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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
September 10, 1998
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Date of Report (Date of earliest event reported)
FIRST CONSULTING GROUP, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 000-23651 95-3539020
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification No.)
111 W. OCEAN BLVD.
FOURTH FLOOR
LONG BEACH, CA 90802
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(Address of principal executive offices)
(562) 624-5200
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
A. FIRST CONSULTING GROUP, INC. ANNOUNCES MERGER WITH INTEGRATED SYSTEMS
CONSULTING GROUP, INC.
On September 9, 1998, First Consulting Group, Inc. announced an
agreement to merge with Integrated Systems Consulting Group, Inc. in a
transaction to be accounted for as a "pooling of interests" and intended to
qualify as a tax-free reorganization. A press release relating to the
proposed transaction is attached hereto as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
EX.-99.1 Press Release dated September 9, 1998:
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SIGNATURE
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 hereunto duly authorized.
First Consulting Group, Inc.
Date: September 10, 1998
/c/ Luther J. Naussbaum
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EXHIBIT 99.1
For more information contact:
Luther Nussbaum, Executive Vice President, First Consulting Group
(562) 624-5220
Jim Reep, Chairman, President and CEO, First Consulting Group
(562) 624-5205
David Lipson, Chairman and CEO, Integrated Systems Consulting Group
(610) 989-7000
David Gathman, Executive Vice President, Integrated Systems Consulting Group
(610) 989-7000
FIRST CONSULTING GROUP AND INTEGRATED SYSTEMS
CONSULTING GROUP TO MERGE
COMBINED ENTITIES TO PROVIDE BROAD OPERATIONS IMPROVEMENT AND INFORMATION
MANAGEMENT SERVICES TO THE CONVERGING HEALTHCARE SERVICES AND PHARMACEUTICAL
INDUSTRIES
LONG BEACH, Calif. (September 9, 1998) - First Consulting Group, Inc. (NASDAQ:
FCGI), a leading provider of operations improvement and information management
services for the healthcare industry, and Integrated Systems Consulting Group,
Inc. (NASDAQ: ISCG), a leading provider of application development, document
management and network integration services predominately for the pharmaceutical
industry, today announced a definitive merger agreement.
This transaction, which is valued at $123.8 million based on Tuesday's
closing price of FCG's common stock and the approximately 9 million fully
diluted shares outstanding of ISCG common stock, will significantly enhance
FCG's breadth of coverage in the increasingly interrelated healthcare services
and pharmaceutical industries. It also strengthens the Company's application
development capability in
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client-server architecture, web-based applications, object-oriented and
relational databases, and cross-platform systems integration.
The combined companies had a pro forma 1998 first half annualized revenue
run rate of $180.1 million and more than 1,300 employees as of June 30, 1998.
Under the terms of the agreement, which is subject to approval of both
FCG and ISCG shareholders and customary closing conditions, each outstanding
share of ISCG 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 parties expect the transaction,
which was unanimously approved by the boards of directors of both companies,
to be accretive to earnings per share, excluding one-time costs relating to
the merger.
"The next wave of healthcare will see increasing interaction among genetic
engineering, drug development, disease management and care delivery," said James
A. Reep, FCG's chairman and chief executive officer. "This merger gives us
strong positions in each of the major worldwide healthcare services segments:
healthcare delivery, physician organizations, health plans, government based
healthcare, pharmaceuticals and biotechnology. ISCG gives us a major leap
forward to become a leader in the global 21st century integrated health and
human services industry," Reep added.
David S. Lipson, chairman and chief executive officer of ISCG explained,
"We think that the combination of FCG's broad industry expertise, information
technology strategic planning skills and program management methods with
ISCG's deep information technology skills will allow us to significantly
broaden the range and scope of our services. We are very
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pleased to have found a partner with a similar corporate culture and an
unquestioned commitment to client satisfaction and results, employee development
and practice research."
Upon completion of the transaction, James A. Reep will continue as
chairman, president and chief executive officer of the combined firm and David
S. Lipson will become vice chairman and managing director of the pharmaceutical
and life sciences practice.
The transaction is intended to be accounted for as a pooling-of-interests
and is intended to qualify as a tax-free reorganization. Shareholders
representing approximately 56.6% and 27% of the common stock outstanding of
ISCG and First Consulting Group respectively have signed irrevocable proxies
to vote in favor of the merger. FCG was advised by Hambrecht & Quist LLC and
ISCG was advised by Robert W. Baird & Co. Incorporated each of which has
rendered an opinion that the exchange ratio is fair to its respective client
shareholders.
The merged organizations will provide consulting, systems development and
integration, and management services to the healthcare services and
pharmaceutical industries through 27 offices serving North America and Europe.
The firm's services are designed to increase its clients' operations
effectiveness resulting in reduced costs, improved customer service, enhanced
quality of patient care and the more rapid introduction of new pharmaceutical
compounds.
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FIRST CONSULTING GROUP INC.
INTEGRATED SYSTEMS CONSULTING GROUP, INC.
FACT SHEET
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FIRST CONSULTING GROUP, INC.
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STOCK SYMBOL: FCGI
TOP MANAGEMENT: James A. Reep, chairman & chief executive
officer
Luther J. Nussbaum, executive vice
president
Steven Heck, executive vice president
Thomas A. Reep, chief financial officer
NUMBER OF OFFICES: 23
NUMBER OF EMPLOYEES: 707
HEADQUARTERS: Long Beach, California
WEIGHTED AVERAGE DILUTED SHARES
OUTSTANDING: 15.372 million
1998 FIRST HALF HIGHLIGHTS: Net revenue: $60,386
Net income: $3,704
Earnings per share: $0.24
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INTEGRATED SYSTEMS CONSULTING GROUP
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STOCK SYMBOL: ISCG
TOP MANAGEMENT: David S. Lipson, chairman, president &
chief executive officer
Jay M. Rose, chief operating officer
David D. Gathman, chief financial officer
NUMBER OF OFFICES: 4
NUMBER OF EMPLOYEES: 600
HEADQUARTERS: Wayne, Pennsylvania
WEIGHTED AVERAGE DILUTED SHARES
OUTSTANDING: 9.045 million
1998 FIRST HALF HIGHLIGHTS: Revenues: $29,673
Net income: $2,206
Earnings per share: $0.25
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Except for the historical information contained herein, this news
release contains forward-looking statements, including, without limitation,
statements containing the words, "believes," "anticipates," "expects" and
words of similar import. Such forward-looking statements involve known and
unknown risks, uncertainties an other factors which may cause the actual
results, performance or achievements of FCG or ISCG, or industry results, to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors
include, among others: the importance of attracting and retaining personnel;
variability of operating results; potential inability to maintain business
relationships; significant investment of resources in marketing; competition
in the healthcare consulting and information technology industry; management
of the combined company's growth; consolidation and cost pressures in the
healthcare and life sciences; regulatory and technological change in the
healthcare and information technology industries; expansion into
international consulting; integration of acquired businesses and personnel;
dependence on key employees; limited protection of proprietary information;
control by existing stockholders and management and other factors referenced
in FCG's Prospectus, dated February 13, 1998, and each company's 10Q for the
quarter ended June 30, 1998.
