<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 JUNE 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: 00-24055
DA CONSULTING GROUP, INC.
(Exact name of registrant as specified in its charter)
TEXAS 76-0418488
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5847 SAN FELIPE ROAD, SUITE 3700
HOUSTON, TEXAS 77057
(Address of principal executive offices) (Zip Code)
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE): (713) 361-3000
(Former name, former address and former
fiscal year--if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [_]
As of July 31, 1998, 6,546,861 shares of common stock $0.01 par value
("Common Stock") of the registrant were outstanding.
================================================================================
<PAGE>
DA CONSULTING GROUP, INC.
INDEX
PART I
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NO.
--------
Item 1. Financial Statements
<S> <C> <C>
Condensed Consolidated Balance Sheet as of December 31, 1997 and June 30, 1998........... 3
Condensed Consolidated Statement of Income for the Three and Six Months ended
June 30, 1997 and 1998............................................................... 4
Condensed Consolidated Statement of Cash Flows for the Six Months ended
June 30, 1997 and 1998............................................................... 5
Notes to Condensed Consolidated Financial Statements..................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.... 8
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K......................................................... 12
Signatures......................................................................................... 13
</TABLE>
2
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
DA CONSULTING GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
-------- --------
A S S E T S
<S> <C> <C>
Current assets:
Cash and cash equivalents..................................... $ 3,664 $ 17,732
Short-term investments........................................ -- 3,650
Accounts receivable:
Trade, net................................................. 10,934 15,517
Other...................................................... 800 467
Unbilled revenue.............................................. 645 1,069
Prepaid expenses and other current assets..................... 250 554
-------- --------
Total current assets..................................... 16,293 38,989
Property and equipment, net..................................... 2,507 2,658
Other assets, net............................................... 898 130
Intangible assets, net.......................................... 437 427
-------- --------
Total assets............................................. $ 20,135 $ 42,204
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving lines of credit..................................... $ 3,208 $ --
Note payable.................................................. 762 756
Accounts payable.............................................. 1,841 2,109
Accrued expenses.............................................. 5,517 6,973
Deferred income............................................... 312 1,283
Income taxes payable.......................................... 333 42
Deferred income taxes......................................... 219 213
-------- --------
Total current liabilities................................ 12,192 11,376
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value: 10,000,000 shares authorized. -- --
Common stock, $.01 par value: 40,000,000 shares authorized;
4,829,191 and 6,571,420 shares issued and 4,808,475 and
6,546,861 shares outstanding............................... 48 66
Additional paid-in capital.................................... 6,449 27,578
Retained earnings............................................. 2,099 3,674
Treasury stock, at cost: 20,716 and 24,559 shares............. (91) (116)
Notes receivable from shareholders............................ (503) --
Cumulative foreign currency translation adjustment............ (59) (374)
-------- --------
Total shareholders' equity................................. $ 7,943 $ 30,828
-------- --------
Total liabilities and shareholders' equity............... $ 20,135 $ 42,204
======== ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
<PAGE>
DA CONSULTING GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- -----------------------
1997 1998 1997 1998
------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue.............................................................. $ 9,897 $ 19,703 $ 17,981 $ 34,290
Cost of revenue...................................................... 5,609 10,278 10,162 18,018
------- -------- -------- --------
Gross profit....................................................... 4,288 9,425 7,819 16,272
Selling and marketing expense........................................ 898 1,214 1,622 2,435
Development expense.................................................. 250 536 495 996
General and administrative expenses.................................. 2,580 5,808 4,956 9,982
------- -------- -------- --------
Operating income.................................................. 560 1,867 746 2,859
Interest (expense) income, net....................................... (24) 100 (26) 6
Other expense, net................................................... (9) (260) (9) (279)
------- -------- -------- --------
Income before taxes............................................... 527 1,707 711 2,586
Provision for income taxes........................................... 209 677 287 1,011
------- -------- -------- --------
Net income........................................................ $ 318 $ 1,030 $ 424 $ 1,575
======= ======== ======== ========
Basic earnings per share............................................. $ 0.07 $ 0.17 $ 0.09 $ 0.29
Weighted average shares outstanding.................................. 4,808 5,978 4,808 5,395
Diluted earnings per share........................................... $ 0.06 $ 0.16 $ 0.08 $ 0.28
Weighted average shares outstanding.................................. 5,053 6,264 5,053 5,681
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
4
<PAGE>
DA COUNSULTING GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------
1997 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income........................................................................ $ 424 $ 1,575
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization.................................................. 194 495
Deferred income taxes.......................................................... -- (6)
Loss on sale of property and equipment......................................... -- 10
Changes in operating assets and liabilities:
Increase in accounts receivable and unbilled revenue......................... (4,210) (4,674)
Increase in prepaid expenses and other current assets........................ (87) (304)
Increase in other assets..................................................... -- (130)
Increase in accounts payable and accrued expenses............................ 459 1,724
Increase in deferred income.................................................. -- 971
Increase (decrease) in income taxes payable.................................. 49 (291)
-------- --------
Total adjustments......................................................... (3,595) (2,205)
-------- --------
Net cash used in operating activities..................................... (3,171) (630)
-------- --------
Cash flows from investing activities:
Proceeds from sale of fixed assets................................................ -- 20
Purchases of short-term investments............................................... -- (3,650)
Purchases of property and equipment............................................... (484) (666)
-------- --------
Net cash used in investing activities..................................... (484) (4,296)
-------- --------
Cash flows from financing activities:
Net proceeds from (repayments of) revolving lines of credit....................... 1,671 (3,208)
Net repayments of note payable.................................................... (356) (6)
Issuance of common stock.......................................................... 1,332 25,267
Repayments of notes receivable from shareholders.................................. -- 503
Employee stock issuances (repurchases)............................................ 4 (25)
Deferred offering costs........................................................... (159) (3,222)
-------- --------
Net cash provided by financing activities................................. 2,492 19,309
-------- --------
Effect of changes in foreign currency exchange rate on cash and cash equivalents.... (37) (315)
-------- --------
(Decrease) increase in cash and cash equivalents.......................... (1,200) 14,068
-------- --------
Cash and cash equivalents at beginning of period.................................... 2,199 3,664
-------- --------
Cash and cash equivalents at end of period.......................................... $ 999 $ 17,732
======== ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
5
<PAGE>
DA CONSULTING GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION AND BUSINESS
DA Consulting Group, Inc. (the "Company") is a leading international
provider of end-user support solutions to companies which are implementing
enterprise resource planning software systems.
(2) BASIS OF PRESENTATION
The unaudited consolidated financial statements included herein have been
prepared by the Company without audit pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted,
pursuant to such rules and regulations. The unaudited consolidated financial
statements should be read in conjunction with the Company's consolidated
financial statements and the notes thereto as of and for the year ended December
31, 1997, included in the Company's Form S-1 Registration Statement No. 333-
43989.
The unaudited consolidated financial information included herein reflect
all adjustments, consisting only of normal recurring adjustments, which are
necessary, in the opinion of management for a fair presentation of the Company's
financial position, results of operations and cash flows for the interim periods
presented. The results of operations for the interim periods presented herein
are not necessarily indicative of the results to be expected for the full year.
New Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("SFAS No. 133"). SFAS No.133 establishes accounting and
reporting standards for derivative instruments and hedging activities and
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. SFAS No. 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. Earlier application of all of the provisions of
the Statement is encouraged, but it is permitted only as of the beginning of any
fiscal quarter that begins after issuance of the Statement. As the Company is
not presently involved in such instruments, adoption of this statement will not
have a material impact on the consolidated financial statements of the Company.
Short-Term Investments
The Company records its short-term investments at cost, which approximates
market value. Short-term investments are those, that when purchased, have
maturities greater than three months. The Company has adopted the provisions of
Statement of Financial Accounting Standards (SFAS) 115, "Accounting for Certain
Investments in Debt and Equity Securities". As the Company does not intend to
hold the investments until their stated maturity dates, the Company has
classified all investments as available-for-sale. As of June 30, 1998, the
short-term investments consist of variable rate municipal debt instruments,
which result in no unrealized holding gains or losses.
6
<PAGE>
DA CONSULTING GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(3) Initial Public Offering
In connection with the consummation of the Company's initial public
offering on April 29, 1998 (the "IPO"), the Company sold 1.7 million shares of
its common stock, par value $0.01 per share. Additionally on May 28, 1998, the
Company sold additional 42,586 shares of its common stock pursuant to and in
connection with the underwriters' over-allotment option (the "Option Offering"
and together with the IPO, the "Offering"). The Company received net proceeds of
$21.1 million from the sale of such shares, after deducting the underwriting
discount and other offering expenses.
(4) EARNINGS PER SHARE
Basic earnings per share has been computed based on the weighted average
number of common shares outstanding during the applicable period. Diluted
earnings per share includes the number of shares issuable upon exercise of stock
options, less the number of shares that could have been repurchased with the
exercise proceeds, using the treasury stock method.
The following table summarizes the Company's computation of earnings per
share for the three and six months ended June 30, 1998 and 1997 (in thousands,
except per share amounts):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- ----------------------------
1997 1998 1997 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Basic earnings per share............................................ $ 0.07 $ 0.17 $ 0.09 $ 0.29
Net income (numerator).............................................. $ 318 $1,030 $ 424 $1,575
=========== =========== =========== ===========
Weighted average shares outstanding (denominator)................... 4,808 5,978 4,808 5,395
Computation of diluted earnings per share:
Common shares issuable under outstanding stock options............ 449 449 449 449
Less shares assumed repurchased with proceeds from exercise of
stock options.................................................... (204) (163) (204) (163)
----------- ----------- ----------- -----------
Adjusted weighted average shares outstanding (denominator)....... 5,053 6,264 5,053 5,681
Diluted earnings per share.......................................... $ 0.06 $ 0.16 $ 0.08 $ 0.28
=========== =========== =========== ===========
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
OVERVIEW.
The Company is a leading international provider of end-user support
solutions to companies which are implementing enterprise resource planning
("ERP") software systems. The Company provides customized change communications,
education and performance support services designed to maximize its clients'
returns on their substantial investments in ERP systems.
Recognizing the global nature of the ERP software market and the importance
of being able to serve multi-national clients, the Company has built a
substantial international presence. The Company is currently organized into
three divisions: the Americas Division which includes its North, South, and
Central America operations; the EMEA Division which includes its Europe, Middle
East, and Africa operations; and the Asia Pacific Division which includes its
Australia, New Zealand, and Asia operations.
RESULTS OF OPERATIONS.
Three Months ended June 30, 1998 Compared to Three Months ended
June 30, 1997.
Revenue. Revenue increased by $9.8 million, or 99.1%, from $9.9 million in
the second quarter of 1997 to $19.7 million in the second quarter of 1998. The
increase was substantially attributable to an increase in volume of services and
rate increases. The Company experienced growth in each of its three divisions.
Revenues from the Americas Division increased by 97.9% from $6.3 million to
$12.4 million; revenue from the EMEA Division increased by 119.4% from $2.6
million to $5.7 million; and revenue from the Asia Pacific Division increased by
55.9% from $1,051,000 to $1.6 million. The Company ended the second quarter with
714 total employees, up from 478 employees at the end of the same period of the
prior year.
Gross profit. Gross profit increased by $5.1 million, or 119.8%, from $4.3
million to $9.4 million and increased from 43.3% of revenue in the second
quarter of 1997 to 47.8% in the second quarter of 1998. This increase in the
gross profit margin is primarily attributable to rate increases in the Americas
Division and increased staff utilization in both the Americas and EMEA
Divisions.
Sales and marketing expense. Sales and marketing expense increased
$316,000, or 35.2%, from $898,000 in the second quarter of 1997 to $1.2 million
in the second quarter of 1998, and decreased as a percentage of revenue from
9.1% in the second quarter of 1997 to 6.2% in the second quarter of 1998. This
decrease as a percentage of sales is primarily attributable to increased revenue
as described above.
Development expense. Development expense increased $286,000, or 114.4%,
from $250,000 in the second quarter of 1997 to $536,000 in the second quarter of
1998. The increase is primarily attributable to the Company's expansion of its
service offerings. These services include the Company's Fast Implementation
Toolset (FIT) designed to enable the Company to specifically target SAP AG's
middle market clients. The Company also increased its global technology
infrastructure and service and support group, which allows the Company to
rapidly deploy and support new services. The Company expects that development
expense will continue to increase in the future as the Company expands its
service offerings.
8
<PAGE>
DA CONSULTING GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.--(CONTINUED)
General and administrative expense. General and administrative expense
increased by $3.2 million, or 125.1%, from $2.6 million in the second quarter of
1997 to $5.8 million in the second quarter of 1998 and increased as a percentage
of revenue from 26.1% in the second quarter of 1997 to 29.5% in the second
quarter of 1998. The increase in expense is attributable to the cost of building
administrative infrastructure to support future growth.
Operating income. Operating income increased by $1.3 million, or 233.4%,
from $560,000 in the second quarter of 1997 to $1.9 million in the second
quarter of 1998 and increased as a percentage of revenue from 5.7% in the second
quarter of 1997 to 9.5% in the second quarter of 1998. This increase is composed
of the changes described above.
Other expense, net. Other expense, net increased from $33,000 in the second
quarter of 1997 to $160,000 in the second quarter of 1998. The increase is
attributable to $260,000 in the second quarter of 1998, partially offset by
interest income of $100,000, compared to interest expense of $24,000 in second
quarter of 1997. The increase in interest income is due to investment earnings
related to proceeds from the Offering which was completed in April 1998.
Provision for income taxes. The Company's effective rate was 39.6% in the
second quarter of each of 1998 and 1997.
Net income. The Company's net income increased by $712,000, or 223.9%, from
$318,000 in the second quarter of 1997 to $1.0 million in the second quarter of
1998. Diluted earnings per share increased from $0.06 in the second quarter of
1997 to $0.16 in the second quarter of 1998.
Six Months ended June 30, 1998 Compared to Six Months ended June 30, 1997.
Revenue. Revenue increased by $16.3 million, or 90.7%, from $18.0 million
in the first six months of 1997 to $34.3 million in the first six months of
1998. The increase was substantially attributable to an increase in volume of
services and to rate increases. The Company experienced growth in each of its
three divisions. Revenues from the Americas Division increased by 84.1% from
$11.7 million to $21.5 million; revenue from the EMEA Division increased by
106.6% from $4.6 million to $9.5 million; and revenue from the Asia Pacific
Division increased by 93.1% from $1.7 million to $3.3 million. The Company
opened one new office (in San Francisco) during the first quarter of 1998,
increasing the total number of offices to 16.
Gross profit. Gross profit increased by $8.5 million, or 108.1%, from $7.8
million to $16.3 million and increased from 43.5% of revenue in the first six
months of 1997 to 47.5% in the first six months of 1998. This increase in the
gross profit margin is primarily attributable to rate increases in the Americas
Division and increased staff utilization in both the Americas and EMEA
Divisions.
Sales and marketing expense. Sales and marketing expense increased
$813,000, or 50.1%, from $1.6 million in the first six months of 1997 to $2.4
million in the first six months of 1998, and decreased as a percentage of
revenue from 9.0% in the first six months of 1997 to 7.1% in the first six
months of 1998. This decrease as a percentage of sales is primarily attributable
to increased revenue.
9
<PAGE>
DA CONSULTING GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.--(CONTINUED)
Development expense. Development expense increased $501,000, or 101.2%,
from $495,000 in the first six months of 1997 to $996,000 in the first six
months of 1998. The increase is primarily attributable to the Company's
expansion of its service offerings. These services include the Company's Fast
Implementation Toolset (FIT). The Company also increased its global technology
infrastructure and service and support group which allows the Company to rapidly
deploy and support new services. The Company expects that development expense
will continue to increase in the future as the Company expands its service
offerings.
General and administrative expense. General and administrative expense
increased by $5,026,000, or 101.4%, from $4,956,000 in the first six months of
1997 to $10.0 million in the first six months of 1998 and increased as a
percentage of revenue from 27.6% in the first six months of 1997 to 29.1% in the
first six months of 1998. The increase in expense is attributable to the cost of
building administrative infrastructure to support future growth.
Operating income. Operating income increased by $2.1 million, or 283.2%,
from $746,000 in the first six months of 1997 to $2.9 million in the first six
months of 1998 and increased as a percentage of revenue from 4.1% in the first
six months of 1997 to 8.3% in the first six months of 1998.
Other expense, net. Other expense, net increased from $35,000 in the first
six months of 1997 to $273,000 in the first six months of 1998. The increase is
attributable to $279,000 in the first six months of 1998, partially offset by
net interest income of $6,000 compared to interest expense of $26,000, for the
same prior year period. The increase in interest income is due to investment
earnings related to proceeds from the Offering which was completed in April 1998
compared to borrowings on the Company's line of credit during the same prior
year period.
Provision for income taxes. The Company's effective rate decreased slightly
from 40.4% in the first six months of 1997 to 39.1% in the first six months of
1998. The decrease in the effective rate resulted from lower non-deductible
expenses in the first six months of 1998, as compared to the first six months of
1997.
Net income. The Company's net income increased by $1.1 million, or 271.4%,
from $424,000 in the first six months of 1997 to $1.6 million in the first six
months of 1998. Diluted earnings per share increased from $0.08 in the first six
months of 1997 to $0.28 in the first six months of 1998.
LIQUIDITY AND CAPITAL RESOURCES.
The Company's cash and cash equivalents were $17.7 million at June 30, 1998
compared to $3.7 million at December 31, 1997. The Company's working capital was
$27.6 million at June 30, 1998, and $4.1 million at December 31, 1997. The
increases in cash and cash equivalents and working capital are primarily
attributable to the proceeds from the Offering (see Note 3 of Part I, Item I.)
The Company's operating activities used cash of $630,000 for the six months
ended June 30, 1998, compared to $ 3.2 million used in operations for the same
period in 1997. The decrease in cash used in operations resulted primarily from
an increase in net income and from differences in the timing of payments of
accounts payable and accrued liabilities and the timing of billings and
collections in the six months ended June 30, 1998, compared to the same period
in 1997.
10
<PAGE>
DA CONSULTING GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. -- (CONTINUED)
Investing activities used cash of $4.3 million in the six months ended June
30, 1998, compared to $484,000 for the same period in 1997. The Company
invested $3.6 million of the proceeds from the Offering in available -for-sale
securities.
Financing activities provided cash of $19.3 million in the six months ended
June 30, 1998, compared to $2.5 million for the same period in 1997. The Company
received approximately $21.1 million in net proceeds from the consummation of
the Offering during the second quarter in 1998. The Company received
approximately $1.3 million in connection with private placements of shares of
its common stock in February 1997. The Company used $3.2 million of the
Offering proceeds to repay its revolving line of credit in April 1998, compared
to borrowings of $1.7 million in the same prior year period. The Company has a
$5.0 million unsecured revolving line of credit with a commercial bank, which
bears interest at the prime rate of interest plus 0.5%. The Company utilizes
this line of credit to finance a portion of its working capital needs. There
was no outstanding balance as of June 30, 1998, compared to an outstanding
balance of $3.2 million at December 31, 1997.
During 1998, the Company expects to make $3.0 million in capital
expenditures, primarily for office furniture, computer and office equipment, and
leasehold improvements to support the anticipated growth in its professional and
administrative staff. Capital expenditures in the first six months of 1998 were
$666,000. The Company believes that its current cash balances, cash from future
operations, and its revolving lines of credit will be sufficient to meet the
Company's working capital and cash needs for at least the next 12 months.
ACCOUNTING MATTERS.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("SFAS No. 133"). SFAS No.133 establishes accounting and
reporting standards for derivative instruments and hedging activities and
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. SFAS No. 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. Earlier application of all of the provisions of
the Statement is encouraged, but it is permitted only as of the beginning of any
fiscal quarter that begins after issuance of the Statement. As the Company is
not presently involved in such instruments, adoption of this statement will not
have a material impact on the consolidated financial statements of the Company.
FORWARD LOOKING STATEMENTS.
This Quarterly Report on Form 10-Q contains certain statements, that are
not historical facts, which constitute forward-looking statements within the
meaning of the Private Securities Legislation Reform Act of 1995 which provides
a safe harbor for forward-looking statements. These forward-looking statements
are subject to substantial risks and uncertainties that could cause the
Company's actual results, performance or achievements to differ materially from
those expressed or implied by these forward-looking statements. When used in
this Report, the words "anticipate", "believe", "estimate", "expect", and
similar expressions as they relate to the Company or its management are intended
to identify such forward-looking statements. Actual future results and trends
may differ materially from historical results as a result of certain factors,
including but not limited to: dependence on SAP AG and the ERP software market,
risks associated with management of a geographically-dispersed organization,
fluctuating quarterly results, the need to attract and retain professional
employees, substantial competition, dependence on key personnel, risks
associated with management of growth factors, rapid technological change,
limited protection of proprietary expertise, methodologies and software, as well
as those set forth in Management's Discussion and Analysis section of this
Report and in the Company's final prospectus dated April 24, 1998 as filed with
the Securities and Exchange Commission.
11
<PAGE>
PART II--OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27 Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
June 30, 1998.
12
<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.
DA CONSULTING GROUP, INC.
Dated August 13, 1998
By: /s/ Nicholas H. Marriner
-------------------------------------
Nicholas H. Marriner
President and Chief Executive Officer
By: /s/ Michael J. Mackey
-------------------------------------
Michael J. Mackey
Chief Financial Officer, EVP Finance
and Administration
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 17,732
<SECURITIES> 3,650
<RECEIVABLES> 16,583
<ALLOWANCES> (599)
<INVENTORY> 0
<CURRENT-ASSETS> 38,989
<PP&E> 3,898
<DEPRECIATION> 1,240
<TOTAL-ASSETS> 42,204
<CURRENT-LIABILITIES> 11,376
<BONDS> 0
0
0
<COMMON> 66
<OTHER-SE> 30,762
<TOTAL-LIABILITY-AND-EQUITY> 42,204
<SALES> 34,290
<TOTAL-REVENUES> 34,290
<CGS> 0
<TOTAL-COSTS> 18,018
<OTHER-EXPENSES> 13,692
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (6)
<INCOME-PRETAX> 2,586
<INCOME-TAX> 1,011
<INCOME-CONTINUING> 1,575
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,575
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.28
</TABLE>
