<PAGE>
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 September 30,
1998 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _________ to
_________
Commission file number 0-28206
Integrated Systems Consulting Group, Inc.
-----------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2528944
------------ ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
575 East Swedesford Road, Suite 200, Wayne, Pennsylvania 19087
--------------------------------------------------------------
(Address of principal executive offices, including zip code)
(610) 989-7000
--------------
(Registrant's telephone number, including area code)
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
--- ---
There were 8,079,404 shares of the registrant's common stock, par value $.005
per share, outstanding at November 9, 1998.
<PAGE>
Integrated Systems Consulting Group, Inc.
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets as of September 30, 1998
(unaudited) and December 31, 1997
Consolidated Statements of Operations for the three and nine
months ended September 30, 1998 and 1997 (unaudited)
Consolidated Statements of Cash Flows for the nine months
ended September 30, 1998 and 1997 (unaudited)
Notes to Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
Integrated Systems Consulting Group, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
September 30
1998 December 31
(Unaudited) 1997
------------- -----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 4,025 $ 8,842
Short-term investments, at cost, which approximates market -- 601
Accounts receivable:
Trade, net of reserves of $764 and $312 15,512 8,789
Unbilled 212 148
Prepaid expenses 560 340
Other current assets 932 151
-------- --------
Total current assets 21,241 18,871
Property and equipment, net 3,651 3,507
Goodwill, net 4,558 1,413
Other assets 104 107
-------- --------
$ 29,554 $ 23,898
-------- --------
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 3,007 $ 1,107
Accrued compensation payable 976 909
Income taxes payable 346 439
Deferred income taxes 341 86
-------- --------
Total current liabilities 4,670 2,541
-------- --------
Commitments
Stockholders' equity:
Preferred stock, $1.00 par value; 500,000 shares authorized;
none issued -- --
Common stock, $.005 par value, 25,000,000 shares
authorized, 9,227,513 and 9,227,513 shares issued 46 46
Additional paid-in capital 12,843 12,654
Retained earnings 12,566 9,289
-------- --------
25,455 21,989
Treasury stock, at cost, 1,149,909 and 1,273,681 common shares (571) (632)
-------- --------
24,884 21,357
-------- --------
$ 29,554 $ 23,898
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Integrated Systems Consulting Group, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Septmber 30 Septmber 30
- ---------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues $16,224 $11,478 $45,897 $30,576
Operating expenses:
Direct costs 9,765 6,777 27,732 17,893
Selling expenses 1,128 785 3,143 2,018
General and administrative expenses 3,062 2,374 9,161 6,937
Cost and expenses associated with
terminated business combination 486 -- 486 --
------- ------- ------- -------
Total operating expenses 14,441 9,936 40,522 26,848
------- ------- ------- -------
Income from operations 1,783 1,542 5,375 3,728
Interest income, net 60 88 221 317
------- ------- ------- -------
Income before income taxes 1,843 1,630 5,596 4,045
Provision for income taxes 771 685 2,319 1,699
------- ------- ------- -------
Net income $ 1,072 $ 945 $ 3,277 $ 2,346
------- ------- ------- -------
Net income per common share:
Basic $ .13 $ .12 $ .41 $ .30
------- ------- ------- -------
Diluted $ .12 $ .11 $ .37 $ .26
------- ------- ------- -------
Shares used in computing net income per common share:
Basic 8,076 7,924 8,030 7,914
------- ------- ------- -------
Diluted 8,973 8,911 8,976 8,885
------- ------- ------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Integrated Systems Consulting Group, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
<TABLE>
<CAPTION>
Nine Months Ended
September 30
- ----------------------------------------------------------------------------------------------------------------
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,277 $ 2,346
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,374 1,000
Deferred income tax benefit 97 (218)
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable (5,973) (3,893)
Prepaid expenses (220) 135
Other assets (766) 338
Accounts payable and accrued expenses 1,721 (406)
Accrued compensation payable (67) (363)
Income taxes payable (97) 120
-------- --------
Net cash used in operating activities (654) (941)
-------- --------
Cash flows from investing activities:
Purchases of property and equipment (1,161) (1,451)
Purchases of short-term investments -- (9,756)
Maturity and sale of short-term investments 601 10,550
Acquisition of business, net of cash acquired (3,853) (1,894)
-------- --------
Net cash used in investing activities (4,413) (2,551)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock 250 48
-------- --------
Net cash provided by financing activities 250 48
-------- --------
Net change in cash and cash equivalents (4,817) (3,444)
Cash and cash equivalents, beginning 8,842 8,730
-------- --------
Cash and cash equivalents, ending $ 4,025 $ 5,286
-------- --------
Supplemental disclosure of cash flow information:
Income taxes paid $ 2,022 $ 1,795
Acquisition of business
Assets acquired $ 935 $ 480
Liabilities assumed $ 475 $ 80
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Integrated Systems Consulting Group, Inc.
Notes to Consolidated Financial Statements (Unaudited)
1. The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the nine month period ended September 30, 1998 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1998. For further information, refer to the consolidated financial
statements and footnotes thereto for the year ended December 31, 1997
included in the Company's Annual Report on Form 10-K.
2. On September 9, 1998 the Company announced a definitive merger agreement
with First Consulting Group, Inc. (FCGI). Under the terms of the agreement,
which is subject to approval of both FCGI's and the Company's shareholders
and customary closing conditions, each outstanding share of the Company's
common stock will be exchanged at a fixed exchange rate of 0.77 for a newly
issued share of FCGI common stock. Completion of the merger is expected in
the fourth quarter of 1998. The transaction is intended to be accounted for
as a pooling-of-interests and is intended to qualify as a tax-free
reorganization.
3. In February 1998, the Company acquired all of the outstanding shares of
capital stock of WaveFront Consulting, Inc. (WaveFront) for an initial cash
payment of $3,650,000, plus conditional payments based upon future
operating income. WaveFront is an information technology consulting firm
located in Vienna, Virginia, specializing in providing distributed
computing solutions, including client/server and internet development,
principally in the telecommunications industry. WaveFront had 30 employees
and reported revenues of $2.8 million for the year ended December 31, 1997.
This acquisition was accounted for using the purchase method of accounting.
The fair value of the identifiable net assets acquired was $460,000. The
remainder of the purchase price was allocated to goodwill. Pro forma
information as if the acquisition had occurred on January 1, 1997 has not
been provided since such pro forma results do not differ materially from
those reported in the accompanying financial statements.
4. In April 1997, the Company completed the acquisition of the assets and
certain liabilities of Cutting Edge Computer Solutions, Inc. (Cutting Edge)
for cash. Cutting Edge is an information services consulting firm with
primary offices in Malvern, PA, and Alexandria, VA, that specializes in the
design and development of business software using client-server, relational
database, and internet and intranet technologies. Cutting Edge had 26
employees and reported revenues of $2.2 million in calendar year 1996. This
acquisition was accounted for using the purchase method of accounting. The
fair value of the identifiable net assets acquired was $400,000. The
remainder of the purchase price was allocated to goodwill.
<PAGE>
5. Statement of Financial Accounting Standards No. 128, Earnings per Share,
(SFAS 128) was adopted by the Company in December 1997. SFAS 128 changed
the method for computing and presenting earnings per share (EPS) and
requires dual presentation of basic and diluted earnings per share. Prior
period EPS data has been restated to conform with the provisions of SFAS
128.
6. The following statements were adopted by the Company on January 1, 1998.
SFAS 130 - Reporting Comprehensive Income, SFAS 131 - Disclosure about
Segments of an Enterprise and Related Information, SFAS 132 - Employers'
Disclosure about Pensions and Other Post Retirement Benefits, and SOP 97-2
- Software Revenue Recognition. These standards did not have a material
effect on the Company's financial condition and results of operations and
the Company has no components of other comprehensive income to report.
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations:
Revenue. The Company's revenues for the quarter and nine month periods ended
September 30, 1998 increased by $4.7 million, or 41%, and $15.3 million, or 50%,
compared to the corresponding periods in 1997. Approximately $4.5 million and
$14.3 million, or 96% and 93%, of these increases resulted from growth in
professional services revenue and approximately $187,000 and $1.1 million, or 4%
and 7%, from increases primarily in software revenue during the quarter and nine
months. Approximately 66% and 69% of the increase in professional services
revenue is attributed to an increase in hours billed and approximately 34% and
31% is attributed to an increase in aggregate average rates during the quarter
and nine months, respectively. For the quarter and nine month periods ended
September 30, 1998, the percentage of professional services revenue from clients
in the pharmaceutical industry was 70% and 68% compared to 62% and 63% for the
corresponding periods in 1997.
Direct costs. Direct costs for the quarter and nine month periods ended
September 30, 1998 increased by $3.0 million, or 44%, and $9.8 million, or 55%,
compared to the corresponding periods in 1997. These increases are principally
due to the growth in the professional staff to 538 technical personnel at
September 30, 1998 from 430 at September 30, 1997. As a percentage of revenues,
direct costs were 60% for the quarter and nine month periods ended September 30,
1998 compared to 59% for each of the corresponding periods in 1997. The increase
for the quarter and nine month period resulted principally from a decline in the
Company's utilization rates (i.e. the ratio of hours billed to total available
hours) compared with the corresponding periods in 1997.
Selling expenses. Selling expenses for the quarter and nine month periods ended
September 30, 1998 increased by $343,000, or 44%, and $1.1 million, or 56%,
compared to the corresponding periods in 1997. As a percentage of revenues,
selling expenses were 7% for the quarter and nine month periods ended September
30, 1998 compared to 7% for each of the corresponding periods in 1997. The
dollar increase is principally due to the increase in the number of sales and
marketing personnel to 27 at September 30, 1998 from 21 at September 30, 1997.
General and administrative expenses. General and administrative expenses for the
quarter and nine month periods ended September 30, 1998 increased by $688,000,
or 29%, and $2.2 million, or 32%, compared to the corresponding periods in 1997.
These increases are principally due to increases in administrative expenses to
support the Company's growth, facilities and facilities related costs and the
amortization of goodwill. The increases in facilities costs (office rent,
utilities, depreciation of computer equipment, amortization of software and
leasehold improvements, expansion of computer networks, additional software
costs and the costs of related support personnel) is related to the growth in
the number of professional and supervisory personnel performing client
engagements in the Company's offices, rather than at client locations. As a
percentage of revenues, general and administrative expenses were 19% and 20% for
the quarter and nine month periods ended September 30, 1998 compared to 21% and
23% for the quarter and nine month periods of 1997. These decreases were
principally a result of increased revenues, which did not require a
corresponding increase in general and administrative expenses. The Company
believes its general and administrative expenses as a percentage of revenue will
be less for the full year 1998 than for the full year in 1997.
<PAGE>
Cost and expenses associated with terminated business combination. As a result
of the termination of a potential business combination prior to the definitive
merger agreement with First Consulting Group, Inc., the Company incurred a
charge of $486,000 in the third quarter of 1998. This charge included a payment
for a release of claims between ISCG and the other party and due diligence,
accounting, and legal expenses.
Interest income. Interest income for the quarter and nine month periods ended
September 30, 1998 decreased to $60,000 from $88,000 and $221,000 from $317,000
in the corresponding periods in 1997. These decreases are principally due to
lower average cash equivalents and short-term investment balances.
Effective income tax rate. The Company's effective income tax rate in 1998
decreased to 41% from 42% in 1997.
<PAGE>
Liquidity and Capital Resources:
Cash and cash equivalents and short-term investments decreased $5.4 million to
$4.0 million at September 30, 1998 from $9.4 million at December 31, 1997. The
decrease resulted principally from the acquisition of WaveFront, working capital
requirements, and capital expenditures. At September 30, 1998 cash equivalents
were invested in institutional money-market funds. By policy, the Company places
its investments in high credit-quality instruments.
The Company currently anticipates that cash generated from operations and
existing cash balances will be sufficient to satisfy its operating requirements
and ordinary capital spending for the foreseeable future. Should the Company's
business expand more rapidly than expected, the Company's $1.0 million bank line
of credit would be available to fund such operating and capital requirements. In
addition, the Company could consider seeking additional public or private debt
or equity financing to fund growth opportunities, including acquisitions.
Impact of Year 2000:
The Year 2000 or Y2K issue arises because many existing computer programs and
systems, including some of those used by the Company for its own internal
purposes and those used by its clients, suppliers, vendors and others, and
possibly some custom applications designed, built or modified by the Company for
its clients, use only two digits to identify the year in the date field. These
programs were designed and developed without considering the impact of the
upcoming change in the century. If not corrected, computer applications that
utilize this two-digit year format could fail or create erroneous results by or
at the year 2000.
The Company has identified four main areas of its Y2K risk:
1. The Company's internal computer systems could be disrupted or
fail, causing an interruption or decrease in the Company's
ability to operate. The Company is conducting an ongoing
assessment of the Y2K-readiness of its major information
technology (IT) systems and non-IT systems such as building
security, voice mail, telephone and other systems containing
embedded microprocessors.
Except as described in the next paragraph, the Company has
completed an analysis of its internal business systems
including its accounting and human resource applications and
its PC's, servers, networks, and application software. Plans
to modify, update, or replace key business systems are being
implemented. The Company expects that its internal systems
will be substantially Y2K compliant before December 31, 1999.
The Company is currently analyzing the software and hardware
used to develop custom applications for its customers,
including development tools, utilities, operating systems, and
servers. The Company is attempting to obtain written
confirmation from vendors that these products are Y2K
compliant, and is testing and modifying its internally
developed tools. Where necessary,
<PAGE>
the Company is upgrading, modifying, or replacing this
software and hardware. While the Company believes that it will
continue to be able to deliver custom applications to its
customers after the year 2000, a substantial failure of its
internal systems could delay that delivery, and could have an
adverse impact on the Company's business.
The costs incurred to date on these efforts have not been
material. Based on currently available information, the
Company believes that the cost to compete these efforts will
also not be material. However, if additional compliance
efforts of which the Company is not currently aware are
required, or if updating, modifying or replacing the Company's
systems costs more than currently estimated, the Y2K issue
could have a material adverse effect on the Company. If the
Company's efforts to make its internal systems Y2K compliant
are unsuccessful, the resulting failure could result in a
substantial interruption of the Company's operations and
materially affect the Company's business.
2. The computer systems of third parties with whom the Company
regularly deals could be disrupted or fail, causing an
interruption or decrease in the Company's ability to continue
its operations. The Company relies on third party
relationships in the conduct of its business, including
suppliers, vendors, utilities, financial institutions and
others. The Company has created a list of the third parties it
believes are material to its operations and is attempting to
obtain written assurances from them that there will be no
interruption of service as a result of the Y2K issue. Where
such assurances are not given, the Company intends, where
practical, to devise contingency plans to allow the Company to
operate in the event of Y2K-related service interruption. It
is possible that the Company will experience interruptions in
third party services despite vendors' assurances otherwise,
and that the Company will not be able to develop contingency
plans to meet individual or multiple third party failures,
resulting in an operations interruption that could materially
adversely affect the Company's business.
3. The Company could be exposed to liabilities if any of the
custom applications designed, built or modified by the Company
for its clients are disrupted or fail. The Company believes it
is likely that certain custom software applications it
designed, built or modified in the past are non-Y2K compliant.
The Company has not made a determination of which custom
applications may not be Y2K compliant. Further, the Company
has not determined the extent to which it may be legally
responsible for either (i) fixing any non-Y2K compliant
applications or (ii) the consequences of such non-compliance.
The Company has not quantified the impact that the foregoing
risk could have on its business. To better estimate the scope
of this potential problem, the Company is planning to review
representative samples of the custom applications it has
worked on in its larger engagements in the past one to three
years. To the extent this review indicates that any of such
applications are not Y2K compliant, the Company will evaluate
whether such non-compliance may result in liability for the
Company. Even in the absence of legal liability, the Company
<PAGE>
may determine that it is in the Company's best interests to
offer to fix non-compliant applications under a variety of
arrangements including at no charge or at rates below the
Company's normal rates. The failure of custom software
applications delivered by the Company in the past to be Y2K
compliant, and the liabilities or the need to devote
additional resources that could result from such failure,
could have a material adverse effect on the Company's
business.
4. The Company's sources of revenue could decline if clients'
resources are diverted to the Y2K problem or if clients'
operations are disrupted. If clients of the Company divert
significant resources from new application development to
addressing their Y2K problems, the Company's work for those
clients would be reduced and the Company could experience a
material decrease in its business overall. Currently, the
Company is not able to predict the extent to which its clients
will divert their resources to the Y2K problem or to estimate
the impact, if any, this may have on the Company's revenues.
The Company is evaluating whether it should take steps (such
as making inquiries with the relevant persons within its
clients' organizations) to attempt to quantify this risk.
In addition, business interruptions experienced by the
Company's clients due to the Y2K issue could result in reduced
demand for the Company's services (applications development or
systems and networking) or delay in payment of the Company's
invoices. Such interruptions could have a material adverse
effect on the Company's business.
The Company has not yet devised, and may not be able to devise, a contingency
plan that will adequately address all Y2K issues. Because of the uncertainty
surrounding the Y2K issue, unforeseen and unpredictable costs and liabilities
associated with the Y2K issue could materially adversely impact the business,
prospects, financial condition and results of operations of the Company.
Safe Harbor Statement:
Statements made in this filing that are forward-looking, including, among
others, statements describing the Company's plans and expectations regarding the
Y2K issue, involve risks and uncertainties and are subject to change at any
time. Such risks and uncertainties could cause the Company's actual results or
experience to be materially different from the results predicted in such forward
looking statements. These risks and uncertainties involve, among other things,
client demand, dependence on the pharmaceutical industry, the attraction and
retention of technical employees, concentration and mix of revenues, and the
impact of the Y2K issue. These factors, as and when applicable, are disclosed
from time to time in the Company's filings with the Securities and Exchange
Commission.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings: None
Item 2. Changes in Securities: None
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders: None
Item 5. Other Information: None
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
3.1 Articles of Incorporation*
3.2 By-laws, as amended
11.1 Computation of Net Income Per Share
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
Form 8-K, dated September 9, 1998 and filed on September 15,
1998, The Company announced an agreement to merge with and be
acquired by First Consulting Group, Inc. in a transaction to be
accounted for as a "pooling of interests" and intended to qualify
as a tax-free reorganization. This was reported in Item 5 of
Form 8-K.
Form 8-K, dated September 22, 1998 and filed on September 23,
1998, relating to information in connection with the agreement to
merger with First Consulting Group, Inc. This was reported in
Item 5 and 7 of Form 8-K.
- ------------
* Filed as an exhibit to the Company's registration statement on Form S-1
(File No. 333-00790) and incorporated herein by reference.
<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.
Integrated Systems Consulting Group, Inc.
<TABLE>
<S> <C>
Date: November 12, 1998 By: /s/DAVID S. LIPSON
------------------
David S. Lipson
Chairman, Chief Executive Officer,
President and Treasurer
Date: November 12, 1998 By /s/DAVID D. GATHMAN
-------------------
David D. Gathman
Executive Vice President, Finance and Administration,
Chief Financial Officer and Secretary (Principal
Financial and Accounting Officer)
</TABLE>
<PAGE>
EXHIBIT INDEX
Number Description
3.1 Articles of Incorporation*
3.2 By-laws, as amended
11.1 Computation of Net Income Per Share
27.1 Financial Data Schedule
- ------------
* Filed as an exhibit to the Company's registration statement on Form S-1
(File No. 333-00790) and incorporated herein by reference.
<PAGE>
INTEGRATED SYSTEMS CONSULTING GROUP, INC.
-----------------------------------------
Index to By-Laws
ARTICLE I APPLICABLE STATUTE. OFFICES
1.01 Applicable Statute
1.02 Registered Office
1.03 Other Offices
ARTICLE II MEETINGS OF SHAREHOLDERS
2.01 Place of Meetings
2.02 Time of Meetings
2.03 Notice
2.04 Determination of Shareholders of Record
2.05 Quorum
2.06 Voting
2.07 Conference Telephone
2.08 Unanimous Consent of Shareholders in Lieu of Meeting
2.09 Voting Lists
2.10 Judges of Election
ARTICLE III DIRECTORS
3.01 Number of Directors
3.02 Election of Directors. Vacancies
3.03 Powers
3.04 Meetings
3.05 Quorum
3.06 Telephone Conferences
3.07 Action by Unanimous consent
3.08 Committees
3.09 Compensation
ARTICLE IV OFFICERS AND AGENTS
4.01 Titles
4.02 Election of Officers
4.03 Salaries
4.04 Terms of Office
4.05 Chairman of the Board
4.06 President
4.07 Vice Presidents
4.08 Secretary
4.09 Assistant Secretaries
4.10 Treasurer
4.11 Assistant Treasurers
<PAGE>
ARTICLE V SHARES OF CAPITAL STOCK
5.01 Right to Certificate
5.02 Form of Certificate
5.03 Registered Shareholders
5.04 Transfers of Stock. Restrictions on Transfer
5.05 Lost and Destroyed Certificates
5.06 Record Date for Dividends and Distributions
ARTICLE VI DIVIDENDS. FINANCIAL REPORTS
6.01 Declaration of Dividends
6.02 Financial Reports
ARTICLE VII LIMITATION OF LIABILITY, INDEMNIFICATION AND INSURANCE
7.01 Limitation of Liability
7.02 Indemnification
7.03 Insurance
ARTICLE VIII GENERAL PROVISIONS
8.01 Corporate Seal
8.02 Fiscal Year
8.03 Signatures
8.04 Waiver of Notice
ARTICLE IX AMENDMENTS
9.01 Amendments
<PAGE>
INTEGRATED SYSTEMS CONSULTING GROUP, INC.
BYLAWS
ARTICLE I
APPLICABLE STATUTE. OFFICES
Section 1.01 Applicable Statute. The Bylaws are governed by the
Pennsylvania Business Corporation Law of 1988, as from time to time amended (the
"Statute").
Section 1.02 Registered Office. The location and post office address of
the registered office of the Corporation in Pennsylvania shall be as specified
in the Articles of Incorporation.
Section 1.03 Other Offices. The Corporation shall also have offices at
such other places within or without the Commonwealth of Pennsylvania as the
President or the Board of Directors may from time to time determine.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.01 Place of Meetings. All meetings of the shareholders shall
be held at such place, within or without the Commonwealth, as may be designated
from time to time by the Board of Directors and stated in the notice of meeting
or in a duly executed waiver of notice thereof.
Section 2.02 Time of Meetings.
(a) Regular Meetings.--At least one meeting of the
shareholders shall be held in each calendar year for the election of directors
at such time as the Board of Directors shall fix, at which the shareholders
shall elect a Board of Directors and transact such other business as may
properly be brought before the meeting. If the regular meeting is not called and
held within six months after the designated time, any shareholder may call the
meeting at any time thereafter. Except as otherwise provided in these Bylaws or
by the Statute, any business may be transacted at a regular meeting, whether or
not the notice contained a reference thereto.
(b) Special Meetings.--Special meetings of the shareholders
may be called at any time upon written notice to the Secretary of the
Corporation:
(1) by a majority of the Board of Directors;
(2) [deleted]; or
3
<PAGE>
(3) by the President.
It shall be the duty of the Secretary to fix the time of the
meeting. If the meeting is called pursuant to this Section 2.02(b), it shall be
held not more than 60 days after the receipt of the request for a special
meeting. If the Secretary neglects or refuses to fix the time of the meeting,
the person or persons calling the meeting may do so.
(c) Adjournments.--Adjournments of any regular or special
meeting may be taken but any meeting at which directors are to be elected shall
be adjourned only from day to day, or for such longer periods not exceeding 15
days each as the shareholders present and entitled to vote shall direct, until
the directors have been elected.
Section 2.03 Notice.
(a) Notice in General.--Whenever written notice is required to
be given under the provisions of these Bylaws, it may be given to the person
either personally or by sending a copy thereof by first class or express mail,
postage prepaid, or by telegram (with messenger service specified), telex or TWX
(with answerback received) or courier service, charges prepaid, or by
telecopier, to his address (or to his telex, TWX, telecopier or telephone
number) appearing on the books of the Corporation or, in the case of directors,
supplied by him to the Corporation for the purpose of notice. If the notice is
sent by mail, telegraph or courier service, it shall be deemed to have been
given to the person entitled thereto when deposited in the United states mail or
with a telegraph office or courier service for delivery to that person or, in
the case of telex or TWX, when dispatched. A notice of meeting shall specify the
place, day and hour of the meeting and any other information required by the
Statute.
(b) Notice of Meeting of Shareholders.--Written notice of
every meeting of shareholders shall be given by the Secretary to each
shareholder of record entitled to vote at the meeting at least:
(1) ten days prior to the day named for a meeting
called to consider a fundamental change under Chapter 19 of the
Statute; or
(2) five days prior to the day named for the meeting
in any other case.
If the authorized person neglects or refuses to give notice of
a meeting, the person or persons calling the meeting may do so. In the case of a
special meeting of shareholders, the notice shall specify the general nature of
the business to be transacted.
(c) Notice of Adjourned Shareholder Meeting.--When a meeting
of shareholders is adjourned, it shall not be necessary to give any notice of
the adjourned meeting or of the business to be transacted at the adjourned
meeting, other than by announcement at the meeting at which the adjournment is
taken, unless the Board of Directors fixes a new record date for the adjourned
meeting.
4
<PAGE>
Section 2.04 Determination of Shareholders of Record.
(a) Fixing Record Date.--The Board of Directors may fix a time
prior to the date of any meeting of shareholders as a record date for the
determination of the shareholders entitled to notice of, or to vote at, the
meeting, which time, except in the case of an adjourned meeting, shall be not
more than 90 days prior to the date of the meeting of shareholders. Only
shareholders of record on the date fixed shall be so entitled notwithstanding
any transfer of shares on the books of the Corporation after any record date
fixed as provided herein. The Board of Directors may similarly fix a record date
for the determination of shareholders of record for any other purpose. When a
determination of shareholders of record has been made as provided herein for
purposes of a meeting, the determination shall apply to any adjournment thereof
unless the Board fixes a new record date for the adjourned meeting.
(b) Determination When No Record Date Fixed.--If a record date
is not fixed:
(1) The record date for determining shareholders
entitled to notice of or to vote at a meeting of shareholders shall be
at the close of business on the day next preceding the day on which
notice is given or, if notice is waived, at the close of business on
the day immediately preceding the day which the meeting is held.
(2) The record date for determining shareholders
entitled to express consent or dissent to corporate action in writing
without a meeting, when prior action by the Board of Directors is not
necessary, shall be the close of business on the day on which the first
written consent or dissent is filed with the Secretary of the
Corporation.
(3) The record date for determining shareholders for
any other purpose shall be at the close of business on the day on which
the Board of Directors adopts the resolution relating thereto.
(c) Certification by Nominee.--The Board of Directors may
adopt a procedure whereby a shareholder of the Corporation may certify in
writing to the Corporation that all or a portion of the shares registered in the
name of the shareholder are held for the account of a specified person or
persons. The resolution of the Board shall set forth the provisions then
required by the Statute.
Section 2.05 Quorum.
(a) General Rule.--A meeting of shareholders duly called shall
not be organized for the transaction of business unless a quorum is present.
(1) The presence of shareholders entitled to cast at
least a majority of the votes that all shareholders are entitled to
cast on a particular matter to be acted upon at the meeting shall
constitute a quorum for the purposes of consideration and action on the
matter.
5
<PAGE>
(2) The shareholders present at a duly organized
meeting can continue to do business until adjournment notwithstanding
the withdrawal of enough shareholders to leave less than a quorum.
(3) If a meeting cannot be organized because a quorum
has not attended, those present in person or by proxy may, except as
otherwise provided in the Statute, adjourn the meeting to such time and
place as they may determine.
(b) Exceptions.
(1) Those shareholders entitled to vote who attend a
meeting called for the election of directors that has been previously
adjourned for lack of a quorum, although less than a quorum as fixed in
these Bylaws, shall nevertheless constitute a quorum for the purpose of
electing directors.
(2) Those shareholders entitled to vote who attend a
meeting of shareholders that has been previously adjourned for one or
more periods aggregating at least 15 days because of an absence of a
quorum, although less than a quorum as fixed in these Bylaws, shall
nevertheless constitute a quorum for the purpose of acting upon any
matter set forth in the notice of the meeting if the notice states that
those shareholders who attend the adjourned meeting shall nevertheless
constitute a quorum for the purpose of acting upon the matter.
Section 2.06 Voting. Except as otherwise provided in the Statute or the
articles of incorporation of the Corporation or these Bylaws, whenever any
corporate action is to be taken by vote of the shareholders of the Corporation,
it shall be authorized by a majority of the votes cast at a duly organized
meeting of shareholders by the holders of shares entitled to vote thereon.
Section 2.07 Conference Telephone. One or more shareholders may
participate in a meeting of the shareholders by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a meeting pursuant to this
Section shall constitute presence in person at the meeting.
Section 2.08 Unanimous Consent of Shareholders in Lieu of Meeting. Any
action required or permitted to be taken at a meeting of the shareholders or of
a class of shareholders of the Corporation may be taken without a meeting if,
prior or subsequent to the action, a consent or consents thereto by all of the
shareholders who would be entitled to vote at a meeting for such purpose shall
be filed with the Secretary of the Corporation.
Section 2.09 Voting Lists. The officer or agent having charge of the
transfer books for the shares of the Corporation shall make a complete list of
the shareholders entitled to vote at the meeting, arranged in alphabetical
order, with the address of and the number of shares held by each shareholder.
The list shall be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting for the purposes thereof.
6
<PAGE>
Section 2.10 Judges of Election.
(a) Appointment.--In advance of any meeting of shareholders of
the Corporation, the Board of Directors may appoint judges of election, who need
not be shareholders, to act at the meeting or any adjournment thereof. If judges
of election are not so appointed, the presiding officer of the meeting may,
whether or not requested by any shareholder, appoint judges of election at the
meeting. The number of judges shall be one or three. A person who is a candidate
for office to be filled at the meeting shall not act as a judge.
(b) Vacancies.--In case any person appointed as a judge fails
to appear or fails or refuses to act, the vacancy may be filled by appointment
made by the Board of Directors in advance of the convening of the meeting or at
the meeting by the presiding officer thereof.
(c) Duties.--The judges of election shall determine the number
of shares outstanding and the voting power of each, the shares represented at
the meeting, the existence of a quorum, the authenticity, validity and effect of
proxies, receive votes or ballots, hear and determine all challenges and
questions in any way arising in connection with the right to vote, count and
tabulate all votes, determine the result and do such acts as may be proper to
conduct the election or vote with fairness to all shareholders. The judges of
election shall perform their duties impartially, in good faith, to the best of
their ability and as expeditiously as is practical. If there are three judges of
election, the decision, act or certificate of a majority shall be effective in
all respects as the decision, act or certificate of all.
(d) Report.--On request of the presiding officer of the
meeting the judges shall make a report in writing of any challenge or question
or matter determined by them, and execute a certificate of any fact found by
them. Any report or certificate made by them shall be prima facie evidence of
the facts stated therein.
ARTICLE III
DIRECTORS
Section 3.01 Number of Directors. The Board of Directors shall consist
of eleven (11) directors.
Section 3.02 Election of Directors. Vacancies.
(a) Except as otherwise provided in these Bylaws, directors of
the Corporation shall be elected by the shareholders. The candidates receiving
the highest number of votes, up to the number of directors to be elected, shall
be elected.
(b) Vacancies. Vacancies in the Board of Directors, including
vacancies resulting from an increase in the number of directors, may be filled
by a majority vote of the remaining members of the board though less than a
quorum, or by a sole remaining director, and each person so selected shall be a
director to serve until a successor has been selected and qualified or until his
or her earlier death, resignation or removal.
7
<PAGE>
Section 3.03 Powers. The business of the Corporation shall be managed
under the direction of its Board of Directors which may exercise all such powers
of the Corporation and do all such lawful acts and things as are not by the
Statute, by the Articles of Incorporation or by these Bylaws directed or
required to be exercised and done by the shareholders.
Section 3.04 Meetings. The Board of Directors may hold meetings, both
regular and special, either within or without the Commonwealth of Pennsylvania.
The first meeting of each newly elected Board of Directors
shall be held immediately following the annual meeting of shareholders at which
such directors are elected and no notice of such meeting shall be necessary or
the meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the Board of Directors, or
as shall be specified in a written waiver signed by all of the directors. At
such regular annual meeting, the Board of Directors shall organize itself and
elect the officers of the Corporation for the ensuing year and may transact any
other business.
Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be scheduled by
the directors.
Special meetings of the Board of Directors may be called by
the President on 24 hours notice to each director, given by the method permitted
by Section 2.03 of these Bylaws. Special meetings shall be called by the
President or the Secretary in like manner and on like notice upon the written
request of two directors.
Section 3.05 Quorum. A majority of the directors in office of the
Corporation shall be necessary to constitute a quorum for the transaction of
business and the acts of a majority of the directors present and voting at the
meeting at which a quorum is present shall be the acts of the Board of
Directors.
Section 3.06 Telephone Conferences. One or more directors may
participate in a meeting of the Board of Directors (or a committee thereof) by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section shall constitute presence in
person at the meeting.
Section 3.07 Action by Unanimous Consent. Any action which may be taken
at a meeting of the directors or the members of any committee may be taken
without a meeting if a consent or consents in writing setting forth the action
so taken shall be signed by all the directors or the members of the committee,
as the case may be, and shall be filed with the Secretary of the Corporation.
Section 3.08 Committees. The Board of Directors may, by resolution
adopted by a majority of the directors in office, establish one or more
committees to consist of one or more directors of the Corporation. Any
committee, to the extent provided in the resolution, shall have and may exercise
all of the powers and authority of the Board of Directors except that a
committee shall not have any power or authority as to the following:
8
<PAGE>
(a) The submission to shareholders of any action requiring
approval of shareholders under the Statute.
(b) The creation or filling of vacancies in the Board of
Directors.
(c) The adoption, amendment or repeal of these Bylaws.
(d) The amendment or repeal of any resolution of the Board
that by its terms is amendable or repealable only by the Board.
(e) Action on matters committed by these Bylaws or resolution
of the Board of Directors to another committee of the Board.
Section 3.09 Compensation. The Board of Directors of the Corporation or
a committee of the Board shall have the authority to fix the compensation of
directors for their services as directors and a director may be a salaried
officer of the Corporation.
ARTICLE IV
OFFICERS AND AGENTS
Section 4.01 Titles. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a President, a Secretary and a Treasurer who
shall have such powers and duties as set forth herein and as from time to time
determined by the Board of Directors. The Board may also elect, at its
discretion, a Chairman of the Board, one or more vice presidents, assistant
secretaries and assistant treasurers, and such other officers, agents, trustees
and fiduciaries as it shall deem appropriate who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors. The Chairman of the
Board, President and Secretary shall be natural persons of full age; the
Treasurer may be a corporation but, if a natural person, shall be of full age.
Any number of these offices may be held by the same person.
Section 4.02 Election of Officers. The Board of Directors, immediately
after each annual meeting of shareholders, shall elect a President, a Secretary
and a Treasurer, who need not be members of the Board of Directors.
Section 4.03 Salaries. The salaries of all officers of the Corporation
shall be fixed by the Board of Directors except to the extent that the Board has
appointed committees of the Board to fix salaries.
Section 4.04 Terms of Office. The officers of the Corporation shall
hold office for a term of one year and until their successors are chosen and
qualify or until their earlier death, resignation or removal. Any officer
elected or appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the Board of Directors. Any vacancy occurring
in any office of the Corporation shall be filled by the Board of Directors.
9
<PAGE>
Section 4.05 Chairman of the Board. The Chairman of the Board, if any,
shall preside at the meetings of the shareholders and the Board of Directors and
shall have such power and perform such duties as may be assigned to him by the
Board of Directors.
Section 4.06 President. Unless provided otherwise by the Board of
Directors, the President shall be the chief executive officer of the
Corporation; shall preside at all meetings of the shareholders and Board of
Directors (if there is no Chairman); shall exercise both executive and
operational supervision over the business of the Corporation; and shall see that
all orders and resolutions of the Board of Directors are carried into effect.
Section 4.07 Vice Presidents. The Vice President, or if there shall be
more than one, the Vice Presidents in the order determined by the Board of
Directors, shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President, and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
Section 4.08 Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the shareholders and record all the
proceedings of the meetings of the Corporation and of the Board of Directors in
a book to be kept for that purpose. He shall give, or cause to be given, notice
of all meetings of the shareholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or the President, under whose supervision he shall be. He shall
keep in safe custody the seal of the Corporation, if any, and, when authorized
by the Board of Directors, affix the same to any instrument requiring it and,
when so affixed, it shall be attested by his signature.
Section 4.09 Assistant Secretaries. The Assistant Secretary, or if
there be more than one, the Assistant Secretaries in the order determined by the
Board of Directors, shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
Section 4.10 Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the President and the Board of Directors, at its regular meetings, or
when the Board of Directors so requires, an account of all his transactions as
Treasurer and of the financial condition of the Corporation.
Section 4.11 Assistant Treasurers. The Assistant Treasurer, or if there
shall be more than one, the Assistant Treasurers in the order determined by the
Board of Directors, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer and shall perform
such other duties and have other powers as the Board of Directors may from time
to time prescribe.
10
<PAGE>
ARTICLE V
SHARES OF CAPITAL STOCK
Section 5.01 Right to Certificate. Unless and until these Bylaws are
amended to provide for uncertificated shares, every shareholder of record shall
be entitled to a share certificate representing the shares owned by him.
Section 5.02 Form of Certificate. Share certificates shall be in such
form as the Board of Directors may from time to time determine. Every share
certificate shall show (1) that the Corporation is incorporated under the laws
of the Commonwealth of Pennsylvania; (2) the name of the person to whom issued;
and (3) the number and class of shares and the designation of the series, if
any, that the certificate represents. Every share certificate shall be executed,
by facsimile or otherwise, by or on behalf of the Corporation in such manner as
the Board of Directors may determine. The signature of any corporate officer may
be a facsimile, engraved or printed. If any officer whose signature appears on
such certificate shall cease to be such officer of the Corporation for any
reason, such certificate may nevertheless be adopted by the Corporation and be
issued and delivered with the same effect as though the person had not ceased to
be such officer of the Corporation.
Section 5.03 Registered Shareholders. Each shareholder, at the time of
the issuance of the share certificate to him, shall notify the Secretary of the
Corporation in writing of the address to which such shareholder wishes notices
relating to the business of the Corporation to be mailed to him. He shall
thereafter notify the Secretary in writing of any changes in such address. The
Corporation shall be entitled to treat the holder of record of any share or
shares as the holder in fact thereof and shall not be bound to recognize any
equitable or other claim to or interest in such share on the part of any other
person, and shall not be liable for any registration or transfer of shares which
are registered or to be registered in the name of a fiduciary or the nominee of
a fiduciary unless made with actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration or transfer, or
with knowledge of such facts that its participating therein amounts to bad
faith.
Section 5.04 Transfers of Stock. Restrictions on Transfer. Shares of
the capital stock of the Corporation shall be transferable on the books of the
Corporation only upon delivery of the certificates representing the same duly
endorsed by the person in whose name such shares are registered or by his duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer. In all cases of transfer by an
attorney, the original letter of attorney, duly approved or an official copy
thereof, duly certified, shall be deposited and remain with the Corporation. In
case of transfer by executors, administrators, guardians or other legal
representative, duly authenticated evidence of their authority shall be
produced, and may be required to be deposited and remain with the Corporation in
its discretion.
If shares of capital stock are subject to restrictions on
their transfer, notice of the existence of a restriction shall be conspicuously
noted on the face or back of the certificates evidencing such shares.
11
<PAGE>
Section 5.05 Lost and Destroyed Certificates. New certificates for
shares of stock may be issued to replace certificates lost, stolen, destroyed or
mutilated upon such terms and conditions, including proof of loss or destruction
and the giving of a satisfactory bond of indemnity, as the Board of Directors or
the transfer agent of the Corporation from time to time may determine.
Section 5.06 Record Date for Dividends and Distributions. Unless
otherwise required by applicable regulation, the Board of Directors may fix a
time, not more than fifty days prior to the date fixed for the payment of any
dividend or distribution, or the date for the allotment of rights, or the date
when any change, conversion or exchange of shares will be made or will go into
effect, as a record date for the determination of the shareholders entitled to
receive payment of any such dividends or distribution, or to receive any such
allotment of rights, or to exercise the rights in respect to any such change,
conversion or exchange of shares. In any such case only such shareholders as
shall be shareholders of record on the day fixed shall be entitled to receive
payment of such dividend or distribution, or to receive such allotment of
rights, or to exercise any such rights in respect to any such change, conversion
or exchange of shares, as the case may be, notwithstanding any transfer of any
shares on the books of the Corporation after the date so fixed.
ARTICLE VI
DIVIDENDS. FINANCIAL REPORTS
Section 6.01 Declaration of Dividends. Dividends upon the shares of the
Corporation, subject to the provisions of the Articles of Incorporation, if any,
may be declared by the Board of Directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property, or in shares of the
Corporation, subject to any restrictions contained in the Articles of
Incorporation
Section 6.02 Financial Reports. Unless and to the extent the
Corporation has obtained contrary written agreements from shareholders, the
Corporation shall furnish its shareholders with the annual financial statements
in the form and within the time period required by the Statute.
ARTICLE VII
LIMITATION OF LIABILITY, INDEMNIFICATION AND INSURANCE
Section 7.01 Limitation of Liability. No director of the Corporation
shall be personally liable as such for monetary damages for any action taken, or
any failure to take action, unless the director has breached or failed to
perform the duties of his office under Section 1721 of the Statute, or any
successor provision, and the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness. This provision shall not apply
12
<PAGE>
to the responsibility or liability of a director pursuant to any criminal
statute or the liability of a director for payment of taxes pursuant to local,
state or federal law.
Section 7.02 Indemnification. The Corporation shall indemnify any
officer or director (or employee or agent designated by majority vote of the
Board of Directors to the extent provided in such vote) who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including action by or in the right of the Corporation ) by reason of the fact
that he is or was a director or officer (or employee or agent) of the
Corporation or is or was serving at the request of the Corporation as a director
or officer (or employee or agent) of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding. Officers and directors of subsidiaries of the Corporation shall be
deemed to be persons acting as officers or directors of another corporation at
the request of the Corporation. Indemnification pursuant to this Section shall
not be made in any case where the act or failure to act giving rise to the claim
for indemnification is determined by a court to have constituted willful
misconduct or recklessness. Expenses incurred by an officer, director, employee
or agent purportedly indemnified by this Section in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section shall continue as to a person who has ceased
to be a director, officer, employee or agent of the Corporation and shall inure
to the benefit of the heirs, executors and administrators of such person.
Section 7.03 Insurance. The Board or Directors may authorize, by a vote
of a majority of the whole Board of Directors, the Corporation to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of this Article. Furthermore, the Corporation may create a fund of
any nature, which may, but need not, be under the control of a trustee, or
otherwise secure or insure in any manner its indemnification obligations
referred to in Section 7.02 hereof.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 Corporate Seal. The Board of Directors may prescribe the
form of a suitable corporate seal, which shall contain the full name of the
Corporation and the year and state of incorporation.
13
<PAGE>
Section 8.02 Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 8.03 Signatures. All checks, agreements and other instruments
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 8.04 Waiver of Notice.Whenever any notice is required to be
given under the provision of the Statute, the Articles or these Bylaws, a waiver
thereof in writing signed by the person or persons entitled to said notice,
whether before or after the time stated herein, shall be deemed equivalent to
the giving of such notice. Attendance of a person, either in person or by proxy,
at any meeting shall constitute a waiver of notice of such meeting, except where
a person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
was not lawfully called or convened.
ARTICLE IX
AMENDMENTS
Section 9.01 Amendments. These Bylaws may be amended or repealed, or
new Bylaws may be adopted, either by the shareholders of the Corporation at any
duly organized meeting thereof or, with respect to those matters that are not by
the Statute committed expressly to the shareholders and regardless of whether
the shareholders have previously adopted or approved the Bylaws being amended or
repealed, by the Board of Directors of the Corporation.
14
<PAGE>
Integrated Systems Consulting Group, Inc.
(in thousands, except per share data)
Exhibit 11.1 - Computation of Net Income Per Share
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
---------------------- ----------------------
1998 1997 1998 1997
------ ------ ------ -------
<S> <C> <C> <C> <C>
Shares used in computing basic net income
per common share:
Shares outstanding, beginning of period 8,045 7,920 7,954 7,857
Weighted impact of common shares issued
during the period 31 4 76 57
------ ------ ------ ------
Total shares used in computing basic
net income per common share 8,076 7,924 8,030 7,914
------ ------ ------ ------
Net income $1,072 $ 945 $3,277 $2,346
------ ------ ------ ------
Basic net income per common share $ .13 $ .12 $ .41 $ .30
------ ------ ------ ------
Shares used in computing diluted net income
per common share:
Shares outstanding, beginning of period 8,045 7,920 7,954 7,857
Net incremental shares resulting from assumed
exercise of stock options and warrants using
the treasury stock method 897 987 946 971
Weighted impact of common shares issued
during the period 31 4 76 57
------ ------ ------ ------
Total shares used in computing diluted
net income per common share 8,973 8,911 8,976 8,885
------ ------ ------ ------
Net income $1,072 $ 945 $3,277 $2,346
------ ------ ------ ------
Diluted net income per common share $ .12 $ .11 $ .37 $ .26
------ ------ ------ ------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<NAME> INTEGRATED SYSTEMS
<CIK> 0001007020
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 4,025
<SECURITIES> 0
<RECEIVABLES> 15,724
<ALLOWANCES> 764
<INVENTORY> 0
<CURRENT-ASSETS> 21,241
<PP&E> 7,426
<DEPRECIATION> 3,775
<TOTAL-ASSETS> 29,554
<CURRENT-LIABILITIES> 4,670
<BONDS> 0
0
0
<COMMON> 46
<OTHER-SE> 24,838
<TOTAL-LIABILITY-AND-EQUITY> 29,554
<SALES> 45,897
<TOTAL-REVENUES> 45,897
<CGS> 0
<TOTAL-COSTS> 40,522
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,596
<INCOME-TAX> 2,319
<INCOME-CONTINUING> 3,277
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,277
<EPS-PRIMARY> .41
<EPS-DILUTED> .37
</TABLE>
