<PAGE>

================================================================================


                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                              -------------------

                                   FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999.

                                       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)

      REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713)  361-3000


  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 [_]

              NUMBER OF SHARES OUTSTANDING OF COMMON STOCK AS OF
                        November 12, 1999 - - 6,418,604

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<PAGE>

                           DA CONSULTING GROUP, INC.
                                     INDEX
                                     PART I
                             FINANCIAL INFORMATION
<TABLE>
<CAPTION>
                                                                               Page No.
                                                                               --------
<S>                                                                            <C>
Item 1.  Financial Statements
         Condensed Consolidated Balance Sheet as of December 31, 1998
           and September 30, 1999 (unaudited)................................    3
         Condensed Consolidated Statement of Income for the Three and
          Nine Months ended September 30, 1998 and 1999 (unaudited)..........    4
         Condensed Consolidated Statement of Cash Flows for the Three
          and Nine Months ended September 30, 1998 and 1999 (unaudited)......    5
         Notes to Condensed Consolidated Financial Statements(unaudited).....    6

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations...........................................    9

Item 3.  Quantitative and Qualitative Disclosures About Market Risk..........   14


                                    PART II

                               OTHER INFORMATION


Item 6.   Exhibits and Reports on Form 8-K...................................   14

Signatures...................................................................   15
</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,            SEPTEMBER 30,
                                                                                            1998                    1999
                                                                                    -----------------       -----------------
                                    ASSETS                                                                       (Unaudited)
                                    ------
<S>                                                                                    <C>                     <C>
Current Assets:
  Cash and cash equivalents...................................................             $ 9,971                 $ 7,131
  Short-term investments......................................................              10,033                   2,314
  Accounts receivable:
   Trade, net.................................................................              15,980                  15,518
   Other......................................................................                  35                       -
  Unbilled revenue............................................................               1,589                   2,588
  Income taxes receivable.....................................................               1,310                   1,040
  Prepaid expenses and other current assets...................................                 626                   1,654
                                                                                           -------                 -------
   Total current assets.......................................................              39,544                  30,245
                                                                                           -------                 -------
  Property and equipment, net.................................................               8,759                  12,605
  Other assets................................................................                 182                      62
  Intangible assets, net......................................................                 418                     405
                                                                                           -------                 -------
             Total assets.....................................................             $48,903                 $43,317
                                                                                           =======                 =======

                    LIABILITIES AND SHAREHOLDERS' EQUITY
                    ------------------------------------

Current Liabilities:
  Accounts payable............................................................             $ 2,954                 $ 2,337
  Accrued expenses............................................................               8,903                   6,889
  Deferred income.............................................................               1,345                     706
  Income taxes payable........................................................                 592                       -
  Deferred income taxes.......................................................                 165                     371
                                                                                           -------                 -------
   Total current liabilities..................................................              13,959                  10,303
                                                                                           -------                 -------
Commitments and contingencies

Shareholder's equity:
  Preferred stock, $0.01 par value: 10,000,000 shares authorized..............                   -                       -
  Common stock, $0.01 par value: 40,000,000 shares authorized; 6,571,777
   shares issued; 6,550,074 and  6,418,604 shares outstanding at December
   31, 1998 and September 30, 1999, respectively..............................                  65                      65
  Additional paid-in capital..................................................              29,359                  29,355
  Retained earnings...........................................................               6,398                   5,806
  Accumulated other comprehensive income (loss)...............................                (762)                   (690)
  Treasury stock, at cost: 21,703 at December 31, 1998 and 153,173 shares at
     September 30, 1999.......................................................                (116)                 (1,522)
                                                                                           -------                 -------
   Total shareholders' equity.................................................              34,944                  33,014
                                                                                           -------                 -------
          Total liabilities and shareholders' equity..........................             $48,903                 $43,317
                                                                                           =======                 =======
</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)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED           NINE MONTHS ENDED
                                                                    SEPTEMBER 30,                SEPTEMBER 30,
                                                                 1998          1999            1998         1999
                                                               -------       -------        ---------     -------
<S>                                                            <C>           <C>            <C>           <C>
Revenue.................................................       $21,882       $15,804        $56,173       $61,980
Cost of revenue.........................................        11,230         8,426         29,249        31,316
                                                               -------       -------        -------       -------
  Gross profit..........................................        10,652         7,378         26,924        30,664

Selling and marketing expense...........................         1,346         1,621          3,781         5,748
Development expense.....................................           779           350          1,523         1,815
General and administrative expense......................         6,436         9,012         16,669        24,238
                                                               -------       -------        -------       -------
  Operating income (loss)...............................         2,091        (3,605)         4,951        (1,137)
Interest income, net....................................           173            92            179           309
Other (expense), net....................................           (12)           (2)          (291)          (90)
                                                               -------       -------        -------       -------
 Total other (expense) income, net                                 161            90           (112)          219
                                                               -------       -------        -------       -------
  Income (loss) before taxes............................         2,252        (3,515)         4,839          (918)
Provision for income taxes..............................           914        (1,318)         1,925          (326)
                                                               -------       -------        -------       -------
   Net income (loss)....................................       $ 1,338       $(2,197)       $ 2,914       $  (592)
                                                               =======       =======        =======       =======
Basic earnings (loss) per share.........................       $  0.20       $ (0.34)       $  0.50       $ (0.09)
Weighted average shares outstanding.....................         6,555         6,419          5,775         6,452

Diluted earnings (loss) per share.......................       $  0.20       $ (0.34)       $  0.48       $ (0.09)
Weighted average shares outstanding.....................         6,822         6,419          6,042         6,452
</TABLE>

                 The accompanying notes are an integral part
              of the condensed consolidated financial statements.

                                       4
<PAGE>

                           DA CONSULTING GROUP, INC.

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In thousands)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                         NINE MONTHS ENDED
                                                                                            SEPTEMBER 30,
                                                                                        1998             1999
                                                                                      ---------       --------
<S>                                                                                   <C>            <C>
Cash flows from operating activities:
  Net income(loss)..............................................................       $  2,914        $  (592)
  Adjustments to reconcile net income (loss) to net cash provided by (used in)
   operating activities:
    Depreciation and amortization...............................................            783          1,758
    Deferred income taxes.......................................................            157            206
    (Gain) Loss on sale of fixed assets.........................................             (8)            41

    Changes in operating assets and liabilities:
       Increase in accounts receivable and unbilled revenue.....................         (6,927)          (502)
       Decrease in income tax receivable........................................              -            270
       Increase in prepaid expenses and other current assets....................           (706)        (1,028)
       Decrease (increase) in other assets......................................           (257)           120
       Increase (decrease) in accounts payable and accrued liabilities..........          2,557         (2,632)
       Increase (decrease) in deferred income...................................          1,937           (639)
       Increase (decrease) in income taxes payable..............................            154           (592)
                                                                                       --------        -------
             Total adjustments..................................................         (2,310)        (2,998)
                                                                                       --------        -------
             Net cash provided by (used in) operating activities................            604         (3,590)
                                                                                       --------        -------
Cash flows from investing activities:
  Proceeds from sale of fixed assets............................................             20             15
  Sales of short-term investments...............................................                         7,723
  Purchases of short-term investments...........................................         (9,984)            (5)
  Purchases of property and equipment...........................................         (3,403)        (5,649)
                                                                                       --------        -------
             Net cash (used in) provided by investing activities................        (13,367)         2,084
                                                                                       --------        -------
Cash flows from financing activities:
  Net repayment of revolving line of credit.....................................         (3,208)             -
  Net repayments of note payable................................................            (55)             -
  Issuance of common stock......................................................         25,268              -
  Repayments of notes receivable from shareholders..............................            503              -
  Stock repurchases.............................................................            (25)        (1,943)
  Deferred offering costs.......................................................         (3,225)             -
  Proceeds from stock option exercise...........................................              -            537
                                                                                       --------        -------
             Net cash used in (provided by) financing activities................         19,258         (1,406)
                                                                                       --------        -------
Effect of changes in foreign currency exchange rate on cash
     and cash equivalents.......................................................           (304)            72
                                                                                       --------        -------
             Decrease in cash and cash equivalents..............................          6,191         (2,840)
Cash and cash equivalents at beginning of year..................................          3,664          9,971
                                                                                       --------        -------
Cash and cash equivalents at end of period......................................       $  9,855        $ 7,131
                                                                                       ========        =======
</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
                                  (Unaudited)

(1)  ORGANIZATION AND BUSINESS

     DA Consulting Group, Inc. and its subsidiaries (the "Company") is a
leading international provider of education for employees of companies
implementing business information technology.

(2)  BASIS OF PRESENTATION

     The unaudited condensed consolidated financial statements included herein
have been prepared by the Company without an 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 condensed
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, 1998, included in the Company's Annual Report on
Form 10-K.

     The unaudited condensed consolidated financial information included herein
reflects 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. Certain reclassifications have been made to prior
year amounts to conform to the current year presentation.  The results of
operations for the interim periods presented herein are not necessarily
indicative of the results to be expected for the full year.

(3)  PUBLIC STOCK OFFERING

     In connection with the consummation of the Company's initial public
offering in April 1998, the Company sold 1.7 million shares of its common stock.
Additionally in May 1998, the Company sold an additional 42,586 shares of its
common stock pursuant to and in connection with the underwriters' over-allotment
option. The Company received aggregate net proceeds of approximately $21.1
million from the sale of such shares, (collectively, the "Public Stock
Offering") after deducting the underwriting discount and other Public Stock
Offering expenses.

(4)  COMPREHENSIVE INCOME

     Comprehensive income is comprised of two components: net income and other
comprehensive income.  Other comprehensive income refers to revenues, expenses,
gains and losses that under generally accepted accounting principles are
recorded as an element of stockholder's equity and are excluded from net income.
Other comprehensive income is comprised of foreign currency translation
adjustments from international subsidiaries.  The components of comprehensive
income are listed below:

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED          NINE MONTHS ENDED
                                                         SEPTEMBER 30,              SEPTEMBER 30,
                                                      1998          1999           1998       1999
                                                     ------       -------        -------     ------
                                                                       (in thousands)
<S>                                                  <C>          <C>            <C>         <C>
Net income (loss)..............................      $1,338       $(2,197)       $2,914      $(592)

Other comprehensive income (loss)..............          11            92          (304)        72
                                                     ------       -------        ------      -----
Comprehensive income (loss)....................      $1,349       $(2,105)       $2,610      $(520)
                                                     ======       =======        ======      =====
</TABLE>

                                       6
<PAGE>

                           DA CONSULTING GROUP, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(5)  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 nine months ended September 30, 1998 and 1999 (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED                  NINE MONTHS ENDED
                                                                        SEPTEMBER 30,                       SEPTEMBER 30,
                                                                  -------------------------           -----------------------
                                                                   1998               1999             1998             1999
                                                                  ------            -------           ------           ------
<S>                                                               <C>               <C>               <C>              <C>
Basic earnings (loss) per share............................       $ 0.20            $ (0.34)          $ 0.50           $(0.09)
                                                                  ======            =======           ======           ======
Net income (loss)..........................................       $1,338            $(2,197)          $2,914           $ (592)
                                                                  ======            =======           ======           ======
Weighted average shares outstanding........................        6,555              6,419            5,775            6,452
Computation of diluted earnings per share:
  Common shares issuable under outstanding stock options...          828                  -              828                -
  Less shares assumed repurchased with proceeds from
  exercise of stock options................................         (561)                 -             (561)               -
                                                                  ------            -------           ------           ------
  Adjusted weighted average shares outstanding.............        6,822              6,419            6,042            6,452
                                                                  ======            =======           ======           ======
Diluted earnings(loss) per share...........................       $ 0.20            $ (0.34)          $ 0.48           $(0.09)
                                                                  ======            =======           ======           ======
</TABLE>

     Approximately 1,015,920 antidilutive options were excluded from the
calculation of diluted earnings per share for the three months and nine months
ended September 30, 1999.

                                       7
<PAGE>

                           DA CONSULTING GROUP, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(6) Geographic Financial Data

   Revenues from the Company's operations are presented below by operating
division.

<TABLE>
<CAPTION>
                                                                          EUROPE,
                                                                       MIDDLE EAST
(In thousands)                                         AMERICAS          & AFRICA       ASIA PACIFIC       TOTAL
                                                       --------        -----------      ------------     --------
<S>                                                     <C>               <C>              <C>            <C>
THREE MONTHS ENDED SEPTEMBER 30, 1998
   Revenues.....................................        $14,470           $ 5,891          $1,521         $21,882
   Operating income.............................          1,260               788              43           2,091
THREE MONTHS ENDED SEPTEMBER 30, 1999
  Revenues......................................          8,827             4,076           2,901          15,804
  Operating income (loss).......................         (2,811)             (872)             78          (3,605)
NINE MONTHS ENDED SEPTEMBER 30, 1998
  Revenues......................................         35,984            15,403           4,786          56,173
  Operating income (loss).......................          3,090             1,476             385           4,951
NINE MONTHS ENDED SEPTEMBER 30, 1999
  Revenues......................................         38,267            16,984           6,729          61,980
  Operating income (loss).......................           (482)               38            (693)         (1,137)
</TABLE>

                                       8
<PAGE>

                           DA CONSULTING GROUP, INC.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

OVERVIEW

  The Company is a leading international provider of education for employees of
companies which are implementing business information technology. The Company
provides customized change communications, education and performance support
services designed to maximize its clients' returns on their substantial
investments in business information technology.

  Recognizing the global nature of its existing and prospective client base, 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 and Asia operations.

RESULTS OF OPERATIONS.

THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
 SEPTEMBER 30, 1999

  Revenue.   Revenue decreased by $6.1 million, or 27.8%, from $21.9 million in
the third quarter of 1998 to $15.8 million in the third quarter of 1999,
reflecting decreases in volume of services offset partially by an increase in
rates.   Revenues from the Americas Division decreased by 39.0% from $14.5
million to $8.8 million; revenues from the EMEA Division decreased by 30.8% from
$5.9 million to $4.1 million; and revenues from the Asia Pacific Division
increased by 90.7% from $1.5 million to $2.9 million. The Company ended the
third quarter with 727 total employees, down from 819 employees at the end of
the same period of the prior year.  Revenue for the third quarter of 1999 was
28.3% less than revenue in the second quarter of 1999 due to a slowdown in the
market for complex computer software and to the postponement of several
projects as clients focus on Y2k readiness. The Company expects further revenue
decline in the fourth quarter of 1999.

  Gross profit.  Gross profit decreased by $3.3 million, or 30.7%, from $10.7
million in the third quarter of 1998 to $7.4 million in the third quarter of
1999 and decreased as a percent of revenue from 48.7% in the third quarter of
1998 to 46.7% in the third quarter of 1999. The decrease in the gross profit
margin percentage is primarily attributable to decreased staff utilization.

  Selling and marketing expense.  Selling and marketing expense increased
$275,000 or 20.4%, from $1.3 million in the third quarter of 1998 to $1.6
million in the third quarter of 1999, and increased as a percentage of revenue
from 6.2% in the third quarter of 1998 to 10.3% in the third quarter of 1999.
This increase as a percentage of revenue is primarily attributable to increased
marketing efforts.

  Development expense.   Development expense decreased $429,000, or 55.1%, from
$779,000 in the third quarter of 1998 to $350,000 in the third quarter of 1999,
and decreased as a percent of revenue from 3.6% in the third quarter of 1998 to
2.2% in the third quarter of 1999. Primary expenditures for development in third
quarter of 1999 were in preparation of the release of FastEd, a tool targeted
for middle market companies. The decrease is due to one time expenditures
incurred during the third quarter of 1998 related to the development of the
Company's Fast Implementation Toolset.

                                       9
<PAGE>

  General and administrative expense.  General and administrative expense
increased by $2.6 million, or 40.0%, from $6.4 million in the third quarter of
1998 to $9.0 million in the third quarter of 1999 and increased as a percentage
of revenue from 29.4% in the third quarter of 1998 to 57.0% in the third quarter
of 1999. The increase in expense is attributable to the cost of building
administrative infrastructure including staff, systems and facilities.  In
addition, during the third quarter of 1999, the Company incurred approximately
$1 million in non-capitalized costs related to the implementation of SAP
software as its primary information system.  The Company also reserved
approximately $300,000 for leasehold abandonment costs related to the
implementation of cost reduction programs. These costs were offset in part by
reduced incentive compensation as a result of slowed year over year revenue
growth beginning late in the second quarter of 1999.

  Operating income.  Operating income decreased from $2.1 million in the third
quarter of 1998 to an operating loss of $3.6 million in the third quarter of
1999 and decreased as a percentage of revenue from 9.6% in the third quarter of
1998 to a loss of 22.8% in the third quarter of 1999.  This decrease resulted
from rapid decreases in revenues resulting in lower expense coverage as compared
to the revenues in the first and second quarters of 1999.

  Other income (expense) net.  Other income (expense), net changed from income
of $161,000 in the third quarter of 1998 to income of $90,000 in the third
quarter of 1999.  Interest income, net changed from income of $173,000 in the
third quarter of 1998 to income of $92,000 in the third quarter of 1999.  The
decrease in interest income is due to investment earnings in 1998 from the
Company's investments of proceeds from the Public Stock Offering, which was
completed in April 1998, compared to lower investment levels in the current
period.

  Provision for income taxes.  The Company's effective tax rate was 40.6% in the
third quarter of 1998 compared to 37.5% in the third quarter of 1999.  The high
effective rate for the third quarter of 1998 is the result of nondeductible
operating losses in various countries.  The lower tax benefit rate for the third
quarter of 1999 was a result of losses in higher income tax rate countries
offset in part by earnings in lower income tax rate countries and nondeductible
operating losses in various countries.

  Net income.  The Company's net income decreased by $3.5 million from $1.3
million in the third quarter of 1998 to a net loss of $2.2 million in the third
quarter of 1999 for reasons discussed above. Diluted earnings per share
decreased from $0.20 in the third quarter of 1998 to a loss per share of $0.34
in the third quarter of 1999.

NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED
 SEPTEMBER 30, 1999

  Revenue.   Revenue increased by $5.8 million, or 10.3%, from $56.2 million in
the first nine months of 1998 to $62.0 million in the first nine months of 1999,
reflecting increases both in volume of services and in rates.   Revenues from
the Americas Division increased by 6.3% from $36.0 million to $38.3 million;
revenues from the EMEA Division increased by 10.3% from $15.4 million to $17.0
million; and revenues from the Asia Pacific Division increased by 40.6% from
$4.8 million to $6.7 million. Revenue for the third quarter of 1999 was 28.3%
less than revenue in the second quarter of 1999 due to a slowdown in the market
for complex computer software and to the postponement of several projects as
clients focus on Y2k readiness.

  Gross profit.  Gross profit increased by $3.7 million, or 13.9%, from $26.9
million in the first nine months of 1998 to $30.7 million in the first nine
months of 1999 and increased as a percent of revenue from 47.9% in the first
nine months of 1998 to 49.5% in the first nine months of 1999. The increase in

                                       10
<PAGE>

the gross profit margin percentage is primarily attributable to increases in
productivity and billing rates offset by decreased staff utilization in the
second and third quarters of 1999.

  Selling and marketing expense.  Selling and marketing expense increased $2.0
million or 52.0%, from $3.8 million in the first nine months of 1998 to $5.8
million in the first nine months of 1999, and increased as a percentage of
revenue from 6.7% for the first nine months of 1998 to 9.3% for the first nine
months of 1999. This increase as a percentage of revenue is primarily
attributable to increased expenditures and declining revenues late in the second
quarter of 1999.

  Development expense.   Development expense increased $292,000 or 19.2%, from
$1.5 million in the first nine months of 1998 to $1.8 million in the first nine
months of 1999, and increased as a percent of revenue from 2.7% in the first
nine months of 1998 to 2.9% in the first nine months of 1999. The increase is
primarily attributable to the Company's expansion of its service offerings and
the development of proprietary and third party technologies to be used in the
education programs delivered to its clients.

  General and administrative expense.  General and administrative expense
increased by $7.5 million, or 45.4%, from $16.7 million in the first nine months
of 1998 to $24.2 million in the first nine months of 1999 and increased as a
percentage of revenue from 29.7% in the first nine months of 1998 to 39.1% in
the same period of 1999. The increase in expense is attributable to the cost of
building administrative infrastructure including staff, systems and facilities.
In addition, the period included approximately $1 million in non-capitalized
costs related to the implementation of SAP software as its primary information
system. The Company incurred costs totaling $575,000 during the first nine
months of 1999 for the termination of employees. The Company also recorded
approximately $300,000 for leasehold abandonment costs related to the
implementation of cost reduction programs. The costs were offset by reduced
incentive compensation in the third quarter of 1999 as a result of slowed year
over year revenue growth.

  Operating income.  Operating income decreased from $5.0 million in the first
nine months of 1998 to an operating loss of $1.1 million in the first nine
months of 1999 and decreased as a percentage of revenue from 8.8% in the first
nine months of 1998 to a loss of 1.8% in the first nine months of 1999.  This
decrease resulted from rapid decreases in revenues resulting in reduced margins
and lower expense coverage.

  Other income (expense) net.  Other income (expense), net changed from expense
of $112,000 in the first nine months of 1998 to income of $219,000 in the first
nine months of 1999.  Interest income, net changed from income of $179,000 in
the first nine months of 1998 to income of $309,000 in the first nine months of
1999.  The increase in interest income is due to investment earnings from the
Company's investments of proceeds from the Initial Public Offering, which was
completed in April 1998. Prior to the Initial Public Offering the company
borrowed against a line of credit.

  Provision for income taxes.  The Company's effective tax rate was 39.8% in the
first nine months of 1998 compared to 35.5% in the first nine months of 1999.
The decrease in the effective rate is due to earnings in lower income tax rate
countries and nondeductible operating losses in various countries.

  Net income.  The Company's net income (loss) decreased $3.5 million from  $2.9
million in the first nine months of 1998 compared to a loss of $592,000 in the
first nine months of 1999 for reasons discussed above. Diluted earnings (loss)
per share decreased from $0.48 in the first nine months of 1998 to a loss of
$0.09 in the first nine months of 1999.

                                       11
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

  The Company's cash and cash equivalents were $7.1 million at September 30,
1999, compared to $10.0 million at December 31, 1998.  The Company's working
capital was $19.9 million at September 30, 1999 and $25.6 million at December
31, 1998.

  The Company's operating activities required cash of $3.6 million for the nine
months ended September 30, 1999, compared to $604,000 provided by operations for
the same period in 1998.  The increase in cash used in operations resulted
primarily from operating losses incurred in the third quarter of 1999. The
increase also resulted from differences in the timing of payments of accounts
payable and accrued liabilities in the nine months ended September 30, 1999,
compared to the same period in 1998.

  Investing activities provided cash of $2.1 million in the nine months ended
September 30, 1999, compared to cash used of $13.4 million for the same period
in 1998, primarily due to sales of short term investments during the first nine
months of 1999.  This was offset in part by purchases of property and equipment
principally related to the implementation cost of the Company's primary
information system.  During the first nine months of 1998, the Company purchased
approximately $9.9 million in short term investments and purchased a license for
its new software system.

  Financing activities used cash of $1.4 million for the nine months ended
September 30, 1999, compared to cash provided of $19.3 million of the same
period of 1998. The Company repurchased 200,000 shares of common stock for $1.9
million and sold approximately 69,000 shares to employees under stock option
plans for $537,000 during 1999.  Cash provided in 1998 primarily consisted of
$22.0 million in net proceeds from an Initial Public Offering offset by a $3.2
million repayment of its revolving line of credit during that 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 may utilize this line of credit to finance a portion of its working
capital needs.

  During 1999, the Company originally planned approximately $10.0 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 nine
months of 1999 were $5.6 million, of which $3 million was related to the
implementation costs of the Company's primary information system.  Capital
expenditures for the remainder of 1999 have been scaled back significantly due
to a temporary decline in the market for the Company's services.

  The Company believes its current cash balances, cash from future operations,
and its revolving line of credit will be sufficient to meet the Company's
working capital and cash needs for at least the next twelve months.

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,
including those relating to Year 2000 compliance issues, 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

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<PAGE>

Report, the words "anticipate," "believe," "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, rapid technological change, limited
protection of proprietary expertise, methodologies and software, as well as
those set forth in the Liquidity and Capital Resources section of Management's
Discussion and Analysis section in the Company's Annual Report on Form 10-K and
other filings with the Securities and Exchange Commission.

YEAR 2000 COMPLIANCE ISSUES

Assessment:  The Company has analyzed and identified the anticipated
consequences that the Year 2000 issue may have on its worldwide operations.  The
major systems in use by the Company may be affected by the Year 2000 issue.
However, the Company has taken the significant steps described below toward
minimizing the risk associated with non-compliance.

Internal Project: During 1998, the Company began to implement plans to ensure
that its systems continue to meet its internal and external requirements.
During the first quarter of 1999, the Company completed the Year 2000
remediation of its corporate headquarters and Americas division based on
currently available information.  The Company completed this remediation process
for its EMEA and Asia Pacific divisions in the second quarter of 1999.
Implementation of the SAP system was completed during the third quarter of 1999.
The company is currently processing daily transactions on its new SAP system.

Internal Systems: In addition to computer and software systems, the Company
recognizes that the use of internal systems such as telephone systems and other
business-related items may be affected by the Year 2000 issue.  The Company is
currently addressing the potential effects and the cost to mitigate these
effects, and believes that the necessary steps can be taken to upgrade or
replace these items without a material impact on the Company's financial
position.

Third Parties: The Company has communicated and will continue to communicate
with third parties with which the Company does business in order to identify, to
the extent possible, the status of such parties' Year 2000 readiness. Although
these companies have confirmed that they will indeed be compliant by the Year
2000, the Company has limited or no control over the actions taken by these
third parties. Accordingly, there can be no assurance that all third parties
with which the Company does business will successfully resolve all of their Year
2000 compliance issues.  The failure of these third parties to resolve their
Year 2000 compliance issues could have an adverse effect on the Company.  The
Company's present analysis of its worst case scenario included Year 2000
failures in the telecommunications and electricity industries that may cause
disruptions in the Company's operations, thus causing an inability to provide
services to customers and temporary financial losses.

Contingency Plan: While the Company is in the process of addressing its Year
2000 issues prior to being affected by them, there can be no assurances as to
the ultimate success of the Company's compliance efforts.  Uncertainties exist
as to the Company's ability to detect all Year 2000 problems. Management
believes that current monitoring and actions provide ample response time to
avoid material and adverse effects on the Company's business and financial
results, however, the Company is unable to quantify at

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<PAGE>

this time the potential effect of any customer or Company non-compliance on the
Company's business or financial results.  The Company has completed over 90% of
its system conversions at September 30, 1999.

The total expected cost of the Company's current systems conversion is
approximately $8.0 million, of which substantially all has been expended.  This
conversion is not necessary in order for the Company to become Year 2000
compliant.  The cost of converting the only non-compliant system would have been
nominal.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

  The Company holds short-term investments, which consist of variable rate
municipal debt instruments. The Company uses a sensitivity analysis technique to
evaluate the hypothetical effect that changes in market interest rates may have
on the fair value of the Company's investments.  At September 30, 1999, the
potential decrease in the fair value of investments assuming a ten percent
adverse change in the market rates is not significant.



                           DA CONSULTING GROUP, INC.

                           PART II--OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

  (a)  Exhibits

       Exhibit 3.1  - Bylaws of the Company, as amended on August 6, 1999

       Exhibit 10.1 - Change in Control Separation Agreement between DA
                      Consulting Group, Inc. and Dennis C. Fairchild dated
                      November 2, 1999.

       Exhibit 27   - Financial Data Schedule

  (b)  Reports on Form 8-K

       No reports on Form 8-K were filed during the reporting period ended
  September 30, 1999.

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                                  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.
                                                     (Registrant)

Dated: November 12, 1999        By:            /s/ Nicholas H. Marriner
                                   --------------------------------------------
                                                 Nicholas H. Marriner
                                         Chairman and Chief Executive Officer


                                By:             /s/ Dennis C. Fairchild
                                   --------------------------------------------
                                                  Dennis C. Fairchild
                                        Chief Financial Officer, Secretary and
                                                       Treasurer


                                By:              /s/ Lynne P. Hohlfeld
                                   --------------------------------------------
                                                   Lynne P. Hohlfeld
                                          International Corporate Controller
                                            (Principal Accounting Officer)

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