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FILED PURSUANT TO RULE 424(b)(3)
Registration No. 333-51948
PROSPECTUS
FIRST CONSULTING GROUP, INC.
222,222 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
In connection with the acquisition of all of the assets of the web
services business of Doghouse Productions LLC, on May 23, 2000 we issued
222,222 shares of our common stock to Doghouse Productions. Subsequently,
Doghouse Productions distributed those shares to its members. This prospectus
may be used by the members of Doghouse Productions, or their respective
pledgees, donees, transferees or other successors in interest, to resell the
common stock received in connection with the Doghouse Productions acquisition
transaction.
Our common stock is traded on the Nasdaq National Market under the
symbol "FCGI". On December 13, 2000, the last reported sale price for our
common stock on the Nasdaq National Market was $4.25 per share.
The selling stockholders or their respective pledgees, donees,
transferees or other successors in interest may sell all or a portion of the
shares from time to time on one or more stock exchanges, in the over the
counter marker or otherwise, at prices and at terms then prevailing or at
prices related to the current market price, or in negotiated transactions.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 4.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is December 22, 2000.
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TABLE OF CONTENTS
PAGE
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PROSPECTUS SUMMARY 4
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 4
RISK FACTORS 4
INCORPORATION BY REFERENCE 13
USE OF PROCEEDS 13
PRICE RANGE OF COMMON STOCK AND DIVIDENDS 14
DESCRIPTION OF CAPITAL STOCK 15
SELLING STOCKHOLDERS 18
PLAN OF DISTRIBUTION 19
LEGAL MATTERS 20
EXPERTS 21
HOW TO OBTAIN MORE INFORMATION 21
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PROSPECTUS SUMMARY
FIRST CONSULTING GROUP, INC.
We provide information-based consulting, integration and management
services for the healthcare, pharmaceutical, and life sciences industries in
North America and Europe. Our services are designed to increase our clients'
operations effectiveness through reduced cost, improved customer service,
enhanced quality of patient care and more rapid introduction of new
pharmaceutical compounds.
ACQUISITION OF DOGHOUSE PRODUCTIONS
On May 23, 2000, we completed the acquisition of all of the assets
of the web development and design services business of Doghouse Productions
LLC, a web development and design agency. The purchase price was
approximately Four Million Dollars ($4,000,000). The closing payment was made
by delivery of Two Million Dollars ($2,000,000) in cash and 222,222 shares of
our common stock to Doghouse Productions.
Under a Registration Rights Agreement dated as of May 23, 2000,
between Doghouse Productions and us, we have agreed to register the resale of
shares of our common stock issued at the closing of the Doghouse Productions
acquisition transaction. All of the shares of our common stock that are
registered on this registration statement were issued in connection with the
Doghouse Productions acquisition.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical information, this prospectus contains statements
relating to our future results. These statements include certain projections
and business trends which are "forward looking" within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are made only as of the date of this prospectus. We do not
undertake to update or revise the forward-looking statements, whether as a
result of new information, future events or otherwise. In addition, these
statements are subject to a number of risks, uncertainties and other factors
that could cause results to differ materially, as discussed in the risk
factors contained herein and in the documents we incorporate by reference.
These statements appear in the sections of our Securities and Exchange
Commission documents filed with the Securities and Exchange Commission
captioned "Business," "Risk Factors," and "Management's Discussion and
Analysis."
RISK FACTORS
OUR BUSINESS FACES SIGNIFICANT RISKS. THE RISKS DESCRIBED BELOW MAY
NOT BE THE ONLY RISKS WE FACE. ADDITIONAL RISKS THAT WE DO NOT YET KNOW OF OR
THAT WE CURRENTLY THINK ARE IMMATERIAL MAY ALSO IMPAIR OUR BUSINESS
OPERATIONS. IF ANY OF THE EVENTS OR CIRCUMSTANCES DESCRIBED IN THE FOLLOWING
RISKS ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF
OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED AND THE TRADING PRICE OF
OUR COMMON STOCK COULD DECLINE. YOU SHOULD CAREFULLY CONSIDER AND EVALUATE
ALL OF THE INFORMATION IN THIS PROSPECTUS, INCLUDING THE RISK FACTORS LISTED
BELOW.
THERE ARE VARIOUS FACTORS WHICH MAY CAUSE OUR NET REVENUES, OPERATING RESULTS
AND CASH FLOWS TO FLUCTUATE.
Our net revenue, operating results and cash flows may fluctuate significantly
because of a number of factors, many of which are outside our control. These
factors may include:
- Losing one or more significant clients
- Fluctuations in market demand for our services, consultant hiring and
utilization
- Delays in securing and completing client engagements
- Timing and collection of payments and new client engagements
- Increased competition and pricing pressures
- Losing key personnel and other employees
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- Changes in our, and our competitor's, business strategy, pricing and
billing policies
- Timing of certain general and administrative expenses
- Consummating an acquisition and the costs of integrating acquired
operations
- Variability in the number of billable days in each quarter
- Availability of foreign net operating losses and other credits against
our earnings
- International currency fluctuations
A substantial portion of our expenses, particularly personnel and related
costs, depreciation, office rent and occupancy costs, are relatively fixed.
One or more of the foregoing factors may cause our operating expenses to be
relatively high during any given period. In addition, we bill certain of our
services on a fixed-price basis, and any assignment delays or expenditures of
time beyond that projected for the assignment could result in write-offs of
client billings. Significant write-offs could materially adversely effect our
business, financial condition and results of operations. Based on the
preceding factors, we may experience a shortfall in revenue or earnings or
otherwise fail to meet public market expectations, which could materially
adversely effect our business, financial condition and the market price of
our common stock.
In particular, for the fiscal quarters ended December 31, 1999, March 31,
2000, June 30, 2000 and September 30, 2000, we reported net losses (including
non-recurring items) of $354,000, $1,707,000, $3,864,000 and $6,178,000,
respectively. We cannot assure you that we will return to profitability in
the future, which could materially adversely affect our business, financial
condition and the market price of our common stock.
THE LENGTH OF TIME REQUIRED TO ENGAGE A CLIENT AND TO COMPLETE AN ASSIGNMENT
MAY BE UNPREDICTABLE AND COULD NEGATIVELY IMPACT OUR NET REVENUES AND
OPERATING RESULTS.
The timing of client engagements and service fulfillment is not predictable
with any degree of accuracy. Prior engagement cycles are not necessarily an
indication of the timing of future client engagements or revenues.
Prior to client engagements, we typically spend a substantial amount of time
and resources
- identifying strategic or business issues facing the client,
- defining engagement objectives,
- gathering information,
- preparing proposals and
- negotiating contracts.
We may be required to hire new consultants before securing a client
engagement. Clients may defer committing to new assignments for any length of
time and for any reason. Such deferrals could require us to maintain a
significant number of under-utilized consultants during any given period. In
addition, failing to procure an engagement after spending such time and
resources could materially adversely effect our business, financial condition
and results of operations.
In particular, the outsourcing business which we conduct through our
subsidiary, FCG Management Services, has very long lead times, requiring us
to spend a substantial amount of time and resources in attempting to secure
an outsourcing engagement. We cannot predict whether the investment of time
and resources will result in a new outsourcing engagement or, if the
engagement is secured, that the engagement will be on terms favorable to us.
The length of time required to complete an assignment often depends on factors
outside our control, including:
- Existing information systems at the client site;
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- Changes or the anticipation of changes in the regulatory environment
affecting healthcare and pharmaceutical organizations;
- Changes in the management or ownership of the client;
- Budgetary cycles and constraints;
- Availability of personnel and other resources; and
- Consolidation in the healthcare and pharmaceutical industries.
IF WE ARE UNABLE TO GENERATE ADDITIONAL REVENUE FROM OUR EXISTING CLIENTS,
OUR BUSINESS MAY BE NEGATIVELY AFFECTED.
Our success depends on obtaining additional engagements from our existing
clients. A substantial portion of our revenue is derived from services
provided to our existing clients. The loss of a small number of clients may
result in a material decline in revenues and cause us to fail to meet public
market expectations of our financial performance and operating results. If we
materially fail to generate additional revenues from our existing clients it
may materially adversely effect our business, financial condition and results
of operations.
IF WE FAIL TO MEET CLIENT EXPECTATIONS IN THE PERFORMANCE OF OUR SERVICES,
OUR BUSINESS COULD SUFFER.
Our services often involve complex information systems and software, which
are critical to the clients' operations. Our failure to meet client
expectations in the performance of our services, including the quality, cost
and timeliness of our services, may damage our reputation in the healthcare
and pharmaceutical industries and adversely affect our ability to attract and
retain clients. If a client is not satisfied with our services, we will
generally spend additional human and other resources at our own expense to
ensure client satisfaction. Such expenditures will typically result in a
lower margin on such engagements and could materially adversely effect our
business, financial condition and results of operations.
In the course of providing our services, we will often recommend the use of
other software and hardware products. These products may not perform as
expected or contain defects. If this occurs, our reputation could be damaged
and we could be subject to liability. We attempt contractually to limit our
exposure to potential liability claims. Such limitations may not be
effective. A successful liability claim brought against us may adversely
affect our reputation in the healthcare and pharmaceutical industries and
could have a material adverse effect on our business, financial condition and
results of operations. Although we maintain liability insurance, such
insurance may not provide adequate coverage for successful claims against us.
OUR OUTSOURCING ACTIVITIES ENTAIL SIGNIFICANT ENGAGEMENTS IN WHICH WE WILL
COMMIT TO SPECIFIC SERVICE LEVEL AGREEMENTS THAT DEFINE OUR RESPONSIBILITIES
OVER THE CONTRACTED PERIOD.
Any failure on the part of us to meet contracted service levels may result in
financial penalty or default of the contract, and may have a material adverse
effect on us. Our outsourcing engagements are typically performed on a fixed
price basis where we hire part or all of a client's information technology
personnel. We cannot assure you that we will be able to retain these
individuals, and effectively hire additional personnel as needed to meet the
obligations of our contract. Our ability to achieve profitability in our
outsourcing activities is dependent upon the accuracy of our forecasting and
our ability to deliver the contracted scope of services within the
constraints of the fixed price contract. Any failure by us in these areas may
have a material adverse effect on the profitability of our outsourcing
business.
In addition, our outsourcing agreements require that we invest significant
amounts of time and resources in order to win the engagement, transition the
client's information technology department to our management and complete the
initial transformation of our client's information technology functioning to
meet agreed-upon service levels. Often, we recover this investment through
payments over the life of the outsourcing agreement. If we are unable to
achieve agreed-upon service levels or otherwise breach the terms of our
outsourcing agreements, the clients may have rights to terminate the
agreements and we may be unable to recover our investments. In the case of
our outsourcing agreement with the New York & Presbyterian Hospital, this
investment amounts to almost $10 million, which we will recover over the
seven-year term of that agreement. Any failure by us to recover these
investments may have a material adverse effect on our financial condition,
results of operations and price of our common stock.
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WE MAY BE UNABLE TO ATTRACT AND RETAIN A SUFFICIENT NUMBER OF QUALIFIED
EMPLOYEES.
Our business is labor-intensive and requires highly skilled employees. Most
of our consultants possess extensive expertise in healthcare, insurance,
pharmaceutical, information technology and consulting fields. To serve a
growing client base, we must continue to recruit and retain qualified
personnel with expertise in each of these areas. Competition for such
personnel is intense. We compete for such personnel with management
consulting firms, healthcare and pharmaceutical organizations, software firms
and other businesses. Many of these entities have substantially greater
financial and other resources than we do or can offer more attractive
compensation packages to candidates, including salary, bonuses, stock and
stock options. We may not be able to recruit and retain a sufficient number
of qualified personnel to serve existing and new clients. If we fail to
recruit and retain a sufficient number of qualified personnel, our ability to
expand our client base or services could be impaired and our business,
financial condition and results of operations could be adversely effected.
THE LOSS OF OUR VICE PRESIDENTS AND EXECUTIVE OFFICERS COULD NEGATIVELY
AFFECT US.
Our performance depends on the continued service of our vice presidents,
executive officers and senior managers. In particular, we depend on such
persons to secure new clients and engagements and to manage our business and
affairs. The loss of such persons could result in disruption of our business
and stock price volatility and could have a material adverse effect on our
business, financial condition and results of operations. We have not entered
into long-term employment contracts with any of our employees and do not
maintain key employee life insurance.
CONTINUED OR INCREASED EMPLOYEE TURNOVER COULD NEGATIVELY AFFECT OUR BUSINESS.
We have experienced employee turnover as a result of:
- dependence on lateral hiring of consultants,
- travel demands imposed on our consultants,
- loss of employees to competitors and clients, and
- the growth in the number of internet-related companies.
Continued or increased employee turnover could materially adversely affect
our business, financial condition and results of operations. In addition,
many of our consultants develop strong business relationships with our
clients. We depend on these relationships to generate additional assignments
and engagements. The loss of a substantial number of consultants could erode
our client base and decrease our revenue.
IF WE ARE UNABLE TO MANAGE OUR GROWTH, OUR BUSINESS MAY BE NEGATIVELY
IMPACTED.
Our business has grown rapidly in recent years. This growth has placed new
and increased demands on our vice presidents and other management personnel.
This growth has also placed significant and increasing demands on our
financial, technical and operational resources and on our information
systems. To manage any future growth, we must (1) extend our financial
reporting and information management systems to a growing number of offices
and employees, and (2) develop and implement new procedures and controls to
accommodate new operations, services and clients. Increasing operational and
administrative demands may make it difficult for our vice presidents to
engage in business development activities. Adding a significant number of new
employees and offices may also impair our ability to maintain our service
delivery standards and corporate culture. In addition, we have in the past
changed, and may in the future change, our organizational structure and
business strategy. Such changes may result in operational inefficiencies and
delays in delivering our services. Such changes could also cause a disruption
in our business and could have a material adverse effect on our business,
financial condition and results of operations. If we fail to effectively
manage our growth, our business, financial condition and results of
operations could be adversely affected.
WE COULD BE NEGATIVELY IMPACTED IF WE FAIL TO SUCCESSFULLY INTEGRATE THE
BUSINESSES WE ACQUIRE.
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We intend to grow, in part, by acquiring complementary professional practices
within the healthcare and pharmaceutical industries. In 1998, we completed
three acquisitions; in 1999, we completed two more acquisitions; and through
July 31, 2000 we have completed one additional acquisition. Integrating
acquired operations is a complex, time-consuming and expensive process. All
acquisitions involve risks that could materially and adversely effect our
business and operating results. These risks include
- distracting management from our business,
- losing key personnel and other employees,
- losing clients,
- costs, delays and inefficiencies associated with integrating acquired
operations and personnel, and
- amortizing the cost of acquired assets and goodwill.
Acquired businesses may not enhance our services, provide us with increased
client opportunities or result in growth. Combining acquired operations with
us may result in lower overall operating margins, greater stock price
volatility and quarterly earnings fluctuations. Cultural incompatibilities,
career uncertainties and other factors associated with such acquisitions may
result in the loss of employees and clients. Failing to acquire and
successfully integrate complementary practices could materially adversely
effect our business, financial condition and results of operations.
OUR INTERNATIONAL OPERATIONS CREATE SPECIALIZED RISKS THAT CAN NEGATIVELY
AFFECT US.
We provide our services to international clients. Expanding into
international markets will require us to
- spend a significant amount of management, human and financial
resources,
- hire additional personnel, and
- establish international offices.
We may be unable to recruit and retain a sufficient number of qualified
consultants in each country in which we intend to conduct our business. If we
fail to recruit and retain qualified employees, our ability to expand
internationally may be impaired and our business, financial condition and
results of operations could be adversely effected. Our international
operations are subject to a variety of risks, including:
- Difficulties in creating international market demand for our services;
- Difficulties and costs of tailoring our services to each individual
country's healthcare and pharmaceutical market needs;
- Unfavorable pricing and price competition;
- Currency fluctuations;
- Longer payment cycles in some countries and difficulties in collecting
international accounts receivables;
- Difficulties in enforcing contractual obligations and intellectual
property rights;
- Adverse tax consequences;
- Increased costs associated with maintaining international marketing
efforts and offices;
- Adverse changes in regulatory requirements; and
- Economic instability.
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We have been performing services in Europe for international clients for
three years, and we have not yet been profitable in providing those services.
We have recently announced that we will cease performing healthcare
consulting services in Europe, although we will continue to provide our
services in Europe to our pharmaceutical clients. We cannot assure you that
we will be able to achieve profitability in our European pharmaceutical
services, which may materially adversely effect our financial condition,
results of operations and price for our common stock.
Any one or all of these factors may cause increased operating costs, lower
than anticipated financial performance and may materially adversely effect
our business, financial condition and results of operations.
IF WE DO NOT COMPETE EFFECTIVELY IN THE HEALTHCARE AND PHARMACEUTICAL
INFORMATION SERVICES INDUSTRIES, THEN OUR BUSINESS MAY BE NEGATIVELY IMPACTED.
The market for healthcare and pharmaceutical information technology
consulting is very competitive. We have competitors that provide some or all
of the services we provide. In strategic consulting services, we compete with
international consulting firms, regional and specialty consulting firms and
the consulting groups of international accounting firms such as KPMG LLP,
Ernst & Young LLP, Deloitte & Touche LLP, PricewaterhouseCoopers, LLP and
Andersen Consulting.
In integration and co-management services, we compete with:
- information system vendors such as HBO & Company, Inc., Shared Medical
Systems Corporation and Integrated Systems Solution Corporation, a
division of International Business Machines Corporation,
- service groups of computer equipment companies,
- systems integration companies such as Electronic Data Systems
Corporation, Perot Systems Corporation, CAP Gemini America, Inc. and
Computer Sciences Corporation,
- clients' internal information management departments,
- other healthcare consulting firms such as DAOU Systems Inc. and
Superior Consultant Holdings Corporation and
- other pharmaceutical consulting firms such as Andersen Consulting,
Technology Solutions Corporation, Cap Gemini America, Computer
Sciences Corporation's consulting division, and Cambridge Technology
Partners, Inc.
In e-health and e-commerce related services, we compete with the traditional
competitors outlined above, as well as newer Internet product and service
companies such as Razorfish, Scient, TriZetto, and Viant.
Many of our competitors have significantly greater financial, human and
marketing resources than us. As a result, such competitors may be able to
respond more quickly to new or emerging technologies and changes in customer
demands, or to devote greater resources to the development, promotion, sale,
and support of their products and services than we do. In addition, as
healthcare organizations become larger and more complex, our larger
competitors may be better able to serve the needs of such organizations. If
we do not compete effectively with current and future competitors, we may be
unable to secure new and renewed client engagements, or we may be required to
reduce our rates in order to complete effectively. This could result in a
reduction in our revenues, resulting in lower earnings or operating losses,
and otherwise materially adversely effecting our business, financial
condition and results of operations.
IF WE FAIL TO ESTABLISH AND MAINTAIN RELATIONSHIPS WITH VENDORS OF SOFTWARE
AND HARDWARE PRODUCTS, IT COULD HAVE A NEGATIVE EFFECT ON OUR ABILITY TO
SECURE ENGAGEMENTS.
We have a number of relationships with vendors. For example, we have
established a non-exclusive partnership arrangement with Documentum, Inc.
Documentum markets document management software applications largely to the
pharmaceutical industry. We believe that our relationships with this vendor
and others are important to our sales, marketing, and support activities. We
often are engaged by vendors or their customers to implement or integrate
vendor products based on our relationship with that vendor. If we fail to
maintain our relationships with Documentum and other vendors or fails to
establish additional new relationships, our business could be materially
adversely effected.
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OUR RELATIONSHIPS WITH AND INVESTMENTS IN VENDORS OF SOFTWARE AND HARDWARE
PRODUCTS COULD HAVE A NEGATIVE IMPACT ON OUR ABILITY TO SECURE CONSULTING
ENGAGEMENTS.
Our growing number of relationships with software and hardware vendors could
result in clients perceiving that we are not independent from those software
and hardware vendors. Our ability to secure assessment and other consulting
engagements is often dependent, in part, on our being independent of software
and hardware solutions that we may review, analyze or recommend to clients.
If clients believe that we are not independent of those software and hardware
vendors, clients may not engage us for certain consulting engagements
relating to those vendors, which could materially adversely effect our
business, financial condition and results of operations.
This is particularly true since we announced the formation of our First
Ventures venture capital fund. First Ventures has made initial investments
for us in software vendors such as Confer Software, Inc., Sentillion, Inc.
and Rover Software, Inc. First Ventures will invest in other companies during
2000 and beyond. Any of First Ventures' investments may be in software or
hardware vendors who sell and license products to healthcare, pharmaceutical
and other companies that may be our clients. If clients believe that we are
not independent of the companies that First Ventures invests in, clients may
not engage us for certain consulting engagements relating to those companies,
which could materially adversely effect our business, financial condition and
results of operations.
WE MAY EXPERIENCE LOSSES IN OUR INVESTMENTS IN FIRST VENTURES.
We have committed up to $15 million to invest through First Ventures, our
venture capital fund formed in 1999. First Ventures invests in early-stage
companies with limited capitalization and no public market for their shares.
Many of these companies have never earned profits or, in some cases, realized
any revenues on sales of products or services. We are not assured that these
companies will be successful or that we will earn any returns on our
investments, and could suffer a loss of our entire investment in First
Ventures. Even if the companies in which First Ventures invests are
successful, we are not assured that it will be able to sell our shares in
those companies or otherwise realize any value in the investments, or that
any sale will be on terms favorable to First Ventures and us. If we
experience investment losses in First Ventures, this could materially
adversely effect our business, financial condition and results of operations.
IF WE FAIL TO KEEP PACE WITH REGULATORY AND TECHNOLOGICAL CHANGES OUR
BUSINESS COULD BE MATERIALLY ADVERSELY AFFECTED.
The healthcare and pharmaceutical industries are subject to regulatory and
technological changes that may affect the procurement practices and
operations of healthcare and pharmaceutical organizations. During the past
several years, the healthcare and pharmaceutical industries have been subject
to an increase in governmental regulation and reform proposals. These reforms
could increase governmental involvement in the healthcare and pharmaceutical
industries, lower reimbursement rates or otherwise change the operating
environment of our clients. Healthcare and pharmaceutical organizations may
react to these proposals by curtailing or deferring investments, including
those for our services. We cannot predict with any certainty what impact, if
any, such legislative reforms could have on our business.
Technological change in the network and application markets has created high
demand for consulting, implementation and integration services. If the pace
of technological change were to diminish, we could experience a decrease in
demand for our services. Any material decrease in demand would materially
adversely effect our business, financial condition and results of operations.
CHANGES IN THE HEALTHCARE AND PHARMACEUTICAL INDUSTRIES COULD NEGATIVELY
IMPACT OUR REVENUES.
We derive a substantial portion of all of our revenue from clients in the
healthcare industry. As a result, our business, financial condition and
results of operations are influenced by conditions affecting this industry,
particularly current trends towards consolidation among healthcare and
pharmaceutical organizations. Such consolidation may reduce the number of
existing and potential clients for our services. In addition, the resulting
organizations could have greater bargaining power, which could erode the
current pricing structure for our services. The reduction in the size of our
target market or our failure to maintain our pricing strategies could have a
material adverse effect on our business, financial condition and results of
operations.
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A substantial portion of our revenues has come from companies in the
pharmaceutical business. Our revenues are, in part, linked to the
pharmaceutical industry's research and development expenditures. Should any
of the following events occur in the pharmaceutical industry, our business
could be negatively affected in a material way:
- The industry's general economic environment changes adversely;
- Companies continue to consolidate; or
- Research and development expenditures or pharmaceutical companies'
expenditures on technology in general decrease.
A trend in the pharmaceutical industry is for companies to "outsource" either
large information technology-dependent projects or their information systems
staffing requirements. Outsourcing means that, rather than utilize its own
employees, a company contracts with a third party to undertake an entire
project or to provide technical personnel to augment its own staff. We
benefit when pharmaceutical companies outsource to us, but may lose
significant future business when pharmaceutical companies outsource to our
competitors. If this outsourcing trend slows down or stops, or if
pharmaceutical companies direct their business away from us, our financial
condition and results of operations could be impacted in a materially adverse
way.
WE MAY BE UNABLE TO EFFECTIVELY PROTECT OUR PROPRIETARY INFORMATION AND
PROCEDURES.
We must protect our proprietary information, including our proprietary
methodologies, research, tools, software code and other information. To do
this, we rely on a combination of copyright and trade secret laws and
confidentiality procedures to protect our intellectual property. These steps
may not protect our proprietary information. In addition, the laws of certain
countries do not protect or enforce proprietary rights to the same extent, as
do the laws of the United States. We are currently providing our services to
clients in international markets. Our proprietary information may not be
protected to the same extent as provided under the laws of the United States,
if at all. The unauthorized use of our intellectual property could have a
material adverse effect on our business, financial condition or results of
operations.
WE MAY INFRINGE THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
Our success depends, in part, on not infringing patents, copyrights and other
intellectual property rights held by others. We do not know whether patents
held or patent applications filed by third parties may force us to alter our
methods of business and operation or require us to obtain licenses from third
parties. If we attempt to obtain such licenses, we do not know whether we
will be granted licenses or whether the terms of those licenses will be fair
or acceptable to us. Third parties may assert infringement claims against us
in the future. Such claims may result in protracted and costly litigation,
penalties and fines, regardless of the merits of such claims.
OUR MANAGEMENT MAY BE ABLE TO EXERCISE CONTROL OVER MATTERS REQUIRING
STOCKHOLDER APPROVAL.
Our current officers, directors, and others affiliates beneficially own
approximately 50% of our outstanding shares of common stock. As a result, our
existing management, if acting together, may be able to exercise control over
or significantly influence matters requiring stockholder approval, including
the election of directors, mergers, consolidations, sales of all or
substantially all of our assets, issuance of additional shares of stock and
approval of new stock and option plans.
THE PRICE OF OUR COMMON STOCK MAY BE ADVERSELY AFFECTED BY MARKET VOLATILITY.
The trading price of our common stock fluctuates significantly. Since our
common stock began trading publicly, the reported sale price of our common
stock on the Nasdaq National Market has been as high as $29.13 and as low as
$4.06 per share. This price may be influenced by many factors, including:
- our performance and prospects;
- the depth and liquidity of the market for our common stock;
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- investor perception of us and the industries in which we operate;
- changes in earnings estimates or buy/sell recommendations by analysts;
- general financial and other market conditions; and
- domestic and international economic conditions.
In addition, public stock markets have experienced, and are currently
experiencing, extreme price and trading volume volatility, particularly in
high technology sectors of the market. This volatility has significantly
affected the market prices of securities of many companies for reasons
frequently unrelated to or disproportionately impacted by the operating
performance of these companies. These broad market fluctuations may adversely
affect the market price of our common stock. As a result, we may be unable to
raise capital or use our stock to acquire businesses on attractive terms and
investors may be unable to resell their shares of our common stock at or
above their purchase price.
IF OUR STOCK PRICE IS VOLATILE, WE MAY BECOME SUBJECT TO SECURITIES
LITIGATION WHICH IS EXPENSIVE AND COULD RESULT IN A DIVERSION OF RESOURCES.
If our stock price experiences periods of volatility, our security holders
may initiate securities class action litigation against us. If we become
involved in this type of litigation it could be very expensive and divert our
management's attention and resources, which could materially and adversely
affect our business and financial condition.
OUR CHARTER DOCUMENTS, DELAWARE LAW AND STOCKHOLDERS RIGHTS PLAN WILL MAKE IT
MORE DIFFICULT TO ACQUIRE US AND MAY DISCOURAGE TAKE-OVER ATTEMPTS AND THUS
DEPRESS THE MARKET PRICE OF OUR COMMON STOCK.
Our board of directors has the authority to issue up to 10,000,000 shares of
undesignated preferred stock, to determine the powers, preferences and rights
and the qualifications, limitations or restrictions granted to or imposed
upon any unissued series of undesignated preferred stock and to fix the
number of shares constituting any series and the designation of such series,
without any further vote or action by our stockholders. The preferred stock
could be issued with voting, liquidation, dividend and other rights superior
to the rights of our common stock. Furthermore, any preferred stock may have
other rights, including economic rights, senior to our common stock, and as a
result, the issuance of any preferred stock could depress the market price of
our common stock.
In addition, our certificate of incorporation eliminates the right
of stockholders to act without a meeting and does not provide cumulative
voting for the election of directors. Our certificate of incorporation also
provides for a classified board of directors. The ability of our Board of
Directors to issue preferred stock and these other provisions of our
certificate of incorporation and bylaws may have the effect of deterring
hostile takeovers or delaying changes in control or management.
We are subject to the provisions of Section 203 of the Delaware
General Corporation Law, which could delay or prevent a change in control of
us, impede a merger, consolidation or other business combination involving us
or discourage a potential acquirer from making a tender offer or otherwise
attempting to obtain control. Any of these provisions which may have the
effect of delaying or preventing a change in control could adversely effect
the market value of our common stock.
In 1999, our Board of Directors adopted a share purchase rights plan
that is intended to protect our stockholders' interests in the event we are
confronted with coercive takeover tactics. Pursuant to the stockholders
rights plan, we distributed "rights" to purchase shares of a newly created
series of preferred stock. Under some circumstances these rights become the
rights to purchase shares of our common stock or securities of an acquiring
entity at one-half the market value. The rights are not intended to prevent
our takeover, rather they are designed to deal with the possibility of
unilateral actions by hostile acquirers that could deprive our Board of
Directors and stockholders of their ability to determine our destiny and
obtain the highest price for our common stock.
12
<PAGE>
INCORPORATION BY REFERENCE
The SEC's rules allow us to "incorporate by reference" into this
prospectus the information we file with the SEC. This means that we can
disclose important information to you by referring you to those filings. This
information we incorporate by reference is considered a part of this
prospectus, and subsequent information that we file with the SEC will
automatically update and supersede this information. Any such information so
modified or superseded will not constitute a part of this prospectus, except
as so modified or superseded. We incorporate by reference the following
documents and any future filings we make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act until the selling stockholders sell
all of the shares of common stock offered by this prospectus:
(a) Our Annual Report on Form 10-K for the year ended December 31,
1999 (including the portions of the Proxy Statement for our 2000
Annual Meeting of Stockholders that are incorporated therein by
reference);
(b) Our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000;
(c) Our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000;
(d) Our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000;
(e) Our Current Report on Form 8-K dated December 15, 2000; and
(f) The description of our Common Stock contained in our
Registration Statement on Form 8-A, filed January 22, 1998
under the Securities Exchange Act of 1934 (the "Exchange Act"),
including any amendment or report filed for the purpose of
updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated herein by reference and be a part hereof from the date of filing
of such documents. Any statement herein or contained in a document
incorporated or deemed to be incorporated herein by reference shall be deemed
to be modified or superseded for purposes of this Registration Statement to
the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein modifies or supersedes that statement. Any such statement so modified
or superseded shall not constitute a part of this Registration Statement,
except as so modified or superseded. For example, the risks and uncertainties
under the heading "Risk Factors" above may change or be modified by future
filings, from time to time, as our business develops or changes and you
should read those updated risk factors.
Upon written or oral request, we will provide you with a copy of any
of the incorporated documents without charge (not including exhibits to the
documents unless the exhibits are specifically incorporated by reference into
the documents). You may submit such a request for this material to Office of
the Secretary, First Consulting Group, Inc., 111 W. Ocean Boulevard, 4th
Floor, Long Beach, California 90802 (telephone number (562) 624-5200).
USE OF PROCEEDS
The selling stockholders will receive all of the proceeds from the
sales of common stock by them pursuant to this prospectus. We will not
receive any proceeds from these sales.
13
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Our common stock began trading on the Nasdaq National Market under
the symbol "FCGI" on February 13, 1998. The following table lists the high
and low per share sale prices for our common stock as reported by the Nasdaq
National Market for the periods indicated.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1998
First Quarter $20.88 $17.50
Second Quarter $29.13 $18.50
Third Quarter $29.00 $13.88
Fourth Quarter $24.13 $ 8.75
1999
First Quarter $25.00 $10.06
Second Quarter $18.00 $ 6.75
Third Quarter $16.75 $ 9.00
Fourth Quarter $17.06 $ 7.88
2000
First Quarter $18.88 $14.94
Second Quarter $17.00 $ 5.50
Third Quarter $ 8.28 $ 5.56
Fourth Quarter (through December 12,2000) $ 6.97 $ 4.06
</TABLE>
On December 13, 2000 the last bid price of the common stock as
reported on the Nasdaq National Market was $4.13 per share. As of September
30, 2000 there were approximately 421 holders of record of our common stock.
Other than dividends paid by an acquired company to its individual owner, we
have never paid cash dividends on our common stock and presently intend to
retain our earnings for use in our business.
14
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock, as amended or
superseded by any applicable prospectus supplement, includes a summary of
certain provisions of our restated certificate of incorporation and our
by-laws. This description is subject to the detailed provisions of, and is
qualified by reference to, our certificate of incorporation and our by-laws,
copies of which have been filed as exhibits to the registration statement of
which this prospectus is a part.
Upon completion of this offering, our authorized capital stock will
consist of 50,000,000 shares of Common Stock, $.001 par value, and 10,000,000
shares of Preferred Stock, $.001 par value.
COMMON STOCK
As of September 30, 2000, there were 24,874,705 shares of Common
Stock outstanding held of record by 421 stockholders. The holders of Common
Stock are entitled to one vote for each share held of record on all matters
submitted to a vote of the stockholders. The holders of Common Stock are
entitled to receive ratably such dividends as may be declared by the Board of
Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, holders of the Common
Stock are entitled to share ratably in all assets remaining after payment of
liabilities. Holders of Common Stock have no preemptive rights and no right
to convert their Common Stock into any other securities. There are no
redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares of Common Stock are, and all shares of Common Stock to be
outstanding upon completion of this offering will be, fully-paid and
nonassessable.
PREFERRED STOCK
The Board of Directors has the authority, without further action by
the stockholders, to issue up to 10,000,000 shares of Preferred Stock, $.001
par value, in one or more series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences, sinking
fund terms and the number of shares constituting any series or the
designation of such series, without any further vote or action by
stockholders. The issuance of Preferred Stock could adversely affect the
voting power of holders of Common Stock and the likelihood that such holders
will receive dividend payments and payments upon liquidation and could have
the effect of delaying, deferring or preventing a change in control of the
Company. The Company has no present plan to issue any shares of Preferred
Stock.
DELAWARE LAW AND CERTAIN CHARTER PROVISIONS
The Company is subject to the provisions of Section 203 of the
Delaware Law, an anti-takeover law. In general, the statute prohibits a
publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date
of the transaction in which the person became an interested stockholder,
unless the business combination is approved in a prescribed manner. For
purposes of Section 203, a "business combination" includes a merger, asset
sale or other transaction resulting in a financial benefit to the interested
stockholder, and an "interested stockholder" is a person who, together with
affiliates and employees, owns (or within three years prior, did own) 15% or
more of the corporation's voting stock. The Company's Certificate of
Incorporation and Bylaws also require that, effective upon the closing of
this offering, any action required or permitted to be taken by stockholders
of the Company must be effected at a duly called annual or special meeting of
the stockholders and may not be effected by a consent in writing. In
addition, special meetings of the stockholders of the Company may be called
only by the Board of Directors, the Chairman of the Board, the Chief
Executive Officer of the Company or by any person or persons holding shares
representing at least 10% of the outstanding capital stock. The Company's
Certificate of Incorporation also provides for a classified Board and
specifies that the authorized number of directors may be changed only by
resolution of the Board of Directors. These provisions may have the effect of
deterring hostile takeovers or delaying changes in control or management of
the Company.
PREFERRED STOCK RIGHTS PLAN
Each outstanding share of our common stock also evidences one
preferred share purchase right (a "Right") for each outstanding share of
common stock, par value $0.001 per share (the "Common Shares"), of the
Company. Each Right
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<PAGE>
entitles the registered holder to purchase from the Company one one-hundredth
of a share of Series A Junior Participating Preferred Stock, par value
$.001 per share (the "Preferred Shares"), at a price of $50.00 per one
one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. Each one one-hundredth of a share of Preferred Shares has
designations and powers, preferences and rights, and the qualifications,
limitations and restrictions which make its value approximately equal to the
value of a Common Share. The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement"), dated as of November
22, 1999 entered into between the Company and American Stock Transfer & Trust
Company as rights agent (the "Rights Agent").
Initially, the Rights will be evidenced by the stock certificates
representing the Common Shares then outstanding, and no separate Right
Certificates, as defined, will be distributed. Until the earlier to occur of
(i) the date of a public announcement that a person, entity or group of
affiliated or associated persons have acquired beneficial ownership of 15% or
more of the outstanding Common Shares (an "Acquiring Person") or (ii) 10
business days (or such later date as may be determined by action of the Board
of Directors prior to such time as any person or entity becomes an Acquiring
Person) following the commencement of, or announcement of an intention to
commence, a tender offer or exchange offer the consummation of which would
result in any person or entity becoming an Acquiring Person (the earlier of
such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding
as of the Record Date, by such Common Share certificate with or without a
copy of the Summary of Rights, which is included in the Rights Agreement as
Exhibit C thereof (the "Summary of Rights").
Until the Distribution Date, the Rights will be transferable with
and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date, whether upon transfer or new issuance of Common
Shares, will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration
of the Rights), the surrender or transfer of any certificates for Common
Shares outstanding as of the Record Date, even without such notation or a
copy of the Summary of Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Shares represented by
such certificate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Shares as of the close of business
on the Distribution Date and such separate Right Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on November 22, 2009 (the "Final Expiration Date"), unless
the Rights are earlier redeemed or exchanged by the Company, in each case, as
described below. The Purchase Price payable, and the number of Preferred
Shares or other securities or other property, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event
of a stock dividend on, or a subdivision, combination or reclassification of,
the Preferred Shares, (ii) upon the grant to holders of the Preferred Shares
of certain rights or warrants to subscribe for or purchase Preferred Shares
at a price, or securities convertible into Preferred Shares with a conversion
price, less than the then current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences
of indebtedness or assets (excluding regular periodic cash dividends paid out
of earnings or retained earnings or dividends payable in Preferred Shares) or
of subscription rights or warrants (other than those referred to above). The
exercise of Rights for Preferred Shares is at all times subject to the
availability of a sufficient number of authorized but unissued Preferred
Shares.
The number of outstanding Rights and the number of one
one-hundredths of a Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of a stock split of the Common Shares
or a stock dividend on the Common Shares payable in Common Shares or
subdivisions, consolidation or combinations of the Common Shares occurring,
in any case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1.00 but will be entitled to an aggregate
dividend of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares would be entitled to a
minimum preferential liquidation payment of $100 per share, but would be
entitled to receive an aggregate payment equal to 100 times the payment made
per Common Share. Each Preferred Share will have 100 votes, voting together
with the Common Shares. Finally, in the event of any merger, consolidation or
other transaction in which Common Shares are exchanged, each Preferred Share
will be entitled to receive 100 times the amount of consideration received
per Common Share. These rights are protected by customary anti-dilution
provisions. Because of the nature of the Preferred Shares' dividend and
liquidation rights, the value of one one-hundredth of a Preferred Share
should
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<PAGE>
approximate the value of one Common Share. The Preferred Shares would rank
junior to any other series of the Company's preferred stock.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision shall be made so that
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person and its associates and affiliates (which will thereafter be void),
will for a 60-day period have the right to receive upon exercise that number
of Common Shares having a market value of two times the exercise price of the
Right (or, if such number of shares is not and cannot be authorized, the
Company may issue Preferred Shares, cash, debt, stock or a combination
thereof in exchange for the Rights). This right will terminate 60 days after
the date on which the Rights become nonredeemable (as described below),
unless there is an injunction or similar obstacle to exercise of the Rights,
in which event this right will terminate 60 days after the date on which the
Rights again become exercisable.
Generally, under the Plan, an "Acquiring Person" shall not be deemed
to include (i) the Company, (ii) a subsidiary of the Company, (iii) any
employee benefit or compensation plan of the Company, or (iv) any entity
holding Common Shares for or pursuant to the terms of any such employee
benefit or compensation plan In addition, except under limited circumstances,
no person or entity shall become an Acquiring Person as the result of the
acquisition of Common Shares by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such person or entity to 15% or more of the Common Shares then
outstanding. Further, except under certain circumstances, no person shall
become an Acquiring Person due to the acquisition of Common Shares directly
from the Company.
In the event that the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power are sold to an Acquiring Person, its associates or affiliates
or certain other persons in which such persons have an interest, proper
provision will be made so that each holder of a Right will thereafter have
the right to receive, upon the exercise thereof at the then current exercise
price of the Right, that number of shares of common stock of the acquiring
company which at the time of such transaction will have a market value of two
times the exercise price of the Right.
At any time after an Acquiring Person becomes an Acquiring Person
and prior to the acquisition by such Acquiring Person of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which have become
void), in whole or in part, at an exchange ratio of one Common Share, or one
one-hundredth of a Preferred Share, per Right (or, at the election of the
Company, the Company may issue cash, debt, stock or a combination thereof in
exchange for the Rights), subject to adjustment.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other
than fractions which are integral multiples of the number of one
one-hundredths of a Preferred Share issuable upon the exercise of one Right,
which may, at the election of the Company, be evidenced by depositary
receipts), and in lieu thereof, an adjustment in cash will be made based on
the market price of the Preferred Shares on the last trading day prior to the
date of exercise.
At any time prior to the earliest of (i) the day of the first public
announcement that a person has become an Acquiring Person or (ii) the Final
Expiration Date, the Board of Directors of the Company may redeem the Rights
in whole, but not in part, at a price of $0.001 per Right (the "Redemption
Price"). Following the expiration of the above periods, the Rights become
nonredeemable. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, except that
from and after such time as the rights are distributed no such amendment may
adversely affect the interest of the holders of the Rights excluding the
interests of an Acquiring Person. Until a Right is exercised, the holder
thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Company's Board of Directors. The Rights
should not interfere with any merger or other business combination approved
by the Board of Directors since the Rights may be
17
<PAGE>
amended to permit such acquisition or redeemed by the Company at $0.001 per
Right prior to the earliest of (i) the time that a person or group has
acquired beneficial ownership of 15% or more of the Common Shares or (ii) the
final expiration date of the rights.
TRANSFER AGENT AND REGISTRAR
American Stock Transfer & Trust Company has been appointed as the
transfer agent and registrar for the Common Stock.
SELLING STOCKHOLDERS
The shares, which may be resold hereunder by the selling
stockholders, are shares issued by us to Doghouse Productions LLC in
connection with our acquisition of all of the assets of the web development
and design services business of Doghouse Productions. Subsequently, Doghouse
Productions distributed the shares to its members. Those members, including
their transferees, pledgees or donees or their successors, are the selling
stockholders.
The shares originally issued at the closing of the Doghouse
Productions transaction were issued in a transaction exempt from the
registration requirements of the Securities Act. The selling stockholders,
including their transferees, pledgees or donees or their successors, may from
time to time offer and sell pursuant to this prospectus any or all of their
shares of our common stock.
The following table sets forth information, as of December 13, 2000,
with respect to the selling stockholders and the shares of common stock
beneficially owned by the selling stockholders that may be offered pursuant
to this prospectus. The information is based on information provided by or on
behalf of the selling stockholders. The selling stockholders may offer all,
some or none of the shares of common stock. Because the selling stockholders
may offer all or some portion of the common stock, we cannot estimate the
amount of the common stock that will be held by the selling stockholders upon
termination of any of these sales. In addition, the selling stockholders
identified below may have sold, transferred or otherwise disposed of all or a
portion of their shares of common stock since the date on which they provided
the information regarding their shares in transactions exempt from the
registration requirements of the Securities Act. None of the selling
stockholders named in the table below beneficially own one percent or more of
our common stock based on 24,874,705 shares of common stock outstanding on
September 30, 2000.
<TABLE>
<CAPTION>
COMMON STOCK
COMMON STOCK OWNED OFFERED
NAME PRIOR TO THE OFFERING HEREBY
---- --------------------- ------------
<S> <C> <C>
Robert M. French 181,116 181,116
Robert P. French 17,045 17,045
Deborah Sweet 4,443 4,443
Steve Roberts 10,997 10,997
William Reid 4,443 4,443
Lincoln Miller 2,199 2,199
Marci Pelletier 1,979 1,979
--------------------- ------------
Total 222,222 222,222
</TABLE>
18
<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders and their successors, which term includes
their transferees, pledgees or donees or their successors, may sell the
common stock directly to purchasers or through underwriters, broker-dealers
or agents, who may receive compensation in the form of discounts, concessions
or commissions from the selling stockholders or the purchasers. These
discounts, concessions or commissions as to any particular underwriter,
broker-dealer or agent may be in excess of those customary in the types of
transactions involved.
The common stock may be sold in one or more transactions at:
- fixed prices,
- prevailing market prices at the time of sale,
- prices related to the prevailing market prices,
- varying prices determined at the time of sale, or
- negotiated prices.
These sales may be effected in transactions:
- on any national securities exchange or quotation service on which
our common stock may be listed or quoted at the time of sale,
including the Nasdaq National Market,
- in the over-the-counter market,
- otherwise than on such exchanges or services or in the
over-the-counter market,
- through the writing of options, whether the options are listed
on an options exchange or otherwise, or
- through the settlement of short sales.
These transactions may include block transactions or transactions in which
the same broker acts as agent on both sides of the trade.
In connection with the sale of the common stock or otherwise, the
selling stockholders may enter into hedging transactions with broker-dealers
or other financial institutions. These broker-dealers or financial
institutions may in turn engage in short sales of the common stock in the
course of hedging the positions they assume with selling stockholders. The
selling stockholders may also sell the common stock short and deliver these
securities to close out such short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities.
The aggregate proceeds to the selling stockholder from the sale of
the common stock offered by them hereby will be the purchase price of the
common stock less discounts and commissions, if any. The selling stockholders
reserve the right to accept and, together with their agents from time to
time, to reject, in whole or in part, any proposed purchase of common stock
to be made directly or through agents. We will not receive any of the
proceeds from the offering of shares by the selling stockholders.
Our outstanding common stock is listed for trading on the Nasdaq
National Market.
In order to comply with the securities laws of some states, if
applicable, the common stock may be sold in these jurisdictions only through
registered or licensed brokers or dealers.
The selling stockholders and any broker-dealers or agents that
participate in the sale of the common stock may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act.
Profits on the sale of the common
19
<PAGE>
stock by selling stockholders and any discounts, commissions or concessions
received by any broker-dealers or agents might be deemed to be underwriting
discounts and commissions under the Securities Act. If any selling
stockholder is deemed to be an "underwriter" within the meaning of Section
2(11) of the Securities Act it will be subject to the prospectus delivery
requirements of the Securities Act.
The selling stockholders and any other person participating in a
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder. Regulation M of the Exchange Act may
limit the timing of purchases and sales of any of the securities by the
selling stockholders and any other person. In addition, Regulation M may
restrict the ability of any person engaged in the distribution of the
securities to engage in market-making activities with respect to the
particular securities being distributed for a period of up to five business
days before the distribution. Each of the selling stockholders has
acknowledged that it understands its obligations to comply with the
provisions of the Exchange Act and the rules thereunder relating to stock
manipulation, particularly Regulation M, and has agreed that it will not
engage in any transaction in violation of such provisions.
To our knowledge, there are currently no plans, arrangements or
understandings between any of the selling stockholders and any underwriter,
broker-dealer or agent regarding the sale of the common stock by that selling
stockholder.
The selling stockholders may decide not to sell any common stock
described in this prospectus. We cannot assure you that the selling
stockholders will use this prospectus to sell any or all of the common stock.
Any securities covered by this prospectus which qualify for sale pursuant to
Rule 144 of the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus. In addition, the selling stockholders may
transfer, devise or gift the common stock by other means not described in
this prospectus.
With respect to a particular offering of the common stock, to the
extent required, an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement of which this
prospectus is a part will be prepared and will set forth the following
information:
- the specific shares of common stock to be offered and sold,
- the names of the selling stockholders,
- the respective purchase prices and public offering prices and
other material terms of the offering,
- the names of any participating agents, broker-dealers or
underwriters, and
- any applicable commissions, discounts, concessions and other
items constituting, compensation from the selling stockholders.
The Registration Rights Agreement provides that Doghouse Productions
LLC and First Consulting will indemnify each other and their respective
directors, their respective officers who signed the registration statement
and their respective controlling persons against specific liabilities in
connection with the offer and sale of the common stock, including liabilities
under the Securities Act, or will be entitled to contribution in connection
with those liabilities. We will pay all of our expenses and specified
expenses incurred by the selling stockholders incidental to the registration,
offering and sale of the common stock to the public but each selling
stockholder will be responsible for payment of commissions, concessions, fees
and discounts of underwriters, broker-dealers and agents, if any.
LEGAL MATTERS
The validity of the issuance of the common stock will be passed
upon for us by Robert R. Holmen, our General Counsel.
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<PAGE>
EXPERTS
The consolidated financial statements and the related financial
statement schedule incorporated in this prospectus by reference from the
First Consulting Group, Inc. Annual Report on Form 10-K for the year ended
December 31, 1999, have been incorporated by reference herein in reliance
upon the report of Grant Thornton LLP, certified public accountants
incorporated by reference herein and upon the authority of said firm as
experts in accounting and auditing.
The consolidated statement of operations, stockholders' equity and
cash flows of Integrated Systems Consulting Group, Inc. for the year ended
December 31, 1997 and related schedule, which are incorporated herein by
reference have been audited by KPMG LLP, independent auditors, as stated in
their report, which is incorporated herein by reference to the First
Consulting Group, Inc. Annual Report on Form 10-K for the year ended December
31, 1999, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
HOW TO OBTAIN MORE INFORMATION
In accordance with the Exchange Act, we file reports, proxy and
information statements and other information with the Securities and Exchange
Commission. You may read and copy these reports, proxy and information
statements and other information that we file at the SEC's public reference
room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the public reference room by calling the SEC
at 1-800-SEC-0330. The SEC also maintains an internet site that contains
reports, proxy and information statements and other information regarding
registrants (including First Consulting Group, Inc.) that file electronically
with the SEC (http://www.sec.gov). Our internet site is
http://www.fcgnet.net. Unless specifically stated, we do not intend the
information on our website to constitute a part or to be incorporated by
reference into this prospectus.
You also may inspect reports, proxy statements and other
information about First Consulting Group, Inc. at the offices of The Nasdaq
Stock Market, Inc. National Market System, 1735 K Street, N.W.,
Washington, D.C. 20006-1500.
We have filed with the SEC a registration statement on Form S-3
under the Securities Act. This prospectus does not contain all of the
information in the registration statement. We have omitted certain parts of
the registration statement, as permitted by the rules and regulations of the
SEC. You may inspect and copy the registration statement, including exhibits,
at the SEC's public reference room or internet site. Our statements in this
prospectus about the contents of any contract or other document are not
necessarily complete. You should refer to the copy of each contract or other
document we have filed as an exhibit to the registration statement for
complete information.
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FIRST CONSULTING GROUP, INC.
COMMON STOCK
(INCLUDING ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
PROSPECTUS
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU
WITH DIFFERENT INFORMATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IS ACCURATE AS OF
ANY DATE OTHER THAN THE DATE OF THIS PROSPECTUS. WE ARE NOT MAKING AN OFFER
OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED.
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