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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, 2008oro

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(State or other jurisdiction
    of
    incorporation or organization)

36-4069408(I.R.S. Employer
    Identification No.)875 N. Michigan Avenue, Suite 3000
    Chicago, Illinois(Address of Principal
    Executive Offices)

60611(Zip
    Code)    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-K Form 10-K Form 10-K. þ
    Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting company)   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,
    2008
  TABLE OF CONTENTS
   
 PagePART IItem 1.


Business


2Item 1A.


Risk Factors


14Item 1B.


Unresolved Staff Comments


19Item 2.


Properties


19Item 3.


Legal Proceedings


19Item 4.


Submission of Matters to a Vote of Security
    Holders


19PART IIItem 5.


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


20Item 6.


Selected Financial Data


23Item 7.


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


24Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


37Item 8.


Financial Statements and Supplementary Data


38Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


38Item 9A.


Controls and Procedures


38Item 9B.


Other Information


41PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


41Item 11.


Executive Compensation


41Item 12.


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


41Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


42Item 14.


Principal Accounting Fees and Services


42PART IVItem 15.


Exhibits, Financial Statement Schedules


42Signatures


442000 Stock Option PlanAmended and Restated Credit AgreementFirst Modification AgreementCode of Business Conduct and EthicsSubsidiariesConsent of Independent Registered Public Accounting FirmSection 302 CertificationSection 302 CertificationSection 906 CertificationSection 906 Certification   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
           3




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##### Table of Contents



Our
    Competitive Strengths
    Objectivity.
  Collaborative and Multidisciplinary Model.
  Delivery of Results.
  Strategic Vertical Industry Insight and
    Expertise.
  Ability to Quickly Evolve Our Offerings.
 4




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Strong Culture.
  Continuous Innovation.
  Experienced and Motivated Management.
  Our
    Growth Strategy
    Focus on, and Expand Relationships with Core
    Clients.
  Develop and Execute a Plan to Expand the Ratio of Partners to
    Staff.
  Increase the Awareness of Our Brand. and/or
 5




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Continue to Develop Client Analytics
    Capability.
  Nurture and Promote Our Intellectual
    Capital.
  Continue to Diversify Across Industries and Geographic
    Locations.
  Our
    Services
        i.e.,
 6




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##### Table of Contents



Industries
    Served
    Financial Services Industry.
  Insurance Industry.
  Healthcare Industry.
 7




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##### Table of Contents



Enterprise Industry.
  Telecommunications Industry.
  Public Sector Industry.
  Business
    Development
      8




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Attract
    Phase
      Capture
    Phase
    DiamondExchange.
  Diamond Network.
  Diamond Fellows.
  Dan Ariely, Co-director,
  Vincent Barabba,
  John Perry Barlow,
 9




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##### Table of Contents



Gordon Bell, ,
  Dan Bricklin,
  Linda Hill,
  Alan Kay, Ph.D.
  Andrew Lippman, Ph.D.
  Chunka Mui,
  David P. Reed,
  Marvin Zonis, Ph
  Client Relationship Executives. executives-in-transition,
  Convert
    Phase
    Diamond Knowledge Center.
  Intellectual Capital Alliances.
  Retain
    Phase
    DiamondExchange.
  Ongoing Communications & Direct
    Mail.
 10




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Employees
    and Culture
  Employees.
  Culture.
  
    an environment that intellectually challenges our personnel
    through continuous training and innovative and 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.
    Training and Professional Development.
  Compensation.
   11




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Competition
    Traditional management and strategy consulting firms
  Systems integration and IT consulting firms
  Information technology product and service vendors
          Executive
    Officers of the Registrant
    Name

Age

PositionAdam J. Gutstein


45


President, Chief Executive Officer and DirectorKarl E. Bupp


46


Chief Financial OfficerJohn J. Sviokla


50


Vice Chairman and DirectorStephen Warrington


46


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


41


Vice President and Managing Partner, Healthcare   Adam J. Gutstein
 12




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##### Table of Contents



Karl E. Bupp
  John J. Sviokla Marketspace Managing in the Marketspace Exploiting the Virtual Value Chain, Harvard Business Review.
  Stephen Warrington
  Thomas E. Weakland
  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)
 13




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Item 1A.
    Risk
    Factors    Our
    Profitability Will Suffer If We Are Not Able to Maintain Our
    Pricing and Utilization Rates 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.    Our
    Inability to Retain Client Serving Professionals 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.
   14




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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 Result in Increased 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.    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. 15




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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.
      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.   16




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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.
      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; 17




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
    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 operating 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.
    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.
   18




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Certain
    of Our Contracts Pose Unique Risks.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings  Form 10-K,
  Item 4.
    Submission
    of Matters to a Vote of Security Holders   19




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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, 2007:First Quarter

$
11.40


$
7.30Second Quarter


11.30



7.57Third Quarter


12.54



10.20Fourth Quarter


15.98



10.77Fiscal year ended March 31, 2008:First Quarter

$
14.13


$
11.03Second Quarter


13.68



7.75Third Quarter


10.70



6.51Fourth Quarter


7.46



4.34   Holders
    Dividends
    2007


2008Declaration date


November 7, 2006



November 6, 2007Per share dividend


$0.30



$0.35Record date


November 22, 2006



November 20, 2007Total amount (in thousands)


$9,700



$10,748Payment date


December 8, 2006



December 6, 2007     Securities
    Authorized for Issuance Under Equity Compensation
    Plans
  Form 10-K.
 20




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##### Table of Contents



Shareholder
    Return Performance Graph
    
  3/03


3/04


3/05


3/06


3/07


3/08Diamond Management & Technology Consultants, Inc.


$
100.00



$
689.29



$
1,150.00



$
764.29



$
856.21



$
496.49NASDAQ Composite Index



100.00




151.01




152.38




181.06




189.63




177.49Dow Jones Wilshire Business Support Services Index



100.00




148.39




148.88




182.52




204.85




180.14  21




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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


Paid per Share(1)


Publicly Announced Plans


Purchased Under the PlanJanuary 1, 2008  January 31, 2008


500,000


$
5.73



500,000


$
31,569,940February 1, 2008  February 29, 2008













$
56,569,940March 1, 2008 
    March 31, 2008


2,644,494


$
6.24



2,644,494


$
40,077,546     (1)
    
    Average price paid per share of stock repurchased under the
    Buy-Back Program is execution price, including commissions paid
    to brokers and expenses of the tender offer. 22




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Item 6.
    Selected
    Financial Data  Form 10-K.
  Year Ended March 31,2004


2005


2006


2007


2008(Amounts in thousands, except per share amounts)Statement of Operations Data:Revenue:Net revenue

$
104,822


$
144,900


$
145,224


$
168,699


$
182,288Reimbursable expenses


14,133



16,848



18,444



21,574



22,768Total revenue


118,955



161,748



163,668



190,273



205,056Project personnel expenses:Project personnel costs before reimbursable expenses


74,614



86,243



99,111



118,596



125,772Reimbursable expenses


14,133



16,848



18,444



21,574



22,768Total project personnel expenses


88,747



103,091



117,555



140,170



148,540Gross margin


30,208



58,657



46,113



50,103



56,516Other operating expenses:Professional development and recruiting


3,523



6,107



6,689



8,838



9,420Marketing and sales


2,750



3,507



3,522



3,766



4,451Management and administrative support


22,867



24,328



25,328



27,499



26,947Restructuring charges (recovery)


1,432







400



(24
)


Total other operating expenses


30,572



33,942



35,939



40,079



40,818Income (loss) from operations


(364
)


24,715



10,174



10,024



15,698Interest income, net


840



1,652



2,868



4,238



3,230Other income (expense), net


514



(216
)


102



(139
)


180Total other income, net


1,354



1,436



2,970



4,099



3,410Income from continuing operations before income taxes


990



26,151



13,144



14,123



19,108Income tax expense (benefit)


(807
)


(13,420
)


11,151



6,908



8,873Income from continuing operations after income taxes


1,797



39,571



1,993



7,215



10,235Discontinued operations:Gain on disposal of discontinued operations, including income
    taxes














22,932



7,000Income (loss) from discontinued operations, net of income taxes


(7,208
)


(6,533
)


(12,577
)


1,254



3,859Discontinued operations, net of income taxes


(7,208
)


(6,533
)


(12,577
)


24,186



10,859Net income (loss)

$
(5,411
)

$
33,038


$
(10,584
)

$
31,401


$
21,094Basic income (loss) per share of Common Stock(1) :Income from continuing operations


0.05



1.18



0.06



0.23



0.34Income (loss) from discontinued operations, net of income taxes


(0.22
)


(0.19
)


(0.38
)


0.76



0.36Net income (loss)

$
(0.17
)

$
0.99


$
(0.32
)

$
0.98


$
0.70Diluted income (loss) per share of Common Stock(1):Income from continuing operations


0.05



1.09



0.06



0.21



0.33Income (loss) from discontinued operations, net of income taxes


(0.21
)


(0.18
)


(0.36
)


0.71



0.34Net income (loss)

$
(0.16
)

$
0.91


$
(0.31
)

$
0.92


$
0.67Shares used in computing basic income (loss) per share of Common
    Stock(1)


32,710



33,516



32,963



31,951



30,200Shares used in computing diluted income (loss) per share of
    Common Stock(1)


34,206



36,281



34,682



34,076



31,492Cash dividends declared per share of Common Stock

$



$



$



$
0.30


$
0.35   23




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March 31,2004


2005


2006


2007


2008(Amounts in thousands)Balance Sheet Data:Cash and cash equivalents(2)

$
39,004


$
42,270


$
69,899


$
84,125


$
53,267Short-term investments


42,300



55,975











Restricted cash










5,493



6,095



7,338Working capital(2)


79,998



104,506



76,091



81,905



55,532Total assets


121,304



153,060



127,620



120,875



92,395Total stockholders equity(3)

$
80,787


$
117,945


$
91,888


$
95,927


$
74,852     (1)
    
    See Note (12) 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)
    
    As of March 31, 2006, 2007 and 2008, amounts reported
    include only continuing operations. Prior to March 31,
    2006, amounts reported include combined (continuing and
    discontinued) operations.(3)
    
    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  Form 10-K. Form 10-K.
  Overview
         24




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25




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Critical
    Accounting Policies and Estimates
    Revenue
    Recognition
   26




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Allowance
    for Doubtful Accounts and Deferred Revenue
        Stock-based
    Compensation
   27




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##### Table of Contents



Operating
    Expenses
      Valuation
    of Deferred Tax Assets
   28




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##### Table of Contents



Recent
    Accounting Pronouncements
    Revenue
        Billed Fee Revenue


New Client RevenueIndustry

2006


2007


2008


2006


2007


2008Financial Services


37%



32%



30%



32%



37%



20%Insurance


22%



26%



23%



22%



7%



12%Healthcare


15%



19%



21%



17%



22%



19%Enterprise


13%



13%



17%



22%



12%



44%Telecommunications


9%



6%



6%



5%



10%



2%Public Sector


4%



4%



3%



2%



12%



3%100%



100%



100%



100%



100%



100%  29




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##### Table of Contents



Operating
    Expenses
  Project
    Personnel Costs
        2006


2007


2008Practice headcount


441



507



510Annualized net revenue per practice professional (in thousands)

$
336


$
351


$
358Utilization rate


63
%


63
%


62
%Annualized voluntary attrition


17
%


18
%


16
%Total annualized attrition(1)


23
%


22
%


22
%     (1)
    
    Defined as voluntary attrition plus Company initiated attrition.  Professional
    Development and Recruiting
      Marketing
    and Sales
   30




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Management
    and Administrative Support
      Restructuring
    Charges (Recovery)
    Other
    Income, Net
    Income
    Tax Expense
     31




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Discontinued
    Operations
     32




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Liquidity
    and Capital Resources
    March 31,2007


2008(In millions)Working capital(1)

$
81.9


$
55.5Cash and cash equivalents(1)


84.1



53.3Restricted cash


6.1



7.3Unutilized bank credit facilities


7.5



17.5Stockholders equity(1)

$
95.9


$
74.9     (1)
    
    We repurchased 3.3 million and 6.3 million shares of
    treasury stock during fiscal years 2007 and 2008, respectively,
    for an aggregate cost of $37.5 million and
    $50.9 million, respectively.        2007


2008Declaration date


November 7, 2006



November 6, 2007Per share dividend


$0.30



$0.35Record date


November 22, 2006



November 20, 2007Total amount (in thousands)


$9,700



$10,748Payment date


December 8, 2006



December 6, 2007    33




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##### Table of Contents



Cash
    Flows from Operating Activities
    Fiscal Year EndedMarch 31, 2008Net income

$
21.1Non-cash charges(1)


19.9Gain on disposal of discontinued operations(2)


(7.0
)Deferred income taxes(3)


(0.3
)Excess tax benefits from employee stock plans(4)


(1.2
)Total increases in cash flows from operating activities due to
    changes in 
    assets and liabilities(5)


2.5Total decreases in cash flows from operating activities due to
    changes in 
    assets and liabilities(6)


(9.0
)Net cash provided by operating activities

$
26.0     (1)
    
    Total non-cash items aggregating $19.9 million were added
    to net income of $21.1 million to arrive at net cash
    provided by operating activities. These non-cash items are
    summarized as follows (in millions):  Fiscal Year EndedMarch 31, 2008Stock-based compensation

$
18.4Depreciation and amortization


1.5Total non-cash items

$
19.9   (2)
    
    A net gain on the sale of discontinued operations before income
    taxes as a result of a cash payment of $7.0 million was
    excluded from net income of $21.1 million to arrive at net
    cash provided by operating activities.(3)
    
    Deferred income taxes increased $0.3 million during fiscal
    year 2008. This change was excluded from net income of
    $21.1 million to arrive at cash flows from operations.(4)
    
    Excess tax benefits from employee stock plans was
    $1.2 million and was excluded from net income of
    $21.1 million to arrive at net cash provided by operating
    activities.(5)
    
    The total increase in cash flows from operating activities due
    to changes in assets and liabilities was $2.5 million. The
    increase was primarily the result of a decrease in accounts
    receivable and an increase in accounts payable. The increases
    are summarized as follows (in millions):  Fiscal Year EndedMarch 31, 2008Accounts receivable

$
1.7Accounts payable


0.7Prepaid expenses and other


0.1Total increases in cash flows from operating activities due to
    changes in assets and liabilities

$
2.5  34




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(6)
    
    The total decrease in cash flows from operating activities due
    to changes in assets and liabilities was $9.0 million. The
    decrease was primarily the result of a decrease in other assets
    and liabilities primarily related to the reduction of the
    Spanish tax indemnification obligation as described in
    Contingencies below. The decrease was also due to a
    decrease in accrued compensation related to the payment of
    $7.9 million of annual variable compensation expense
    related to the prior fiscal year offset by $4.6 million of
    variable compensation accrued during the fiscal year 2008. The
    decreases are summarized as follows (in millions):  Fiscal Year EndedMarch 31, 2008Other assets and liabilities

$
(4.8
)Accrued compensation


(3.3
)Income taxes payable


(0.4
)Deferred revenue


(0.3
)Restructuring accrual


(0.2
)Total decreases in cash flows from operating activities due to
    changes in assets and liabilities

$
(9.0
)     Contractual
    Obligations
    Payments Due By PeriodLess Than








More ThanOne Year


1-3 Years


3-5 Years


5 Years


TotalOperating leases

$
2,817


$
2,053


$
63


$



$
4,933Cash outlays for restructuring and other related activities(1)


220



119











339Purchase obligations(2)


1,993



353



75







2,421Other long-term liabilities(3)(4)














450



450Total

$
5,030


$
2,525


$
138


$
450


$
8,143     (1)
    
    Cash outlays for restructuring and other related activities
    include minimum future lease and related payments for excess
    facilities.(2)
    
    Purchase obligations represent minimum commitments due 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, 2008. 35




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(3)
    
    The $0.5 million long-term liability related to the net tax
    indemnification obligation as discussed in
    Contingencies below is reflected on our consolidated
    balance sheet under GAAP.(4)
    
    The table excludes our liability for uncertain tax positions,
    which totaled $1.3 million as of March 31, 2008, since
    we cannot predict with reasonable reliability the timing of cash
    settlements to the respective tax authorities.  Contingencies
      Off
    Balance Sheet Arrangements
    Cash
    Flows from Investing Activities
    Cash
    Flows from Financing Activities
   36




---



##### Table of Contents



Treasury
    Stock Transactions
      Summary
    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Foreign
    Currency Risk
    non-U.S. businesses
 37




---



##### Table of Contents



Interest
    Rate Risk
    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)
         38




---



##### Table of Contents



Internal Control 
    Integrated Framework
  Changes
    in Internal Control Over Financial Reporting
   39




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm on
    Internal Control Over Financial Reporting
    Internal Control  Integrated
    Framework
        Internal
    Control  Integrated Framework
    
    40




---



##### 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


7,001,690
(1)

$
10.63
(2)


19,537,777
(3)Equity compensation plans not approved by security holders










Total


7,001,690







19,537,777     (1)
    
    Includes 3,679,376 shares issuable upon vesting of
    outstanding stock awards and 1,987,305 stock-settled stock
    appreciation rights (SARs).(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 1,069,182 shares available for future issuance
    under the Companys Employee Stock Purchase Plan. 41




---



##### 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
  Form 10-K.
  ExhibitNo.

Description3
.1

Form of Restated Certificate of Incorporation of the Company
    (filed as Exhibit 3.1(a) 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).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,
    2007 (filed as Exhibit 10.3 to the Companys Annual
    Report on
    Form 10-K
    for the year ended March 31, 2007 (File
    No. 000-22125)
    and incorporated herein by reference). 42




---



##### Table of Contents



ExhibitNo.

Description10
.4

Amended and Restated 1998 Equity Incentive Plan (filed as
    Exhibit 10.2 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
.5

Form of Notices of Grant and Restricted Stock Unit Agreement
    (filed as Exhibit 10.4 to the Companys Annual Report
    on
    Form 10-K
    for the period ended March 31, 2007 (File
    No. 000-22125)
    and incorporated herein by reference).10
.6

Form of Notices of Grant and Stock Appreciation Rights Agreement
    (filed as Exhibit 10.5 to the Companys Annual Report
    on
    Form 10-K
    for the period ended March 31, 2005 (File
    No. 000-22125)
    and incorporated herein by reference).10
.7*

2000 Stock Option Plan, as amended June 4, 2008 (originally
    filed as Exhibit 4.4 to the Companys Post-Effective
    Amendment No. 2 to Registration Statement on
    Form S-4
    (Registration
    No. 333-47830)
    filed November 29, 2000).10
.8

Amended and Restated Employee Stock Purchase Plan (filed as
    Exhibit 4.4 to the Companys Registration Statement on
    Form S-8
    (Registration
    No. 333-64278)
    filed June 29, 2001 and incorporated herein by reference).10
.9

Summary of Outside Director Board Compensation (disclosed on
    page 5 of the Companys Definitive Proxy Statement on
    Schedule 14A filed July 31, 2007 (File
    No. 000-22125)
    and incorporated herein by reference).10
.10*

Amended and Restated Credit Agreement between the Company and JP
    Morgan Chase Bank, N.A. dated July 31, 2007.10
.11*

First Modification Agreement (to that certain Amended and
    Restated Credit Agreement dated July 31, 2007) among
    the Company, JP Morgan Chase Bank, N.A., and certain of the
    Companys subsidiaries dated March 31, 2008.14
*

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. 43




---



##### 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 10, 2008/s/  Karl
    E. BuppKarl
    E. Bupp

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

June 10, 2008/s/  John
    J. SvioklaJohn
    J. Sviokla

Vice Chairman and Director

June 10, 2008/s/  Edward
    R. AndersonEdward
    R. Anderson

Director

June 10, 2008/s/  Melvyn
    E. BergsteinMelvyn
    E. Bergstein

Director

June 10, 2008/s/  Donald
    R. CaldwellDonald
    R. Caldwell

Director

June 10, 2008/s/  Michael
    E. MikolajczykMichael
    E. Mikolajczyk

Director

June 10, 2008 44




---



##### Table of Contents



Signature

Title

Date/s/  Michael
    H. MoskowMichael
    H. Moskow

Director

June 10, 2008/s/  Javier
    RubioJavier
    Rubio

Director

June 10, 2008/s/  Pauline
    A. SchneiderPauline
    A. Schneider

Director

June 10, 2008/s/  Samuel
    K. SkinnerSamuel
    K. Skinner

Director

June 10, 2008/s/  Arnold
    R. WeberArnold
    R. Weber

Director

June 10, 2008  45




---



##### 



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,
    2007 and 2008


F-3Consolidated Statements of Operations and
    Comprehensive Income (Loss) for the Years Ended March 31,
    2006, 2007 and 2008


F-4Consolidated Statements of Stockholders
    Equity for the Years Ended March 31, 2006, 2007 and 2008


F-5Consolidated Statements of Cash Flows for the
    Years Ended March 31, 2006, 2007 and 2008


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
  
    F-2




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  CONSOLIDATED
    BALANCE SHEETS
 March 31,
    2007 and 2008
  2007


2008(In thousands,except per share data)ASSETSCurrent assets:Cash and cash equivalents

$
84,125


$
53,267Accounts receivable, net of allowance of $573 and $695 as of
    March 31, 2007 and 2008, respectively


14,883



13,215Income taxes receivable






256Deferred tax asset  current portion


865



1,236Prepaid expenses


2,064



1,970Other current assets


1,269



1,276Total current assets


103,206



71,220Restricted cash


6,095



7,338Computers, equipment, leasehold improvements and software, net


2,750



4,572Deferred tax asset  long-term portion


7,826



7,710Other assets


998



1,555Total assets

$
120,875


$
92,395LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
1,656


$
2,416Share repurchase payable


1,172



Accrued compensation


7,916



4,648Deferred revenue


1,430



1,092Income taxes payable  current portion


1,743



Other accrued liabilities


7,384



7,532Total current liabilities


21,301



15,688Restructuring accrual  long-term portion


340



119Accrued income tax liabilities  long-term portion






1,286Net tax indemnification obligation


3,307



450Total liabilities


24,948



17,543Commitments and contingencies Stockholders equity:Preferred Stock, $1.00 par value, 2,000 shares
    authorized, no shares issued






Common Stock, $0.001 par value, 300,000 shares
    authorized, 40,023 and 40,024 shares issued as of
    March 31, 2007 and 2008, respectively


40



40Additional paid-in capital


627,599



622,849Accumulated other comprehensive loss


(2,771
)


(2,748
)Accumulated deficit


(435,177
)


(424,831
)189,691



195,310Less Common Stock in treasury, at cost, 8,325 and
    12,936 shares held at March 31, 2007 and 2008,
    respectively


93,764



120,458Total stockholders equity


95,927



74,852Total liabilities and stockholders equity

$
120,875


$
92,395    F-3




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 Fiscal
    years ended March 31, 2006, 2007 and 2008
  2006


2007


2008(In thousands, except per share data)Revenue:Net revenue

$
145,224


$
168,699


$
182,288Reimbursable expenses


18,444



21,574



22,768Total revenue


163,668



190,273



205,056Project personnel expenses:Project personnel costs before reimbursable expenses


99,111



118,596



125,772Reimbursable expenses


18,444



21,574



22,768Total project personnel expenses


117,555



140,170



148,540Gross margin


46,113



50,103



56,516Other operating expenses:Professional development and recruiting


6,689



8,838



9,420Marketing and sales


3,522



3,766



4,451Management and administrative support


25,328



27,499



26,947Restructuring charges (recovery)


400



(24
)


Total other operating expenses


35,939



40,079



40,818Income from operations


10,174



10,024



15,698Interest income


2,959



4,301



3,323Interest expense


(91
)


(63
)


(93
)Other income (expense), net


102



(139
)


180Total other income, net


2,970



4,099



3,410Income from continuing operations before income taxes


13,144



14,123



19,108Income tax expense


11,151



6,908



8,873Income from continuing operations after income taxes


1,993



7,215



10,235Discontinued operations:Gain on disposal of discontinued operations, including income
    tax benefit of $574 and $0 for the fiscal years ended
    March 31, 2007 and 2008, respectively






22,932



7,000Income (loss) from discontinued operations, net of income taxes


(12,577
)


1,254



3,859Discontinued operations, net of income taxes


(12,577
)


24,186



10,859Net income (loss)


(10,584
)


31,401



21,094Foreign currency translation adjustments:Foreign currency translation adjustments arising during the
    period


(172
)


890



27Less: reclassification adjustment for foreign currency
    translation realized from the sale of discontinued operations






(6,065
)


Total foreign currency translation adjustments


(172
)


(5,175
)


27Unrealized loss on investment


(15
)


(69
)


(4
)Comprehensive income (loss)

$
(10,771
)

$
26,157


$
21,117Basic income (loss) per share of Common Stock:Income from continuing operations

$
0.06


$
0.23


$
0.34Income (loss) from discontinued operations


(0.38
)


0.76



0.36Net income (loss)

$
(0.32
)

$
0.98


$
0.70Diluted income (loss) per share of Common Stock:Income from continuing operations

$
0.06


$
0.21


$
0.33Income (loss) from discontinued operations


(0.36
)


0.71



0.34Net income (loss)

$
(0.31
)

$
0.92


$
0.67Shares used in computing basic income (loss) per share of Common
    Stock


32,963



31,951



30,200Shares used in computing diluted income (loss) per share of
    Common Stock


34,682



34,076



31,492     2006


2007


2008Project personnel costs before reimbursable expenses

$
9,203


$
11,318


$
15,059Professional development and recruiting


67



101



124Marketing and sales


385



345



332Management and administrative support


2,219



2,925



2,841SBC included in income from continuing operations


11,874



14,689



18,356SBC included in income (loss) from discontinued operations


3,211



527



15,085



15,216



18,356SBC recorded against the gain on disposal of discontinued
    operations






1,379



Total SBC

$
15,085


$
16,595


$
18,356    F-4




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
 Fiscal
    years ended March 31, 2006, 2007 and 2008
  AccumulatedAdditional











Other


TotalCommon


Paid-in


Stock-based


Accumulated


Treasury


Comprehensive


StockholdersStock


Capital


Compensation


Deficit


Stock


Income (Loss)


Equity(In thousands)Balance at March 31, 2005

$
40


$
639,795


$
(2,174
)

$
(446,294
)

$
(76,082
)

$
2,660


$
117,945Issuance, forfeiture and cancellation of stock


1























1Reclassification of stock-based compensation






(2,174
)


2,174















Stock-based compensation






15,085



















15,085Stock-based compensation related to restructuring charges






606



















606Exercise of stock options


1



4,914



















4,915Shares withheld for taxes






(2,965
)


















(2,965
)Issuance of treasury stock under equity incentive plans


(2
)


(32,910
)










32,912







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






(307
)


















(307
)Purchase of treasury stock


















(34,337
)






(34,337
)Employee stock purchase plan






1,716



















1,716Unrealized loss on investment






















(15
)


(15
)Translation adjustment






















(172
)


(172
)Net loss














(10,584
)










(10,584
)Balance at March 31, 2006

$
40


$
623,760


$



$
(456,878
)

$
(77,507
)

$
2,473


$
91,888Issuance, forfeiture and cancellation of stock


1























1Stock-based compensation






16,595



















16,595Tender offer cash settlements for employee stock options






(1,805
)


















(1,805
)Exercise of stock options


1



9,819



















9,820Shares withheld for taxes






(4,990
)


















(4,990
)Issuance of treasury stock under equity incentive plans


(2
)


(21,208
)










21,208







(2
)Income tax expense related to stock-based compensation, net of
    adjustments






3,459



















3,459Purchase of treasury stock


















(37,465
)






(37,465
)Employee stock purchase plan






1,969



















1,969Unrealized loss on investment






















(69
)


(69
)Translation adjustment






















(5,175
)


(5,175
)Dividend paid on Common Stock, $0.30 per share














(9,700
)










(9,700
)Net income














31,401











31,401Balance 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
)

$
74,852    F-5




---



##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS(1)
 Fiscal
    Years ended March 31, 2006, 2007 and 2008
  2006


2007


2008(In thousands)Cash flows from operating activities:Net income (loss)

$
(10,584
)

$
31,401


$
21,094Adjustments to reconcile income (loss) to net cash provided by
    operating activities:Restructuring charges (recovery)


9,069



(478
)


Depreciation and amortization


2,744



1,754



1,550Stock-based compensation


15,085



15,216



18,356Gain on sale of discontinued operations






(22,358
)


(7,000
)Deferred income taxes


10,008



757



(254
)Excess tax benefits from employee stock plans


(91
)


(4,387
)


(1,220
)Changes in assets and liabilities:Accounts receivable


(6,792
)


(8,395
)


1,742Prepaid expenses and other


(264
)


154



89Accounts payable


263



(1,088
)


693Accrued compensation


(354
)


3,638



(3,261
)Restructuring accrual


(7,805
)


(1,309
)


(221
)Deferred revenue


(130
)


306



(339
)Income taxes payable


891



5,265



(429
)Other assets and liabilities


(382
)


1,746



(4,799
)Net cash provided by operating activities


11,658



22,222



26,001Cash flows from investing activities:Increase in restricted cash


(5,493
)


(602
)


(132
)Net redemptions of short-term investments


55,975







Net proceeds from sale of discontinued operations






29,462



7,000Capital expenditures, net


(1,580
)


(2,902
)


(3,066
)Other assets


60



227



44Net cash provided by investing activities


48,962



26,185



3,846Cash flows from financing activities:Stock option and employee stock purchase plan proceeds


6,732



11,685



4,292Payment of employee withholding taxes from equity transactions


(2,965
)


(4,990
)


(3,436
)Tender offer cash settlements for employee stock options






(1,805
)


Common stock cash dividends






(9,700
)


(10,748
)Excess tax benefits from employee stock plans


91



4,387



1,220Purchase of treasury stock


(34,337
)


(36,293
)


(52,110
)Net cash used in financing activities


(30,479
)


(36,716
)


(60,782
)Effect of exchange rate changes on cash


(188
)


211



77Net increase (decrease) in cash and cash equivalents


29,953



11,902



(30,858
)Cash and cash equivalents at beginning of year(2)


42,270



72,223



84,125Cash and cash equivalents at end of year(2)

$
72,223


$
84,125


$
53,267Supplemental disclosure of cash flow information:Cash paid during the year for interest

$
55


$
12


$
9Cash paid during the year for income taxes


1,379



808



9,530Non-cash financing activities:Treasury stock repurchase obligation

$



$
1,172


$
Reclassification of stock-based compensation balance to
    additional paid-in capital


2,174







     (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, 2006, 2007 and 2008.(2)
    
    Cash and cash equivalents includes
    $2,324 of cash and cash equivalents classified as discontinued
    operations as of March 31, 2006.   F-6




---



##### 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
    Reclassification
    and Other
   F-7




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Foreign
    Currency Translation
    Revenue
    Recognition
    Allowance
    for Doubtful Accounts and Deferred Revenue
     F-8




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Stock-based
    Compensation
          Cash
    and Cash Equivalents
    Restricted
    Cash
    Short-term
    Investments
   F-9




---



##### 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
  98-1, SOP 98-1,
  Other
    Comprehensive Income
    Financial
    Instruments and Concentration of Credit Risk
   F-10




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Income
    Taxes
    Taxes
    Remitted to Government Authorities
  No. 06-3 (EITF 06-3) EITF 06-3
  Financial
    Instruments
    Use of
    Estimates
    (3)
    Recent
    Accounting Pronouncements      (4)
    Discontinued
    Operations   F-11




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                 F-12




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Fiscal Year Ended March 31,2006


2007


2008Net revenue

$
54,666


$
22,339


$
Total revenue


63,495



25,757



Gross margin


12,525



4,077



2,864Income (loss) from discontinued operations


(10,994
)


(132
)


3,481Other income


150



1,213



Income (loss) from discontinued operations before income taxes


(11,144
)


1,081



3,481Income tax expense (benefit)


1,433



(173
)


(378
)Income (loss) from discontinued operations (net of income taxes)


(12,577
)


1,254



3,859Net gain on disposal of discontinued operations (net of income
    taxes)






22,932



7,000     (5)
    Geographic
    Data   F-13




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2006


2007


2008Net revenue:North America

$
137,502


$
155,948


$
166,497United Kingdom and India


7,722



12,751



15,791Total net revenue

$
145,224


$
168,699


$
182,288Long-lived assets (as of March 31):North America





$
3,625


$
5,264United Kingdom and India






123



863Total long-lived assets





$
3,748


$
6,127     (6)
    Restricted
    Cash    7)
    Computers,
    Equipment, Leasehold Improvements and Software, Net    2007


2008Computers and equipment

$
5,079


$
5,459Leasehold improvements


4,894



5,258Software


5,682



7,46815,655



18,185Less accumulated depreciation and amortization


(12,905
)


(13,613
)$
2,750


$
4,572  F-14




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (8)
    Other
    Accrued Liabilities    2007


2008Accrued employee expenses

$
1,543


$
1,371Accrued medical insurance claims


1,032



995Accrued vacation


925



906Other accrued liabilities


3,884



4,260Total

$
7,384


$
7,532   (9)
    Commitments,
    Guarantees and Contingencies  Lease
    Commitments
    Year Ending March 31,2009

$
3,0372010


1,6792011


4932012


63Thereafter


$
5,272       Guarantees
      Legal
    Contingencies
   F-15




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (10)
    Line of
    Credit    (11)
    Accumulated
    Other Comprehensive Loss    2007


2008Foreign currency translation adjustments

$
(2,807
)

$
(2,780
)Unrealized gain on investment


36



32Accumulated other comprehensive loss

$
(2,771
)

$
(2,748
)     (12)
    Income
    (Loss) Per Share   F-16




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fiscal Year Ended March 31,2006(1)


2007


2008Shares used in computing basic income (loss) per share


32,963



31,951



30,200Dilutive effect of stock options, SARs, and restricted
    stock/units


1,719



2,125



1,292Shares used in computing diluted income (loss) per share


34,682



34,076



31,492Antidilutive securities not included in dilutive net income
    (loss) per share calculation


6,993



2,352



2,448     (1)
    
    In accordance with SFAS No. 128, Earnings Per
    Share, the Company reported income from continuing
    operations and therefore used diluted shares in computing all
    other per-share amounts even though those amounts would have
    been antidilutive to their respective basic per-share amounts.  (13)
    Stockholders
    Equity  Stockholder
    Rights Plan Adoption & Termination
    Dividend
    Distribution
    2007

2008Declaration date

November 7, 2006

November 6, 2007Per share dividend

$0.30

$0.35Record date

November 22, 2006

November 20, 2007Total amount (in thousands)

$9,700

$10,748Payment date

December 8, 2006

December 6, 2007     Stock
    Repurchases
     F-17




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##### 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 Price2008


6,296


$
50,937


$
8.092007


3,341


$
37,465


$
11.212006


3,537


$
34,337


$
9.71Inception to 2005


6,769


$
92,684


$
13.69Total


19,943


$
215,423


$
10.80    F-18




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##### Table of Contents



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


Treasury


NetBalance at March 31, 2005


40,168



(5,732
)


34,436Issued:Equity incentive plans


354



1,697Treasury Stock:


Repurchases






(3,537
)Shares withheld under equity incentive plans






(451
)Retirement


(451
)


451Balance at March 31, 2006


40,071



(7,572
)


32,499Issued:Equity incentive plans


615



2,588Treasury Stock:Repurchases






(3,341
)Shares withheld under equity incentive plans






(663
)Retirement


(663
)


663Balance 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
)


27,088   (14)
    Stock
    Plans  Share-Based
    Plans
       F-19




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Restricted
    Stock and Restricted Stock Units (Stock Awards)
         F-20




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##### 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, 2005


3,183


$
7.64Granted


2,789



9.49Vested


(1,343
)


6.98Forfeited


(577
)


9.49Non-vested at March 31, 2006


4,052


$
8.87Granted


2,359



10.41Vested


(1,439
)


8.18Forfeited


(1,344
)


9.11Non-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


$
9.92     Stock
    Options and SARs
       F-21




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2006

2007Expected volatility

40% - 65%

46% - 56%Weighted-average volatility

56%

54%Expected dividend yield

0%

0% - 2.6%Average expected life (in years)

3.42

3.61Risk-free interest rate

3.35% - 4.53%

4.54% - 5.14%Weighted-average grant date fair value of options/SARs granted

$4.87

$4.41     Weighted-Shares


Weighted-


Average


AggregateUnder


Average


Remaining


IntrinsicOption/SARs


Exercise Price


Contractual


ValueOptions/SARs

(000)


Per Share


Term


($000)Outstanding at March 31, 2005


9,730


$
11.21



2.92


$
55,970Granted


2,776



11.21Exercised


(901
)


7.57Forfeited or expired


(1,712
)


14.87Outstanding at March 31, 2006


9,893


$
10.90



2.86


$
14,680Granted


37



10.71Exercised


(2,076
)


8.62Forfeited or expired


(3,036
)


11.76Outstanding 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


$
143Exercisable at March 31, 2008


2,335


$
10.68



1.40


$
46     Employee
    Stock Purchase Plan
   F-22




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##### 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 2006


240


$
6.11 to $14.28


$
7.16Issued fiscal year 2007


308


$
6.11 to $11.44


$
6.39Issued fiscal year 2008


341


$
4.93 to $12.04


$
6.33     2006

2007

2008Expected volatility

42% - 69%

21%-57%

34%-66%Weighted-average volatility

54%

42%

51%Expected dividend yield

0%

0% - 2.6%(1)

2.7%-7.4%(1)Average expected life (in years)

1.13

1.13

1.13Risk-free interest rate

2.9% - 4.6%

4.7% - 5.2%

2.1%-5.0%Weighted average grant date fair value of ESPP granted

$1.69

$1.92

$1.07     (1)
    
    For ESPP enrollment dates since November 7, 2006, the date
    the Board first declared an annual dividend.  Other
       F-23




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (15)
    Income
    Taxes    2006


2007


2008Current:Federal

$
4


$
5,747


$
7,881State


146



206



1,047Foreign


275



137



15$
425


$
6,090


$
8,943Deferred:Federal


9,604



168



(654
)State


1,122



650



584Foreign










$
10,726


$
818


$
(70
)$
11,151


$
6,908


$
8,873     2006


2007


2008Federal income taxes at statutory rate

$
4,600


$
4,944


$
6,688Effect of intercompany revenue and expenses eliminated in
    consolidation and related to discontinued operations


1,878



(189
)


Nondeductible meals and entertainment


333



407



520Nondeductible stock-based compensation


780



304



450State income taxes, net of federal benefit


824



556



1,060Effect of foreign tax credit converted to a net operating loss
    carryover


1,820







Other


1,298



371



(218
)Writedown in investment in subsidiary


(5,096
)






Change in valuation allowance for deferred tax assets


4,714



515



373$
11,151


$
6,908


$
8,873  F-24




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2008Deferred tax assets attributable to:Net operating loss carryforwards

$
8,411


$
8,343Foreign tax credit and carryforwards


427



264Allowances and accruals


1,512



1,574Stock-based compensation


3,914



5,363Goodwill


1,648



1,420Depreciation


642



192Capital loss carryforwards


1,248



1,245Total gross deferred tax assets


17,802



18,401Less valuation allowance


(8,631
)


(9,004
)Net deferred tax assets


9,171



9,397Deferred tax liabilities attributable to:Prepaids


446



419Other


34



32Total deferred tax liabilities


480



451Net deferred income taxes

$
8,691


$
8,946     paid-in-capital
       F-25




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Unrecognized tax benefits -April 1, 2007

$
1.4Gross increases  tax positions in prior periods


Gross decreases  tax positions in prior periods


Gross increases  current period tax positions


0.1Settlements


(0.1
)Lapse of statute of limitations


(0.1
)Unrecognized tax benefits  March 31, 2008

$
1.3     (16)
    Benefit
    Plans  401(k)
    Plan
    (17)
    Foreign
    Exchange Risk Management  Objectives
    and Context
   F-26




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Strategies
    (18)
    Related
    Party Transactions    (19)
    Subsequent
    Event   F-27




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##### Table of Contents



DIAMOND
    MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (20)
    Quarterly
    Financial Information (Unaudited)    Quarter EndedJune 30


Sept 30


Dec 31


Mar 31Year Ended March 31, 2007Net revenue

$
40,896


$
41,163


$
43,736


$
42,904Total revenue (including reimbursable expenses)


46,230



46,610



49,158



48,275Gross margin


12,923



8,653



14,939



13,588Professional development and recruiting


2,243



2,009



2,662



1,924Marketing and sales


709



650



1,182



1,225Management and administrative support


6,607



7,341



6,892



6,659Restructuring charges


(24
)










Income (loss) from operations


3,388



(1,347
)


4,203



3,780Income (loss) from continuing operations before income taxes


4,250



(229
)


5,175



4,927Income from continuing operations after income taxes


2,088



18



2,544



2,565Per share of Common Stock  basic


0.06



0.00



0.08



0.08Per share of Common Stock  diluted


0.06



0.00



0.08



0.08Gain (loss) on disposal of discontinued operations, including
    income taxes






23,036



(147
)


43Income (loss) from discontinued operations, net of income taxes


(677
)


1,549



457



(75
)Discontinued operations, net of income taxes


(677
)


24,585



310



(32
)Per share of Common Stock  basic


(0.02
)


0.75



0.01



Per share of Common Stock  diluted


(0.02
)


0.73



0.01



Net income


1,411



24,603



2,854



2,533Per share of Common Stock  basic

$
0.04


$
0.75


$
0.09


$
0.08Per share of Common Stock  diluted

$
0.04


$
0.73


$
0.08


$
0.08   F-28




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##### 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, 2008Net revenue

$
47,940


$
45,259


$
46,724


$
42,365Total revenue (including reimbursable expenses)


53,931



50,808



52,434



47,883Gross margin


15,197



13,881



15,907



11,531Professional development and recruiting


2,390



2,161



2,732



2,137Marketing and sales


673



731



1,019



2,028Management and administrative support


6,682



6,353



6,804



7,108Income from operations


5,452



4,636



5,352



258Income from continuing operations before income taxes


6,415



5,613



6,051



1,029Income from continuing operations after income taxes


3,953



2,864



2,842



576Per share of common stock  basic


0.13



0.09



0.09



0.02Per share of common stock  diluted


0.12



0.09



0.09



0.02Gain on disposal of discontinued operations, including income
    taxes














7,000Income (loss) from discontinued operations, net of income taxes


273



(689
)


(311
)


4,586Discontinued operations, net of income taxes


273



(689
)


(311
)


11,586Per share of Common Stock  basic


0.01



(0.02
)


(0.01
)


0.40Per share of Common Stock  diluted


0.01



(0.02
)


(0.01
)


0.40Net income


4,226



2,175



2,531



12,162Per share of Common Stock  basic

$
0.14


$
0.07


$
0.08


$
0.42Per share of Common Stock  diluted

$
0.13


$
0.07


$
0.08


$
0.42  F-29




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM         
    S-1




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##### 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, 2008:Deducted from accounts receivable for uncollectible accounts

$
573


$
143


$
21


$
695For the Year Ended March 31, 2007:Deducted from accounts receivable for uncollectible accounts

$
629


$
(19
)

$
37


$
573For the Year Ended March 31, 2006:Deducted from accounts receivable for uncollectible accounts

$
1,079


$
28


$
478
(1)

$
629     (1)
    
    $311 relates to discontinued operations. S-2