UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-25372
COTELLIGENT GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3173918
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 California Street, Suite 2050
San Francisco, California 94111
(Address of principal executive offices) (Zip Code)
(415) 439-6400
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
At August 13, 1998 there were 14,128,457 shares of common stock
outstanding.
<PAGE>
COTELLIGENT GROUP, INC.
INDEX
Part I - Financial Information
<TABLE>
<CAPTION>
Item 1. Financial Statements PAGE
<S> <C>
Cotelligent Group, Inc.
Consolidated Balance Sheets at June 30, 1998 and March 31, 1998 3
Consolidated Statements of Operations for the Three Months Ended
June 30, 1998 and 1997 4
Consolidated Statements of Cash Flows for the Three Months Ended
June 30, 1998 and 1997 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II - Other Information
Signatures 15
</TABLE>
2
<PAGE>
COTELLIGENT GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
June 30, March 31,
1998 1998
---------------- ----------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents.................................. $ 43,666 $ 40,528
Accounts receivable, including unbilled accounts
of $7,920 and $10,120 and net of allowance for doubtful
accounts of accounts of $1,725 and $2,123, respectively... 49,875 48,982
Notes receivable from officers............................. 190 230
Prepaid expenses and other................................. 2,215 2,292
---------------- ----------------
Total current assets..................................... 95,946 92,032
Property and equipment, net................................... 8,367 7,568
Goodwill, net of accumulated amortization of $580 and $359,
respectively........................................... 17,917 18,106
Other assets.................................................. 711 853
================ ================
Total assets............................................. $ 122,941 $ 118,559
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt............................................ $ 168 $ 192
Accounts payable........................................... 7,751 4,344
Accrued compensation and related payroll liabilities....... 13,327 15,268
Income taxes payable....................................... 3,946 3,171
Deferred tax liabilities................................... 578 508
Other accrued liabilities.................................. 1,987 4,525
---------------- ----------------
Total current liabilities................................ 27,757 28,003
Long-term debt................................................ 238 199
Other long-term liabilities................................... 18 18
---------------- ----------------
Total liabilities........................................ 28,013 28,220
---------------- ----------------
Stockholders' equity:
Preferred Stock, $0.01 par value; 500,000 shares
authorized, no shares issued or outstanding.............. - -
Common Stock, $0.01 par value; 100,000,000 shares authorized,
14,097,359 and 14,057,884 shares issued and outstanding,
respectively............................................. 141 141
Additional paid-in capital................................... 81,409 80,335
Retained earnings............................................ 13,378 9,863
---------------- ----------------
Total stockholders' equity............................... 94,928 90,339
---------------- ----------------
Total liabilities and stockholders'equity................ $ 122,941 $ 118,559
================ ================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE>
COTELLIGENT GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
1998 1997
--------------- --------------
<S> <C> <C>
Revenues...................................................... $ 73,049 $ 54,304
Cost of services.............................................. 52,183 38,187
--------------- --------------
Gross profit ............................................ 20,866 16,117
Selling, general and administrative expenses.................. 15,430 12,962
--------------- --------------
Operating income......................................... 5,436 3,155
Other income (expense):
Interest expense ........................................ (22) (118)
Interest income.......................................... 332 11
Other ................................................... (2) (30)
--------------- --------------
Total other income (expense).......................... 308 (137)
--------------- --------------
Income before provision for income taxes...................... 5,744 3,018
Provision for income taxes....... ............................ 2,229 1,208
--------------- --------------
Net income.................................................... $ 3,515 $ 1,810
=============== ==============
Earnings per share - basic and diluted........................ $ 0.25 $ 0.16
=============== ==============
Weighted average shares outstanding -
Basic............................................... 14,084,703 11,322,569
=============== ==============
Diluted............................................. 14,308,749 11,367,474
=============== ==============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE>
COTELLIGENT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------
June 30, June 30,
1998 1997
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 3,515 $ 1,810
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ......................... 1,483 620
Provision for doubtful accounts....................... 154 125
Loss on sale of assets................................ 16 -
Deferred income taxes, net ............................ - 54
Changes in current assets and liabilities:
Accounts receivable ............................. (1,048) (5,672)
Prepaid expenses and other....................... 117 (352)
Accounts payable and accrued expenses ........... (1,072) 4,403
Income taxes payable ............................ 850 1,143
Other liabilities ............................... - 224
Changes in other assets ............................... - 100
---------------- ----------------
Net cash provided by operating activities 4,015 2,455
---------------- ----------------
Cash flows from investing activities:
Proceeds on sale of assets................................ 147 -
Purchases of property and equipment....................... (2,112) (886)
---------------- ----------------
Net cash used in investing activities ............ (1,965) (886)
---------------- ----------------
Cash flows from financing activities:
Net borrowings (repayments) on short term debt............ 15 (4,528)
Net proceeds from issuance of Common Stock................ 1,073 1,734
---------------- ----------------
Net cash provided by (used in) financing activities... 1,088 (2,794)
---------------- ----------------
Net increase (decrease) in cash and cash equivalents....... 3,138 (1,225)
Cash and cash equivalents at beginning of period........... 40,528 2,904
---------------- ----------------
Cash and cash equivalents at end of period................. $ 43,666 $ 1,679
================ ================
Supplemental disclosures of cash flow information:
Interest paid.............................................. $ 22 $ 104
Income taxes paid.......................................... 1,454 133
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE>
COTELLIGENT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
Note 1 - Business Organization and Basis of Presentation
Cotelligent Group, Inc. ("Cotelligent" or the "Company") was formed in
February 1993 to acquire, own and operate software professional services
businesses specializing in providing information technology ("IT") consultants
on a contract basis and consulting and outsourcing services to businesses with
complex IT operations.
During the years ended March 31, 1998 ("fiscal 1998") and March 31,
1997 ("fiscal 1997") the Company issued 4,976,826 shares of Common Stock to
acquire ten businesses accounted for under the pooling-of-interests method (the
"Pooled Companies"). The consolidated financial statements have been restated in
accordance with generally accepted accounting principles to present the
financial data as if Cotelligent and these companies had always been members of
the same operating group.
In addition, during fiscal years 1998 and 1997, the Company acquired
six businesses accounted for under the purchase method (the "Purchased
Companies") for aggregate consideration of $19,390 (362,998 shares of Common
Stock issued at fair market value of $11,926 and $7,464 of cash). The
consolidated financial statements include the operating results of these
companies subsequent to their respective acquisition dates.
All of the businesses acquired since formation have operations
substantially the same as the Company.
Note 2 - Summary of Significant Accounting Policies
Interim Financial Statement Presentation
The accompanying interim financial statements do not include all
disclosures included in the financial statements as included on Cotelligent's
Annual Report on Form 10-K for the year ended March 31, 1998 ("Form 10-K"), and
therefore should be read in conjunction with the financial statements included
on Form 10-K.
In the opinion of management, the interim financial statements filed as
part of this Quarterly Report on Form 10-Q reflect all adjustments, consisting
only of normal recurring accruals, necessary for a fair presentation of the
financial position and the results of operations and of cash flows for the
interim periods presented.
Comprehensive Income
Effective April 1, 1998, the Company adopted Statement of Financial
Accounting Standards Board (SFAS) No. 130, Reporting Comprehensive Income.
Except for net income, the Company does not have any transactions or other
economic events that qualify as comprehensive income as defined under SFAS No.
130.
Recent Accounting Pronouncements
In June 1997, the FASB issued SFAS No. 131, Disclosures About Segments
of an Enterprise and Related Information. SFAS No. 131 introduces a new model
for segment reporting, called the "management approach". The management approach
is based on the manner in which management organizes segments within a company
for making operating decisions and assessing performance. The management
approach replaces the notion of industry and geographic segments. This statement
is effective for financial statements for periods beginning after December 15,
1997. The Company operates within one business segment and therefore SFAS No.
131 does not affect the Company's current reporting.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and for Hedging Activities. SFAS No. 133
requires derivatives to be recognized in balance sheets at fair-value. This
statement is effective for financial statements for periods beginning after June
15, 1999. The Company does not believe that adoption of SFAS No. 133 will
materially affect the Company's financial statements.
6
<PAGE>
COTELLIGENT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
Note 3 - Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Common Stock Additional Total
---------------------------- Paid-In Retained Stockholders'
Shares Amount Capital Earnings Equity
------------ ---------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1998... 14,057,884 $ 141 $ 80,335 $ 9,863 $ 90,339
Issuance of Common Stock.... 26,819 - 1,074 - 1,074
Net income.................. - - - 3,515 3,515
============ ========== ============ ============= ===============
Balance at June 30, 1998 14,084,703 $ 141 $ 81,409 $ 13,378 $ 94,928
============ ========== ============ ============= ===============
</TABLE>
Note 4 - Pro Forma Results
The following "Pro Forma" results reflect adjustments related to
businesses accounted for under the pooling-of-interests method including:
compensation differentials to former owners and employees, termination of
contributions to retirement plans, elimination of non-recurring transaction
costs related to the acquisition of businesses accounted for under the
pooling-of-interests method and income taxes as if the entities were combined
and subject to the effective federal and state statutory rates throughout the
periods discussed. Since there were no acquisitions during the quarter ended
June 30, 1998, Pro Forma has not been presented for this period.
<TABLE>
<CAPTION>
Three Months
Ended
June 30,1997
-------------------
<S> <C>
Revenues.................................................................. $ 54,304
Cost of services.......................................................... 38,179
----------------
Gross profit......................................................... 16,125
Selling, general and administrative expenses.............................. 12,527
----------------
Operating income..................................................... 3,598
Other income (expense):
Interest expense..................................................... (118)
Interest income...................................................... 11
Other................................................................ (30)
----------------
Total other income(expense)....................................... (137)
----------------
Income before provision for income taxes.................................. 3,461
Provision for income taxes................................................ 1,419
----------------
Net income ............................................................... $ 2,042
================
Earnings per share - basic and diluted.................................... $ 0.18
================
Weighted average shares outstanding -
Basic................................................................ 11,322,569
================
Diluted.............................................................. 11,367,474
================
</TABLE>
7
<PAGE>
COTELLIGENT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
Note 5 - Pro Forma For Purchased Companies Results
In accordance with disclosure requirements under the Accounting Principles
Board Statement No. 16, the following "Pro Forma For Purchased Companies"
consolidated statements of operations for the three months ended June 30, 1998
and 1997 give effect to the acquisitions of the Pooled Companies and Purchased
Companies as if these acquisitions had occurred on the first day of the periods
presented. These Pro Forma For Purchased Companies consolidated statements
reflect adjustments for the acquisitions of the Pooled Companies including:
compensation differentials to former owners and employees, termination of
contributions to retirement plans, elimination of non-recurring transaction
costs related to the acquisition of businesses accounted for under the
pooling-of-interests method and income taxes as if the entities were combined
and subject to the effective federal and state statutory rates throughout the
periods discussed. Additionally, these Pro Forma For Purchased Companies
consolidated financial statements reflect adjustments for interest expense on
cash consideration and amortization of goodwill resulting from the Purchased
Companies for all periods prior to their acquisition.
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
1998 1997
---------------- ----------------
<S> <C> <C>
Revenues....................................... $ 73,049 $ 60,696
Cost of services............................... 52,183 42,930
---------------- ----------------
Gross profit............................ 20,866 17,766
Selling, general and administrative expenses... 15,430 13,598
---------------- ----------------
Operating income .............................. 5,436 4,168
Other income (expense)......................... 308 (240)
---------------- ----------------
Income before provision for income taxes....... 5,744 3,928
Provision for income taxes..................... 2,229 1,610
---------------- ----------------
Net income..................................... $ 3,515 $ 2,318
================ ================
Earnings per share basic and diluted........... $ 0.25 $ 0.20
================ ================
Weighted average shares outstanding -
Basic..................................... 14,084,703 11,322,569
================ ================
Diluted................................... 14,308,749 11,367,474
================ ================
</TABLE>
8
<PAGE>
COTELLIGENT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
Note 6 - Earnings Per Share
Earnings per share were as follows:
<TABLE>
<CAPTION>
For the Year Ended June 30, 1998
---------------------------------------------------
Per Share
Income Shares Amount
----------------- -------------- -------------
<S> <C> <C> <C>
Basic earnings per share-
Net income available to common stockholders $ 3,515 14,084,703 $ 0.25
Options issued to directors and employees.......... 224,046
--------------
Diluted earnings per share-
Income available to common stockholders
plus assumed conversions....................... $ 3,515 14,308,749 $ 0.25
==============
For the Year Ended June 30, 1997
---------------------------------------------------
Per Share
Income Shares Amount
----------------- -------------- ------------
Basic earnings per share-
Net income available to common stockholders $ 1,810 11,322,569 $ 0.16
Options issued to directors and employees.......... 44,905
--------------
Diluted earnings per share-
Income available to common stockholders
plus assumed conversions..................... $ 1,810 11,367,474 $ 0.16
==============
</TABLE>
9
<PAGE>
ITEM 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
Cotelligent Group, Inc. ("Cotelligent" or the "Company") was formed in
February 1993 to acquire, own and operate software professional services
businesses specializing in providing information technology ("IT") consultants
on a contract basis and consulting and outsourcing services to businesses with
complex IT operations.
During the year ended March 31, 1997 ("fiscal 1997") and March 31, 1998
("fiscal 1998") the Company acquired ten businesses accounted for under the
pooling-of-interests method. The consolidated financial statements have been
restated in accordance with generally accepted accounting principles to present
the financial data as if Cotelligent and these companies had always been members
of the same operating group.
In addition, during fiscal 1997 and 1998, the Company acquired six
businesses accounted for under the purchase method. The consolidated financial
statements include the operating results of these companies subsequent to their
respective acquisition dates.
Comparisons to Pro Forma results for the same period of the prior year as
presented on Note 4 of the accompanying financial statements include adjustments
related to businesses accounted for under the pooling-of-interests method
including: compensation differentials to former owners and employees,
termination of contributions to retirement plans, elimination of non-recurring
transaction costs related to the acquisition of businesses accounted for under
the pooling-of-interests method and income taxes as if the entities were
combined and subject to the effective federal and state statutory rates
throughout the periods discussed.
The Company derives substantially all of its revenues from professional
service activities. The majority of these activities are provided under "time
and expense" billing arrangements, and revenues are recorded as work is
performed. Revenues are directly related to the total number of hours billed to
clients and the associated hourly billing rates. Hourly billing rates are
established for each service professional and such rates are a function of the
professional's skills, experience and the type of work performed. The Company's
principal costs are professional compensation directly related to the
performance of services and related expenses. Gross profits (revenues after
professional compensation and related expenses) are primarily a function of
hours billed to clients per professional employee or consultant, hourly billing
rates of those employees or consultants and employee or consultant compensation
relative to those billing rates. Gross profits can be adversely impacted if
service activities cannot be billed, if the Company is not effective in managing
its service activities, if fixed-fee engagements (which historically have not
constituted a significant portion of total revenues) are not properly priced or
if there are high levels of unutilized time (work activities not chargeable to
clients or unrelated to client services) of full-time service professional
employees. Operating income (gross profit less selling, general and
administrative expenses) can be adversely impacted by increased administrative
staff compensation or expenses related to growing and expanding the Company's
business, which may be incurred before revenues or economies of scale are
generated from such investment.
As part of its strategic plan, the Company intends to acquire other software
professional services businesses. Should the Company be successful in acquiring
such businesses, the period in which such acquisition is consummated could be
adversely impacted by costs associated with such acquisition. In addition,
financial periods subsequent to the completion of an acquisition could be
adversely impacted by costs and activities associated with the assimilation and
integration of the acquired company.
As a professional services organization, the Company responds to service
demands from its clients. Accordingly, the Company has limited control over the
timing and circumstances under which its services are provided. Therefore, the
Company can experience volatility in its operating results from quarter to
quarter. The operating results for any quarter are not necessarily indicative of
the results for any future period.
10
<PAGE>
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" issue and has
concluded that the Year 2000 problem will not pose any significant operational
issues for the Company. The Company does not expect the expenditures related to
the Year 2000 issue to have a material effect on its financial position or
results of operations in any year.
Except for historical information contained herein, the information
contained in this report includes forward-looking statements that involve
certain risks and uncertainties that could cause actual results to vary
materially from such statements. All forward-looking statements included in this
report are based upon information available to Cotelligent as of the date
thereof, and Cotelligent assumes no obligation to update any such forward
looking statement. Please refer to the discussion of risk factors and other
factors included in Cotelligent's Annual Report on Form 10-K for the fiscal year
ended March 31, 1998 and other filings made with the Securities and Exchange
Commission.
11
<PAGE>
CONSOLIDATED RESULTS OF OPERATIONS
Three Months Ended June 30, 1998 Compared to
Three Months Ended June 30, 1997
Revenues
In the first quarter of fiscal 1999 revenues increased $18.7 million,
or 34.5%, to $73.0 million from $54.3 million in the first quarter of fiscal
1998. The increase was primarily attributable to a 22.2% increase in total
client service hours to 1,091,000 from 893,000 in the first quarter of 1998, and
a 9.6% increase in the average hourly billing rate to $65.74 from $59.97 in the
comparable quarter of 1998. The increase in hourly billing rate reflects
increased demand for employees and consultants with higher skill levels and a
more favorable economic climate. The increase in revenues was also attributable
to the inclusion of revenues of the companies acquired under the purchase method
of accounting during fiscal 1998 ("FY 1998 Purchases").
Gross Profit
Gross profit increased $4.7 million, or 29.5%, to $20.9 million in the
first quarter of 1999 from $16.1 million in the first quarter of 1998, primarily
due to an increase in hours of service provided to clients and the inclusion of
the FY 1998 Purchases. Gross margin as a percentage of revenues decreased to
28.6% in the first quarter of 1999 from 29.7% in the first quarter of 1998
primarily due to the inclusion of the FY 1998 Purchases with lower gross margins
and a change in the mix of services.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $2.5 million, or
19.0%, to $15.4 million in the first quarter of 1999 from $13.0 million in the
first quarter of 1998. The increase was primarily due to increased compensation
to existing staff, staff added to support growth, additional locations, as well
as incremental costs of Cotelligent's corporate activities. Selling, general and
administrative expenses decreased as a percentage of revenues to 21.1% in the
first quarter of 1999 from 23.9% in the first quarter of 1998. There can be no
assurance that such efficiencies can be sustained in the future as the Company
undertakes to integrate the acquired entities, expand geographically and acquire
other companies.
Selling, general and administrative expenses were $15.4 million, or
21.1% of revenues, compared to Pro Forma selling, general and administrative
expenses of $12.5 million, or 23.1% of Pro Forma revenues, for the same period
in the prior year. The decrease in selling, general and administrative as
percentage of revenues is due to greater operating efficiencies and a larger
revenue base.
Interest Income/Expense, Net
Interest income was $0.3 million in the first quarter of 1999 compared
to interest expense, net of interest income of $0.1 million in the first quarter
of 1998. Net interest income was earned in the first quarter of 1999 due to
earnings from investment of the proceeds from a secondary offering completed in
March of 1998.
Provision for Income Taxes
Provision for income taxes was $2.2 million in the first quarter of
1999, which reflects a provision on pre-tax income of 38.8%. The provision for
income taxes was $1.2 million in the first quarter of 1998 at a rate of 40.0%.
The decrease in the effective tax rate was primarily due to the investment in
tax free instruments from the proceeds of the secondary offering in tax
preferred instruments.
12
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its growth principally through cash flows from
operations, periodic borrowing under its credit facilities and the use of the
net proceeds from its public offerings. On September 12, 1997, the Company
entered into a three year $40 million revolving line of credit facility (the
"Credit Line"). Interest rate options include base borrowings at the lead
lender's prime rate and term loans at LIBOR plus an applicable margin. The
Company believes the existing sources of liquidity and funds generated from
operations will provide adequate cash to fund its anticipated cash needs for
operations and acquisitions at least through the next year.
The Company's primary sources of liquidity are cash balances, the
Credit Line and the collection of its accounts receivable. Accounts receivable
have increased as the Company's operations have grown. Total receivables were 62
and 72 days of revenue at June 30, 1998 and March 31, 1998, respectively. The
Company could draw upon available cash or existing credit facilities to finance
its operations should the Company be unable to bill and collect for its services
on a timely basis.
Cash provided from operating activities was $4.0 million for the first
quarter of 1999. At June 30, 1998 the Company had no balance outstanding under
the Credit Line.
At June 30, 1998, the Company had $43.7 million in cash and cash
equivalents as compared to $40.5 million at June 30, 1998. The increase in cash
and cash equivalents is related to collections in accounts receivable and an
increase in revenues generated by the operations. At June 30, 1998, the Company
had long-term capital lease obligations and other notes outstanding in the
amount of $0.4 million. The current installments of the long-term capital lease
obligations and other notes were $0.2 million at June 30, 1998.
On May 29, 1998 the Company registered 4.0 million shares of its common
stock to be used in connection with merger and acquisition activities.
13
<PAGE>
PART II - OTHER INFORMATION
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(A.) Exhibits.
(B) Reports on Form 8-K.
None
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COTELLIGENT GROUP, INC
Date: August 14, 1998 By: /s/ Herbert D. Montgomery
-----------------------------
Herbert D. Montgomery
Senior Vice President,
Chief Financial Officer and
Treasurer
15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COTELLIGENT GROUP, INC. CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED
JUNE 30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<CIK> 0001004963
<NAME> COTELLIGENT GROUP, INC.
<MULTIPLIER> 1000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-1-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 44666
<SECURITIES> 0
<RECEIVABLES> 51600
<ALLOWANCES> 1725
<INVENTORY> 0
<CURRENT-ASSETS> 95946
<PP&E> 14017
<DEPRECIATION> 5650
<TOTAL-ASSETS> 122941
<CURRENT-LIABILITIES> 27757
<BONDS> 0
0
0
<COMMON> 141
<OTHER-SE> 94787
<TOTAL-LIABILITY-AND-EQUITY> 122941
<SALES> 73049
<TOTAL-REVENUES> 73049
<CGS> 52183
<TOTAL-COSTS> 15430
<OTHER-EXPENSES> 2
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (310)
<INCOME-PRETAX> 5744
<INCOME-TAX> 2229
<INCOME-CONTINUING> 3515
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3515
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
