, and
    stockholders equity as of March 31, 2010, as compared
    to March 31, 2009, is primarily related to increased net
    income and positive operating cash flows during the twelve month
    period, partially offset by cash used for our share repurchase
    and dividend programs.(2)
    
    The decrease in unutilized bank credit facilities as of
    March 31, 2010, as compared to March 31, 2009, is due
    to the expiration of the JP Morgan Chase Bank, N.A. credit
    agreement and the commencement of our Harris N.A. credit
    agreement on July 31, 2009. Our total borrowing capacity
    under the Harris N.A. credit agreement is $12.5 million
    reduced by outstanding letters of credit totaling
    $0.2 million as of March 31, 2010, compared to a total
    borrowing capacity under the JP Morgan Chase Bank, N.A. credit
    agreement of $20.0 million reduced by outstanding letters
    of credit totaling $2.2 million as of March 31, 2009.
    We have never borrowed against either line of credit.     31




---



##### Table of Contents



Three Months Ended


Three Months Ended


Three Months Ended


Three Months EndedJune 30, 2009


September 30, 2009


December 31, 2009


March 31, 2010Declaration date


June 1, 2009



August 19, 2009



November 11, 2009



February 16, 2010Per share dividend


$0.07



$0.07



$0.07



$0.07Record date


June 10, 2009



September 1, 2009



November 20, 2009



February 26, 2010Total amount (in thousands)


$1,921



$1,911



$1,892



$1,905Payment date


June 18, 2009



September 15, 2009



December 4, 2009



March 12, 2010     2008


2009Declaration date


November 6, 2007



November 11, 2008Per share dividend


$0.35



$0.35Record date


November 20, 2007



November 21, 2008Total amount (in thousands)


$10,748



$9,032Payment date


December 6, 2007



December 5, 2008         Cash
    Flows from Operating Activities
   32




---



##### Table of Contents



Cash
    Flows from Investing Activities
    Cash
    Flows from Financing Activities
      Contractual
    Obligations
    Payments Due By PeriodLess Than








More Than1 Year


1-3 Years


3-5 Years


5 Years


TotalOperating leases

$
1,507


$
2,675


$
1,993


$



$
6,175Purchase obligations(1)


2,168



923



47







3,138Total(2)

$
3,675


$
3,598


$
2,040


$



$
9,313     (1)
    
    Purchase obligations represent minimum commitments owed to third
    parties, including IT maintenance contracts in support of
    internal use software and hardware and other marketing and
    consulting contracts. Contracts for which our commitment is
    variable based on volumes, with no fixed minimum quantities, and
    contracts that can be cancelled without payment penalties, have
    been excluded. Amounts presented also exclude accounts payable
    and accrued expenses at March 31, 2010.(2)
    
    The table excludes our liability for uncertain tax provisions,
    which totaled $0.6 million as of March 31, 2010, since
    we cannot predict with reasonable reliability the timing of cash
    settlements to the respective tax authorities.  Off
    Balance Sheet Arrangements
   33




---



##### Table of Contents



Treasury
    Stock Transactions
      Summary
    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Foreign
    Currency Risk
    non-U.S. businesses
  Interest
    Rate Risk
   34




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data    Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  Managements
    Report on Internal Control Over Financial
    Reporting
  Rule 13a-15(f) Rule 15d-15(f)
          Internal Control 
    Integrated Framework
  Changes
    in Internal Control Over Financial Reporting
   35




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
     Internal Control  Integrated
    Framework
        Internal
    Control  Integrated Framework
        36




---



##### Table of Contents



Item 9B.
    Other
    Information   PART III  Form 10-K 120-day Form 10-K 120-day
  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Form 10-K. Form 10-K Regulation S-K. Regulation S-K Form 10-K.
  Form 10-K.
  Item 11.
    Executive
    Compensation  Form 10-K.
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Number of





Number of securitiessecurities to be





remaining available forissued upon


Weighted-average


future issuance underexercise of


exercise price of


equity compensationoutstanding


outstanding


plans (excludingoptions, warrants


options, warrants


securities reflected inPlan Category

and rights


and rights


column (a))(a)


(b)


(c)Equity compensation plans approved by security holders


5,506,018
(1)

$
8.11
(2)


7,931,178
(3)Equity compensation plans not approved by security holders










Total


5,506,018







7,931,178     (1)
    
    Includes 1,185,369 shares issuable upon vesting of
    outstanding Stock Awards, 3,741,940 stock-settled stock
    appreciation rights (SARs), and 578,709 Stock
    Options.(2)
    
    The weighted-average exercise price does not take into account
    the shares issuable upon vesting of outstanding Stock Awards
    which have no exercise price.(3)
    
    Includes 2,172,355 shares available for future issuance
    under the Companys Employee Stock Purchase Plan. 37




---



##### Table of Contents



Form 10-K.
  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence  Form 10-K.
  Item 14.
    Principal
    Accounting Fees and Services  Form 10-K.
 PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules  Financial Statements and Schedules
  page F-1 Form 10-K.
        Exhibits
  Regulation S-K Form 10-K.
  ExhibitNo.

Description3
.1

Form of Restated Certificate of Incorporation of the Company
    (filed as Exhibit 3.1 to the Companys Quarterly Report on
    Form 10-Q for the quarter ended September 30, 2009 (File No.
    000-22125) and incorporated herein by reference).3
.2

Amended and Restated By-laws of the Company (filed as Exhibit
    3.2 to the Companys Quarterly Report on Form 10-Q for the
    quarter ended September 30, 2006 (File No. 000-22125) and
    incorporated herein by reference).10
.1

Stock Purchase Agreement dated July 19, 2006 by and between
    DiamondCluster International B.V. and Mercer Management
    Consulting, Inc. (filed as Exhibit 10.1 to the Companys
    Quarterly Report on Form 10-Q for the quarter ended September
    30, 2006 (File No. 000-22125) and incorporated herein by
    reference).10
.2

Employment Agreement between each of the Executive Officers and
    the Company (filed as Exhibit 10.2 to the Companys Annual
    Report on Form 10-K for the year ended March 31, 2006 (File No.
    000-22125) and incorporated herein by reference).10
.3

Partners Operating Agreement dated as of April 1, 2009
    (filed as Exhibit 10.3 to the Companys Annual Report on
    Form 10-K for the year ended March 31, 2009 (File No.
    000-22125) and incorporated herein by reference). 38




---



##### Table of Contents



ExhibitNo.

Description10
.4

2000 Stock Option Plan, as amended December 31, 2008 (filed as
    Exhibit 10.7 to the Companys Quarterly Report on Form 10-Q
    for the quarter ended December 31, 2008 (File No. 000-22125) and
    incorporated herein by reference).10
.5

Form of Notices of Grant and Restricted Stock Unit Agreement
    under the 2000 Stock Option Plan (filed as Exhibit 10.8 to the
    Companys Quarterly Report on Form 10-Q for the period
    ended December 31, 2008 (File No. 000-22125) and incorporated
    herein by reference).10
.6

Employee Stock Purchase Plan (filed as Exhibit 10.9 to the
    Companys Quarterly Report on Form 10-Q for the period
    ended September 30, 2008 (File No 000-22125) and incorporated
    herein by reference).10
.7

Summary of Outside Director Board Compensation (filed as Exhibit
    10.10 to the Companys Quarterly Report on Form 10-Q for
    the period ended September 30, 2008 (File No 000-22125) and
    incorporated herein by reference).10
.8*

Credit Agreement between the Company and Harris N.A. dated July
    31, 2009.14
*

Code of Business Conduct and Ethics and Supplemental Code of
    Ethics for Senior Financial Officers.21
*

Subsidiaries of the Company.23
*

Consent of Independent Registered Public Accounting Firm.24
*

Power of Attorney (included on signature page).31
.1*

Certification of the President and Chief Executive Officer
    pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to
    section 302 of the Sarbanes-Oxley Act of 2002.31
.2*

Certification of the Chief Financial Officer pursuant to Rule
    13a-14(a)/15d-14(a), as adopted pursuant to section 302 of the
    Sarbanes-Oxley Act of 2002.32
.1*

Certification of the President and Chief Executive Officer
    pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
    section 906 of the Sarbanes-Oxley Act of 2002.32
.2*

Certification of the Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to section 906
    of the Sarbanes-Oxley Act of 2002.     *
    
    Filed herewith. 39




---



##### Table of Contents



SIGNATURES    Diamond
    Management & Technology Consultants, Inc.
  By:
    /s/  Adam
    J. Gutstein   President and Chief Executive Officer
    POWER OF
    ATTORNEY
  Form 10-K,
    Signature

Title

Date/s/  Adam
    J. GutsteinAdam
    J. Gutstein

President and Chief Executive Officer (Principal Executive
    Officer); Director

June 9, 2010/s/  Karl
    E. BuppKarl
    E. Bupp

Chief Financial Officer (Principal Financial Officer and
    Principal Accounting Officer)

June 9, 2010/s/  John
    J. SvioklaJohn
    J. Sviokla

Vice Chairman and Director

June 9, 2010/s/  Edward
    R. AndersonEdward
    R. Anderson

Director

June 9, 2010/s/  Melvyn
    E. BergsteinMelvyn
    E. Bergstein

Director and Chairman

June 9, 2010/s/  Donald
    R. CaldwellDonald
    R. Caldwell

Director

June 9, 2010/s/  Michael
    E. MikolajczykMichael
    E. Mikolajczyk

Director

June 9, 2010 40




---



##### Table of Contents



Signature

Title

Date/s/  Michael
    H. MoskowMichael
    H. Moskow

Director

June 9, 2010/s/  Javier
    RubioJavier
    Rubio

Director

June 9, 2010/s/  Pauline
    A. SchneiderPauline
    A. Schneider

Director

June 9, 2010  41




---



##### 



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
 PageConsolidated Financial Statements:Report of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of March 31, 2009
    and 2010


F-3Consolidated Statements of Operations and
    Comprehensive Income (Loss) for the Years Ended March 31, 2008,
    2009 and 2010


F-4Consolidated Statements of Stockholders
    Equity for the Years Ended March 31, 2008, 2009 and 2010


F-5Consolidated Statements of Cash Flows for the
    Years Ended March 31, 2008, 2009 and 2010


F-6Notes to Consolidated Financial Statements


F-7Supplemental Financial Schedules:Report of Independent Registered Public
    Accounting Firm


S-1Schedule II  Valuation and
    Qualifying Accounts


S-2   F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Internal Control  Integrated
    Framework
  KPMG
    LLP
    F-2




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  CONSOLIDATED BALANCE SHEETS
 March 31, 2009 and 2010
  2009


2010(In thousands,except per share data)ASSETSCurrent assets:Cash and cash equivalents

$
46,112


$
55,834Restricted cash






4,104Accounts receivable, net of allowance of $566 and $477 as of
    March 31, 2009 and 2010, respectively


15,872



22,947Deferred tax asset  current portion


6,747



6,888Prepaid expenses


1,323



1,594Other current assets


1,479



1,472Total current assets


71,533



92,839Restricted cash


4,099



Computers, equipment, leasehold improvements and software, net


4,280



3,667Deferred tax asset  long-term portion


7,757



7,911Other assets


1,480



1,584Total assets

$
89,149


$
106,001LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
4,595


$
5,613Accrued compensation


4,269



17,741Deferred revenue


722



1,358Accrued benefits


2,481



2,355Income taxes payable  current portion


1,493



2,752Other accrued liabilities


2,901



4,274Total current liabilities


16,461



34,093Deferred rent  long term portion


1,593



1,613Accrued income tax liabilities  long-term portion


687



585Net tax indemnification obligation


368



Total liabilities


19,109



36,291Commitments and contingenciesStockholders equity:Preferred Stock, $1.00 par value, 2,000 shares
    authorized, no shares issued






Common Stock, $0.001 par value, 300,000 and
    100,000 shares authorized, 40,087 and 40,082 shares
    issued as of March 31, 2009 and 2010, respectively


40



40Additional paid-in capital


622,967



615,467Accumulated other comprehensive loss


(4,636
)


(4,423
)Accumulated deficit


(442,261
)


(437,517
)176,110



173,567Less Common Stock in treasury, at cost, 12,885 and
    12,830 shares held at March 31, 2009 and 2010,
    respectively


106,070



103,857Total stockholders equity


70,040



69,710Total liabilities and stockholders equity

$
89,149


$
106,001    F-3




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 Fiscal Years ended March 31, 2008, 2009
    and 2010
  2008


2009


2010(In thousands, except per share data)Revenue:Net revenue

$
182,288


$
152,166


$
177,245Reimbursable expenses


22,768



22,812



32,699Total revenue


205,056



174,978



209,944Project personnel expenses:Project personnel costs before reimbursable expenses


125,772



113,703



126,926Reimbursable expenses


22,768



22,812



32,699Stock-based compensation acceleration  tender offer






14,290



Total project personnel expenses


148,540



150,805



159,625Gross margin


56,516



24,173



50,319Other operating expenses:Professional development and recruiting


9,420



6,716



5,580Marketing and sales


4,451



3,103



3,288Management and administrative support


26,947



25,846



25,798Stock-based compensation acceleration  tender offer






2,402



Restructuring recovery






(284
)


Total other operating expenses


40,818



37,783



34,666Income (loss) from operations


15,698



(13,610
)


15,653Interest income


3,323



957



121Interest expense


(93
)


(173
)


(71
)Other income (expense), net


180



(128
)


74Total other income, net


3,410



656



124Income (loss) from continuing operations before income taxes


19,108



(12,954
)


15,777Income tax expense (benefit)


8,873



(4,156
)


3,666Income (loss) from continuing operations after income taxes


10,235



(8,798
)


12,111Discontinued operations:Gain on disposal of discontinued operations, including income
    tax benefit of $0 for the fiscal years ended March 31,
    2008, 2009 and 2010, respectively


7,000







Income from discontinued operations, including income tax
    benefit of$0, $575, and $0 for the fiscal years ended March 31, 2008,
    2009 and 2010, respectively


3,859



400



262Income from discontinued operations, net of income taxes


10,859



400



262Net income (loss)


21,094



(8,398
)


12,373Foreign currency translation adjustments


27



(1,869
)


214Unrealized loss on investment


(4
)


(19
)


(1
)Comprehensive income (loss)

$
21,117


$
(10,286
)

$
12,586Basic income (loss) per share of Common Stock:Income (loss) from continuing operations

$
0.34


$
(0.34
)

$
0.45Income from discontinued operations


0.36



0.02



0.01Net income (loss)

$
0.70


$
(0.32
)

$
0.46Diluted income (loss) per share of Common Stock:Income (loss) from continuing operations

$
0.33


$
(0.34
)

$
0.44Income from discontinued operations


0.34



0.02



0.01Net income (loss)

$
0.67


$
(0.32
)

$
0.45Shares used in computing basic income (loss) per share of Common
    Stock


30,200



26,209



27,139Shares used in computing diluted income (loss) per share of
    Common Stock


31,492



26,209



27,632     2008


2009


2010Project personnel costs before reimbursable expenses

$
15,059


$
11,687


$
3,411Professional development and recruiting


124



110



42Marketing and sales


332



265



413Management and administrative support


2,841



2,861



1,495Total SBC

$
18,356


$
14,923


$
5,361    F-4




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
 Fiscal years ended March 31, 2008, 2009
    and 2010
  AccumulatedAdditional








Other


TotalCommon


Paid-in


Accumulated


Treasury


Comprehensive


StockholdersStock


Capital


Deficit


Stock


Income (Loss)


Equity(In thousands)Balance at March 31, 2007

$
40


$
627,599


$
(435,177
)

$
(93,764
)

$
(2,771
)

$
95,927Issuance, forfeiture and cancellation of stock


1



















1Stock-based compensation






18,356















18,356Exercise of stock options






2,132















2,132Shares withheld for taxes






(3,436
)














(3,436
)Issuance of treasury stock under equity incentive plans


(1
)


(24,243
)






24,243







(1
)Income tax expense related to stock-based compensation, net of
    adjustments






281















281Purchase of treasury stock














(50,937
)






(50,937
)Employee stock purchase plan






2,160















2,160Unrealized loss on investment


















(4
)


(4
)Translation adjustment


















27



27Dividend paid on Common Stock, $0.35 per share










(10,748
)










(10,748
)Net income










21,094











21,094Balance at March 31, 2008

$
40


$
622,849


$
(424,831
)

$
(120,458
)

$
(2,748
)

$
74,852Stock-based compensation






31,615















31,615Exercise of stock options






18















18Shares withheld for taxes






(2,675
)














(2,675
)Issuance of treasury stock under equity incentive plans






(27,533
)






27,533







Income tax expense related to stock-based compensation, net of
    adjustments






(3,341
)














(3,341
)Purchase of treasury stock














(13,145
)






(13,145
)Employee stock purchase plan






2,034















2,034Unrealized loss on investment


















(19
)


(19
)Translation adjustment


















(1,869
)


(1,869
)Dividend paid on Common Stock, $0.35 per share










(9,032
)










(9,032
)Net loss










(8,398
)










(8,398
)Balance at March 31, 2009

$
40


$
622,967


$
(442,261
)

$
(106,070
)

$
(4,636
)

$
70,040Stock-based compensation






5,361















5,361Exercise of stock options






217















217Shares withheld for taxes






(806
)














(806
)Issuance of treasury stock under equity incentive plans






(7,085
)






7,085







Income tax expense related to stock-based compensation, net of
    adjustments






(6,555
)














(6,555
)Purchase of treasury stock














(4,872
)






(4,872
)Employee stock purchase plan






1,368















1,368Unrealized loss on investment


















(1
)


(1
)Translation adjustment


















214



214Dividend paid on Common Stock, $0.07 per share per quarter










(7,629
)










(7,629
)Net income










12,373











12,373Balance at March 31, 2010

$
40


$
615,467


$
(437,517
)

$
(103,857
)

$
(4,423
)

$
69,710    F-5




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS(1)
 Fiscal Years ended March 31, 2008, 2009
    and 2010
  2008


2009


2010(In thousands)Cash flows from operating activities:Net income (loss)

$
21,094


$
(8,398
)

$
12,373Adjustments to reconcile income (loss) to net cash provided byoperating activities:Restructuring recovery






(284
)


Depreciation and amortization


1,550



1,801



1,639Stock-based compensation


18,356



31,615



5,361Gain on sale of discontinued operations


(7,000
)






Deferred income taxes


(254
)


(5,783
)


(6,385
)Excess tax benefits from employee stock plans


(1,220
)


(307
)


(123
)Changes in assets and liabilities:Accounts receivable


1,742



(3,332
)


(6,978
)Prepaid expenses and other


89



216



(103
)Accounts payable


693



1,730



1,300Accrued compensation


(3,261
)


(344
)


13,526Restructuring accrual


(221
)


(55
)


Deferred revenue


(339
)


(369
)


655Income taxes payable


(429
)


(2,244
)


706Other assets and liabilities


(4,799
)


354



433Net cash provided by operating activities


26,001



14,600



22,404Cash flows from investing activities:Decrease (increase) in restricted cash


(132
)


3,082



(5
)Distribution from
    available-for-sale
    investments






289



Net proceeds from sale of discontinued operations


7,000







Capital expenditures, net


(3,066
)


(1,642
)


(1,272
)Other assets


44







Net cash provided by (used in) investing activities


3,846



1,729



(1,277
)Cash flows from financing activities:Stock option and employee stock purchase plan proceeds


4,292



2,052



1,585Payment of employee withholding taxes from equity transactions


(3,436
)


(2,675
)


(647
)Common stock cash dividends


(10,748
)


(9,032
)


(7,629
)Excess tax benefits from employee stock plans


1,220



307



123Purchase of treasury stock


(52,110
)


(13,145
)


(4,872
)Net cash used in financing activities


(60,782
)


(22,493
)


(11,440
)Effect of exchange rate changes on cash


77



(991
)


35Net increase (decrease) in cash and cash equivalents


(30,858
)


(7,155
)


9,722Cash and cash equivalents at beginning of year


84,125



53,267



46,112Cash and cash equivalents at end of year

$
53,267


$
46,112


$
55,834Supplemental disclosure of cash flow information:Cash paid during the year for interest

$
9


$
110


$
81Cash paid during the year for income taxes

$
9,530


$
3,323


$
9,153     (1)
    
    The Consolidated Statements of Cash Flows is prepared on a
    combined basis and the reported results include both continuing
    and discontinued operations for the fiscal years ended
    March 31, 2008, 2009 and 2010.   F-6




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES
    TO CONSOLIDATED FINANCIAL STATEMENTS
  (1)
    Description
    of the Business and Basis of Presentation            (2)
    Summary
    of Significant Accounting Policies  Principles
    of Consolidation
    Foreign
    Currency Translation and Revaluation
      Revenue
    Recognition
   F-7




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  out-of-pocket
  Allowance
    for Doubtful Accounts and Deferred Revenue
      Stock-based
    Compensation
      Cash
    and Cash Equivalents
   F-8




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Long-Lived
    Assets
    Costs
    Incurred to Develop Software for Internal Use
    Accumulated
    Other Comprehensive Income (Loss)
  available-for-sale available-for-sale
  Financial
    Instruments and Concentration of Credit Risk
      Income
    Taxes
     F-9




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Taxes
    Remitted to Government Authorities
    Use of
    Estimates
    (3)
    Recent
    Accounting Pronouncements  No. 157-2, No. 157-2
  03-6-1, EITF 03-6-1, EITF 03-6-1
  
    No. 2010-09,
 F-10




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2010-09). 2010-09, 2010-09
  No. 2010-06, 2010-06). 2010-06 2010-06
  (4)
    Discontinued
    Operations         F-11




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (5)
    Geographic
    Data      2008


2009


2010Net revenue:North America

$
166,497


$
135,546


$
159,944United Kingdom and India


15,791



16,620



17,301Total net revenue

$
182,288


$
152,166


$
177,245Long-lived assets (as of March 31):North America

$
5,264


$
5,176


$
4,741United Kingdom and India


863



584



615Total long-lived assets

$
6,127


$
5,760


$
5,356     (6)
    Restricted
    Cash    (7)
    Computers,
    Equipment, Leasehold Improvements and Software, Net    2009


2010Computers and equipment

$
5,628


$
5,783Leasehold improvements


5,239



5,303Software


8,347



7,76919,214



18,855Less accumulated depreciation and amortization


(14,934
)


(15,188
)$
4,280


$
3,667  F-12




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (8)
    Other
    Accrued Liabilities    2009


2010Accrued employee expenses

$
1,140


$
1,473Other accrued liabilities


1,761



2,801Total

$
2,901


$
4,274   (9)
    Commitments,
    Guarantees and Contingencies  Lease
    Commitments
      Fiscal Year Ending March 31,2011

$
1,5072012


1,2852013


1,3902014


1,4412015


552Thereafter


Total

$
6,175       Guarantees
    Legal
    Contingencies
   F-13




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (10)
    Line of
    Credit        (11)
    Income
    (Loss) Per Share    Fiscal Year Ended March 31,2008


2009


2010Shares used in computing basic income (loss) per share


30,200



26,209



27,139Dilutive effect of stock options, SARs, and restricted
    stock/units


1,292







493Shares used in computing diluted income (loss) per share


31,492



26,209



27,632Antidilutive securities not included in dilutive net income
    (loss) per share calculation


2,448



6,436



4,866Potentially dilutive shares not included due to loss for fiscal
    year






1,183



  F-14




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (12)
    Stockholders
    Equity  Dividend
    Distribution
    Three Months Ended

Three Months Ended

Three Months Ended

Three Months EndedJune 30, 2009

September 30, 2009

December 31, 2009

March 31, 2010Declaration date

June 1, 2009

August 19, 2009

November 11, 2009

February 16, 2010Per share dividend

$0.07

$0.07

$0.07

$0.07Record date

June 10, 2009

September 1, 2009

November 20, 2009

February 26, 2010Total amount (in thousands)

$1,921

$1,911

$1,892

$1,905Payment date

June 18, 2009

September 15, 2009

December 4, 2009

March 12, 2010     2008

2009Declaration date

November 6, 2007

November 11, 2008Per share dividend

$0.35

$0.35Record date

November 20, 2007

November 21, 2008Total amount (in thousands)

$10,748

$9,032Payment date

December 6, 2007

December 5, 2008   Stock
    Repurchases
     F-15




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Repurchases of Common StockFiscal Year Ended March 31,

Shares


Amount


Average Price2010


805


$
4,872


$
6.052009


2,664


$
13,145


$
4.932008


6,296


$
50,937


$
8.092007


3,341


$
37,465


$
11.21Inception to 2006


10,307


$
127,021


$
12.32Total


23,413


$
233,440


$
9.97       Common StockHeld inIssued


Treasury


NetBalance at March 31, 2007


40,023



(8,325
)


31,698Issued:Equity incentive plans


647



1,685Treasury Stock:Repurchases






(6,296
)Shares withheld under equity incentive plans






(646
)Retirement


(646
)


646Balance at March 31, 2008


40,024



(12,936
)


27,088Issued:Equity incentive plans


963



2,715Treasury Stock:Repurchases






(2,664
)Shares withheld under equity incentive plans






(900
)Retirement


(900
)


900Balance at March 31, 2009


40,087



(12,885
)


27,202Issued:Equity incentive plans


126



861Treasury Stock:Repurchases






(805
)Shares withheld under equity incentive plans






(131
)Retirement


(131
)


131Balance at March 31, 2010


40,082



(12,830
)


27,252  F-16




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (13)
    Stock
    Plans  Share-Based
    Plans
          Restricted
    Stock and Restricted Stock Units (Stock Awards)
         F-17




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Non-Vested


Weighted-Stock


AverageAwards


Grant-Date(In thousands)


Fair ValueNon-vested at March 31, 2007


3,628


$
10.01Granted


2,170



9.95Vested


(1,348
)


10.08Forfeited


(704
)


10.15Non-vested at March 31, 2008


3,746


$
9.92Granted


1,485



5.31Vested in tender offer


(1,727
)


8.91Vested


(1,311
)


9.59Forfeited in tender offer


(431
)


8.91Forfeited


(706
)


9.36Non-vested at March 31, 2009


1,056


$
7.49Granted


813



5.86Vested


(500
)


7.68Forfeited


(85
)


7.51Non-vested at March 31, 2010


1,284


$
6.38     Stock
    Options and SARs
       F-18




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2008

2009

2010Expected volatility

n/a

50% - 51%

54%Weighted-average volatility

n/a

50%

54%Expected dividend yield

n/a

5.6% - 5.9%

4.1%Average expected life (in years)

n/a

3.58

4.96Risk-free interest rate

n/a

2.26% - 2.9%

2.16%Weighted-average grant date fair value of options/SARs granted

n/a

$1.59

$2.41     Weighted-Shares


Weighted-


Average


AggregateUnder


Average


Remaining


IntrinsicOption/SARs


Exercise Price


Contractual


ValueOptions/SARs

(000)


Per Share


Term


($000)Outstanding at March 31, 2007


4,818


$
11.37



2.37


$
9,674Granted






Exercised


(806
)


8.87Forfeited or expired


(690
)


17.82Outstanding at March 31, 2008


3,322


$
10.63



1.76


$
143Granted


3,450



6.51Exercised


(8
)


2.31Forfeited or expired


(1,791
)


9.03Outstanding at March 31, 2009


4,973


$
8.36



2.87


$
0Granted


210



6.56Exercised


(92
)


6.27Forfeited or expired


(770
)


9.53Outstanding at March 31, 2010


4,321


$
8.11



2.27


$
4,847Exercisable at March 31, 2010


2,485


$
9.02



2.01


$
2,411     Employee
    Stock Purchase Plan
   F-19




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Weighted-AveragePurchase PriceShares Issued

Range of Prices

Per ShareIssued fiscal year 2008


341


$
4.93 to $12.04


$
6.33Issued fiscal year 2009


502


$
3.13 to $5.39


$
4.04Issued fiscal year 2010


475


$
2.69 to $6.40


$
2.88     2008

2009

2010Expected volatility

34% - 66%

44% - 84%

36% - 69%Weighted-average volatility

51%

69%

60%Expected dividend yield

2.7% - 7.4%

5.7% - 13.7%

3.8% - 9.7%Average expected life (in years)

1.13

0.35

1.12Risk-free interest rate

2.1% - 5.0%

0.27% - 2.1%

0.06% - 1.2%Weighted average grant date fair value of ESPP granted

$1.07

$0.56

$0.70   Other
   F-20




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (14)
    Income
    Taxes    2008


2009


2010Current:Federal

$
7,881


$
1,470


$
3,654State


1,047



80



284Foreign


15



102



1$
8,943


$
1,652


$
3,939Deferred:Federal


(654
)


(4,488
)


2,251State


584



(1,061
)


859Foreign






(259
)


(3,383
)$
(70
)

$
(5,808
)

$
(273
)$
8,873


$
(4,156
)

$
3,666     2008


2009


2010U.S. sources

$
21,619


$
(10,864
)

$
15,533Non-U.S.
    sources


(2,511
)


(2,090
)


244Total

$
19,108


$
(12,954
)

$
15,777   paid-in-capital paid-in-capital
 F-21




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2009


2010Federal income taxes at statutory rate

$
6,688


$
(4,534
)

$
5,522Nondeductible meals and entertainment


520



500



418Nondeductible stock-based compensation


450



663



142Nondeductible executive compensation










256Effect of tax on foreign exchange gain in foreign company






993



State income taxes, net of federal benefit


1,060



(638
)


738Other


(218
)


313



(122
)Change in valuation allowance for deferred tax assets allocated
    to income tax expense


373



(1,453
)


(3,288
)$
8,873


$
(4,156
)

$
3,666     2009


2010Deferred tax assets attributable to:Net operating loss carryforwards

$
5,432


$
4,890Foreign tax credit and carryforwards


101



116Allowances and accruals


1,745



6,584Stock-based compensation


11,058



3,863Goodwill


1,186



962Depreciation


224



407Capital loss carryforwards


1,135



1,149Total gross deferred tax assets


20,881



17,971Less valuation allowance


(6,027
)


(2,739
)Net deferred tax assets


14,854



15,232Deferred tax liabilities attributable to:Prepaids


339



429Other


11



4Total deferred tax liabilities


350



433Net deferred income taxes

$
14,504


$
14,799      F-22




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            2009


2010Unrecognized tax benefits at beginning of year

$
1.3


$
0.7Gross increases  tax positions in prior periods


0.6



Settlements


(1.0
)


(0.1
)Lapse of statute of limitations


(0.2
)


Unrecognized tax benefits at end of year

$
0.7


$
0.6     (15)
    Benefit
    Plans  401(k)
    Plan
   F-23




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (16)
    Foreign
    Exchange Risk Management  Objectives
    and Context
      Strategies
    (17)
    Related
    Party Transactions    (18)
    Fair
    Value Measurements    
    Level 1  Quoted prices in active markets for
    identical assets and liabilities.
    Level 2  Quoted prices in active markets for
    similar assets and liabilities, or other inputs that are
    observable for the asset or liability, either directly or
    indirectly, for substantially the full term of the financial
    instrument. F-24




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    Level 3  Unobservable inputs that are supported
    by little or no market activity and that are significant to the
    fair value of the assets and liabilities. This includes certain
    pricing models, discounted cash flow methodologies and similar
    techniques that use significant unobservable inputs.    (19)
    Subsequent
    Event    (20)
    Quarterly
    Financial Information (Unaudited)    Quarter EndedJune 30

Sept 30

Dec 31

Mar 31Year Ended March 31, 2009Net revenue

$
38,813


$
40,506


$
36,960


$
35,887Total revenue (including reimbursable expenses)


43,565



46,157



43,256



42,001Gross margin


8,403



11,027



9,792



(5,048
)Professional development and recruiting


2,277



1,719



1,688



1,032Marketing and sales


642



1,300



104



1,057Management and administrative support


6,687



6,327



5,944



6,889Income (loss) from operations


(1,203
)


1,965



2,056



(16,428
)Income (loss) from continuing operations before income taxes


(1,049
)


2,096



2,400



(16,401
)Income (loss) from continuing operations after income taxes


720



521



14



(10,053
)Per share of Common Stock  basic


0.03



0.02







(0.39
)Per share of Common Stock  diluted


0.03



0.02







(0.39
)Income from discontinued operations, net of income taxes














400Discontinued operations, net of income taxes










Per share of Common Stock  basic














0.02Per share of Common Stock  diluted














0.02Net income (loss)


720



521



14



(9,653
)Per share of Common Stock  basic

$
0.03


$
0.02


$



$
(0.37
)Per share of Common Stock  diluted

$
0.03


$
0.02


$



$
(0.37
)   F-25




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Quarter EndedJune 30


Sept 30


Dec 31


Mar 31Year Ended March 31, 2010Net revenue

$
37,892


$
43,582


$
45,462


$
50,309Total revenue (including reimbursable expenses)


44,972



51,667



53,764



59,541Gross margin


9,271



11,972



14,243



14,833Professional development and recruiting


706



1,378



2,011



1,485Marketing and sales


541



506



1,217



1,024Management and administrative support


6,103



6,399



6,609



6,687Income from operations


1,921



3,689



4,406



5,637Income from continuing operations before income taxes


1,902



3,705



4,376



5,794Income from continuing operations after income taxes


847



1,828



2,215



7,221Per share of Common Stock  basic


0.03



0.07



0.08



0.27Per share of Common Stock  diluted


0.03



0.07



0.08



0.26Income from discontinued operations, net of income taxes


85



90



17



70Discontinued operations, net of income taxes














Per share of Common Stock  basic


0.00



0.00



0.00



0.00Per share of Common Stock  diluted


0.00



0.00



0.00



0.00Net income


932



1,918



2,232



7,291Per share of Common Stock  basic

$
0.03


$
0.07


$
0.08


$
0.27Per share of Common Stock  diluted

$
0.03


$
0.07


$
0.08


$
0.26  F-26




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM         KPMG
    LLP
    S-1




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS
  Column A

Column B

Column C

Column D

Column EBalance at

Charged to



Balance atBeginning

Costs and



End ofDescription

of Period

Expenses

Deductions

Period(Amounts in thousands)For the Year Ended March 31, 2010:Deducted from accounts receivable for uncollectible accounts

$
566


$
120


$
209


$
477For the Year Ended March 31, 2009:Deducted from accounts receivable for uncollectible accounts

$
695


$
159


$
288


$
566For the Year Ended March 31, 2008:Deducted from accounts receivable for uncollectible accounts

$
573


$
143


$
21


$
695  S-2