SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A
                                   (Mark One)

                /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1999

                                       OR

          / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                           Commission File No. 0-28830

                            Navigant Consulting, Inc.
             (Exact name of Registrant as specified in its charter)


            Delaware                      36-4094854
 (State or other jurisdiction of         (IRS Employer
 incorporation or organization)      Indentification No.)


                615 North Wabash Avenue, Chicago, Illinois 60611
          (Address of principal executive offices, including zip code)

                                 (312) 573-5600
              (Registrant's telephone number, including area code)

           Securities Registered Pursuant to Section 12(b) of the Act:

     Title of Each Class               Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per              New York Stock Exchange
share Preferred Stock Purchase Rights

           Securities Registered Pursuant to Section 12(g) of the Act:

                                      None

     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 |_|
     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|

     As of March 6, 2000, 41.1 million shares of the  Registrants  common stock,
par value $.001 per share  ("Common  Stock"),  were  outstanding.  The aggregate
market  value of shares of Common Stock held by  non-affiliates,  based upon the
closing sale price of the stock on the New York Stock Exchange on March 6, 2000,
was approximately $401.0 million.

     The Registrant's  Annual Meeting of Stockholders is scheduled to be held in
the latter part of 2000.

     Statements  included in this report which are not historical in nature, are
intended to be, and are hereby identified as,  "forward-looking  statements" for
purposes  of  the  Private  Securities  Litigation  Reform  Act  of  1995.  Such
statements  appear  in a number of places  in this  report,  including,  without
limitation, Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of Operations."  When used in this report,  the words  "anticipate,"
"believe,"  "intend,"  "estimate," and "expect" and similar  expressions as they
relate  to  the  Company  or  its  management  are  intended  to  identify  such
forward-looking  statements.  The Company cautions readers that  forward-looking
statements, including without limitation, those relating to the Company's future
business  prospects,  revenues,  working  capital,  liquidity,  and income,  are
subject to certain risks and  uncertainties  that could cause actual  results to
differ materially from those indicated in the forward looking statements, due to
several important factors herein  identified,  among others, and other risks and
factors  identified  from time to time in the  Company's  reports filed with the
SEC.  The Company  undertakes  no  obligation  to publicly  update or revise any
forward-looking statements to reflect current or future events or circumstances.

EXPLANATORY NOTE:

     This  document  incorporates  our Annual Report on Form 10-K for the period
ended December 31, 1999, as filed with the  Securities  and Exchange  Commission
(the "SEC") on March 28, 2000 (the "Original Filing") and the amendments to Form
10-K filed with the SEC on April 29, 2000, May 4, 2000 and on June 16, 2000.

     This report continues to speak as of the date of the Original Filing and we
have not updated the disclosure in this report to speak to any later date. While
this report primarily relates to the historical period covered,  events may have
taken place since the date of the Original Filing that might have been reflected
in this report if they had taken place prior to the Original  Filing.  Any items
in the Original Filing not expressly changed hereby shall be as set forth in the
Original  Filing.  All information  contained in this amendment and the Original
Filing is subject to updating  and  supplementing  as provided in the  Company's
periodic reports filed with the SEC.


<PAGE>




                                     PART I

Item 1. Business

General

     Navigant  Consulting,  Inc., formerly The Metzler Group, Inc., ("We" or the
"Company") is a provider of consulting  services to electric and gas  utilities,
insurance companies and pharmaceutical  companies,  as well as other Fortune 100
companies.   As  of  December  31,  1999,  our  services  included:   management
consulting,  strategic consulting,  financial and claims services, and economics
and policy  consulting.  We believe that our  experience,  reputation,  industry
focus and broad range of services will enable us to compete  effectively  in the
consulting marketplace. Our growth strategy is to:

    --  Continue to build a complementary spectrum of consulting services;

    --  Leverage existing relationships and expand our client base in both
domestic and international markets;

    --  Continue to recruit and retain highly skilled professionals; and

     -- Continue to acquire  consulting  companies  that  provide  complementary
services or geographic presence.

     Our  executive  office is  located  at 615 North  Wabash  Avenue,  Chicago,
Illinois 60611. Our telephone number is (312) 573-5600.

Marketing and Sales

     We market our services  directly to mid-level and senior executives using a
variety of business development and marketing techniques to communicate directly
with current and prospective clients, including on-site presentations,  industry
seminars and industry-specific articles and other publications.

     A significant portion of new business arises from prior client engagements.
In  addition,  we seek to  leverage  the client  relationships  of firms we have
acquired by cross-selling existing services. Clients frequently expand the scope
of engagements  during delivery to include follow-on  complementary  activities.
Also, our on-site presence affords us the opportunity to become aware of, and to
help define,  additional  project  opportunities  as they are  identified by the
client.  The  client  relationships   arising  out  of  many  engagements  often
facilitate  our  ability  to market  additional  capabilities  to clients in the
future.

Human Resources

     As of December 31, 1999, we had approximately 2,200 employees.  Our success
depends in large part on attracting, retaining and motivating talented, creative
and  experienced  professionals  at all levels.  In  connection  with our hiring
efforts,  we employ  internal  recruiters,  retain  executive  search  firms and
utilize personal and business contacts to recruit professionals with significant
industry or consulting experience. Our consultants are drawn from the industries
we serve and from  accounting  and other  consulting  organizations.  We seek to
promote loyalty and continuity of our  consultants by offering  packages of base
and  incentive  compensation  and benefits  that we believe are  attractive  and
competitive.

     We derive our revenues almost  exclusively  from services  performed by our
professional  consultants.  Our future  performance  will  continue to depend in
large part upon our ability to attract and retain highly  skilled  professionals
possessing  appropriate  skills and senior academics with superior  professional
reputations.  Qualified  professional  consultants  are in great  demand and are
likely to remain a limited  resource for the foreseeable  future.  We may not be
able to retain a substantial  majority of our existing or future consultants for
the  long  term.  In  addition,  many  of our  consultants  are not  subject  to
non-competition or similar  restrictions or are subject to such restrictions for
only a limited  period of time.  The loss of the  services of, or the failure to
recruit,  a significant number of consultants would adversely affect our ability
to secure and complete  engagements and would have a material  adverse effect on
our business.

     In addition to the employees discussed above, we supplement our consultants
on certain  engagements  with independent  contractors,  some of whom are former
employees.  We believe that the practice of retaining independent contractors on
a  per-engagement  basis  provides  us with  greater  flexibility  in  adjusting
professional personnel levels in response to changes in demand for our services.

Competition

     We compete in the worldwide  market for consulting  services,  although our
principal market is North America,  which accounted for over 95% of our revenues
in 1999 and 1998. The market for consulting  services is intensely  competitive,
highly  fragmented  and  subject to rapid  change.  The market  includes a large
number of  participants  from a variety of market  segments,  including  general
management,  information technology,  and marketing consulting firms, as well as
the  consulting  practices  of  national  accounting  firms,  and  other  local,
regional, national and international firms. Many of these companies are national
and international in scope and have greater personnel,  financial, technical and
marketing  resources  than we do. We believe  that our  experience,  reputation,
industry focus and broad range of services will enable us to compete effectively
in the consulting marketplace.


Item 2.   Properties

     Our headquarters are currently  located in a 15,000 square foot building in
Chicago,  Illinois  which  we own.  In  addition  to our  headquarters,  we have
approximately 100 operating leases for office facilities  worldwide.  Additional
space may be required as our business expands geographically,  but we believe we
will be able to obtain  suitable space as needed.  We have principal  offices in
the following cities:



         Austin, TX        Westminster, CO           Menlo Park, CA
         Baltimore, MD     Emeryville, CA            New York City, NY
         Boston, MA        Ft. Lauderdale, FL        Princeton, NJ
         Burlington, MA    Houston, TX               Sacramento, CA
         Chicago, IL       London, England           San Francisco, CA
         Cleveland, OH     Los Angeles, CA           Washington, DC
         Dallas, TX


Item 3.   Legal Proceedings

     Numerous  purported  class  action  lawsuits  have been filed  against  the
Company since November 1999 in the United States District Court for the Northern
District of Illinois.  These actions name as defendants  the Company and certain
former directors and former executive officers (one of whom, however, remains an
employee of the  Company) of the  Company and are  purported  to be on behalf of
persons who  purchased  shares of the  Company's  common  stock  during  various
periods  through  November  1999. The  complaints  allege various  violations of
federal securities law, including  violations of Section 10(b) of the Securities
Exchange  Act of 1934,  and  that  the  defendants  made  materially  misleading
statements and/or material omissions which artificially  inflated prices for the
Company's  common stock.  The plaintiffs seek a judgement  awarding  damages and
other relief.  The Company  believes it has meritorious  defenses and intends to
vigorously  defend  these  actions.  The  outcome  of these  lawsuits  cannot be
predicted with certainty and a material  adverse  judgement  against the Company
could have a material adverse effect on the Company.

     Navigant  International,  Inc., a national travel agency  headquartered  in
Denver,  Colorado,  sued the Company in July 1999 in the United States  District
Court for the District of Colorado  claiming  that the use of  "Navigant" in our
name  infringes  on their use of and rights in such name.  The  complaint  seeks
declaratory relief and an injunction  against our use of "Navigant,"  attorneys'
fees and other related relief. The Company believes it has meritorious  defenses
and intends to vigorously defend this action.

     During  the  fourth  quarter  of 1999  the  Company  settled  a  previously
disclosed  lawsuit  initially  brought by the Company against Deborah T. Kearns,
Alan G. Carnrite,  the Estate of Laurel Dell Manning,  and David R. Watkins, who
were the former  shareholders of Sterling  Consulting Group, Inc. Ms. Kearns and
Mr. Carnrite filed a counterclaim asserting various causes of action against the
Company  and two of its  officers.  The  lawsuit  was  settled by payment by the
Company of $1.3  million  to Ms.  Kearns and $0.1  million to Mr.  Carnrite,  no
payment  by Ms.  Kearns  or  Mr.  Carnrite  and no  admission  of  liability  or
wrongdoing by any party in connection with any claims or causes of action in the
lawsuit.

     In addition,  from time to time, we are party to various other lawsuits and
claims in the ordinary  course of business.  While the outcome of those lawsuits
or claims  cannot be  predicted  with  certainty,  we do not believe that any of
those lawsuits or claims will have a material adverse effect on the Company.


Item 4.   Submission of Matters to a Vote of Security Holders.

     None.

Executive Officers of the Registrant

     At February 1, 2000, the Registrant had the following executive officers:

     Mitchell H. Saranow,  54, has served as Chairman of the Board and co-CEO of
the Company since  November  1999.  He has served as one of our directors  since
1996.  Mr.  Saranow has served as Chairman of The Saranow  Group L.L.C.  and its
affiliated  companies since October 1984. He founded Fluid  Management,  L.P. in
April 1987 and served as Chairman  and Chief  Executive  Officer  until  January
1997.  Mr.  Saranow also serves on the boards of Lawson  Products,  Mid-Atlantic
CATV, ELF Machinery, L.L.C., and HyperLOCK Technologies.

     John J. Reed,  45, has served as  Vice-Chairman  and co-CEO of the  Company
since  November 1999. He was appointed a director of the Company on November 21,
1999. Prior to being named  Vice-Chairman and co-CEO, Mr. Reed was the Executive
Managing Director of the Company's  Management  Consulting  practice.  From 1988
until 1999, Mr. Reed was President of Reed Consulting  Group,  which the Company
acquired in August 1997.

     Carl S.  Spetzler,  58, has served as  President  and co-CEO of the Company
since  November 1999. He was appointed a director of the Company on November 21,
1999. Prior to being named President and co-CEO,  Dr. Spetzler was the Executive
Managing  Director of the Company's  Strategic  Consulting  practice.  From 1986
until 1999, Dr. Spetzler was the President of Strategic  Decisions Group,  which
the Company acquired in February 1999.

     James F.  Hillman,  42,  has  served as the  Chief  Financial  Officer  and
Treasurer of the Company since  December  1999.  From May 1999 through  November
1999, he was President of Azimuth  Consulting  LLC. Mr.  Hillman had  previously
served as the Company's  Chief  Financial  Officer and Treasurer  from June 1996
through  April 1999.  From 1988 until he joined the Company in 1996, he was with
the  Ameritech  Corporation,  most  recently as the Chief  Financial  Officer of
Ameritech  Monitoring   Services,   Inc.  Mr.  Hillman  is  a  certified  public
accountant.

     Philip  P.  Steptoe,  48,  has  served  as the  Company's  Vice  President,
Secretary and General Counsel since February 2000. Previously, Mr. Steptoe was a
partner  with the  national  law firm of Sidley & Austin.  During  1994-1995  he
served  for four  months as Acting  General  Counsel  for  Orange  and  Rockland
Utilities,  Inc., a New York electric and gas utility. Prior to joining Sidley &
Austin in 1988,  he was an associate and later a partner in the Chicago law firm
of Isham, Lincoln & Beale.


<PAGE>




                                     PART II

Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters.

Market Information

     The shares of Common  Stock of the Company are traded on the New York Stock
Exchange (the "NYSE") under the symbol "NCI."

     The following table sets forth, for the periods indicated, the high and low
sale prices per share.  Sales prices for periods  beginning July 27, 1999 are as
reported on the NYSE Composite Tape. Prior to July 27, 1999 the Company's Common
Stock was  traded on the Nasdaq  National  Market  under the  symbol  "METZ" and
prices for such periods are as as reported on the Nasdaq National Market.

                                    High Low

            1999
            Fourth quarter....    $48.50    $8.69
            Third quarter.....    $54.25   $26.13
            Second quarter....    $36.13   $22.81
            First quarter.....    $52.00   $28.44
            1998
            Fourth quarter....    $49.00   $28.88
            Third quarter.....    $37.75   $27.25
            Second quarter....    $36.63   $24.25
            First quarter.....    $33.92   $24.00

Holders

     As of March 6, 2000,  there  were  approximately  244  holders of record of
shares of common stock of the Company.

Distributions

     The Company has not paid any cash dividends since its organization and does
not  anticipate  that it will  make any such  distributions  in the  foreseeable
future.

Sale of Unregistered Securities

     Within the past three  years,  we have  issued the  following  unregistered
securities:
<TABLE>
<CAPTION>

                      Type of    Number of                                                 Exemption
     Date             Securities    Shares      Purchaser             Consideration(1)      Claimed
     ----             ----------    ------      ---------             ----------------      -------
<S>                  <C>          <C>          <C>                   <C>                   <C>

January 1, 1997       Common          63,272   Former stockholders        All outstanding     Section
                       Stock                      of L.E.Burgess             shares of        4(2)
                                                Consultants, Inc.           L.E.Burgess
                                                                         Consultants, Inc.

July 31, 1997         Common       3,205,767   Former stockholders        All outstanding     Section
                       Stock                       of Resource           shares of Resource   4(2)
                                                   Management               Management
                                                  International,           International,
                                                       Inc.                     Inc.




<PAGE>


                      Type of    Number of                                                    Exemption
       Date         Securities     Shares          Purchaser             Consideration(1)     Claimed
       ----         ----------     ------          ---------             ----------------     -------

December 1, 1997      Common         578,727   Former stockholders        All outstanding     Section
                       Stock                       of Sterling           shares of Sterling   4(2)
                                                    Consulting            Consulting Group
                                                   Group, Inc.                  Inc.

December 1, 1997      Common          45,000   Former stockholders        All outstanding     Section
                       Stock                     of Reed-Stowe &          shares of Reed-     4(2)
                                                    Co., Inc.            Stowe & Co., Inc.

April 3, 1998         Common         137,931   Former stockholders        All outstanding     Section
                       Stock                    of AUC Management          shares of AUC      4(2)
                                                Consultants, Inc.            Management
                                                                         Consultants, Inc.

April 3, 1998         Common          51,562   Former stockholders        All outstanding     Section
                       Stock                      of Hydrologic              shares of        4(2)
                                                 Consultants Inc.           Hydrologic
                                                  of California.          Consultants Inc.
                                                                           of California.

June 1, 1998          Common           9,200    Former members of          All membership     Section
                       Stock                     The VisionTrust          interest of The     4(2)
                                                 Marketing Group,           VisionTrust
                                                       LLC                Marketing Group,
                                                                                LLC

August 31, 1998       Common       5,596,488    Former members of         All outstanding     Section
                       Stock                    Peterson Consultin           membership       4(2)
                                                       LLC                  interest of
                                                                              Peterson
                                                                           Consulting LLC

August 31, 1998       Common         616,737   Former stockholders        All outstanding     Section
                       Stock                   of Saraswati Systems          shares of        4(2)
                                                   Corporation           Saraswati Systems
                                                                            Corporation

August 31, 1998       Common         103,900   Former stockholders        All outstanding     Section
                       Stock                    of Applied Health        shares of Applied    4(2)
                                                  Outcomes, Inc.       Health Outcomes, Inc.

February 7, 1999      Common       2,437,223   Former stockholders        All outstanding     Section
                       Stock                       of Strategic         shares of Strategic   4(2)
                                                  Decisions Group         Decisions Group

March 31, 1999        Common         952,227   Former stockholders        All outstanding     Section
                       Stock                         of Triad             shares of Triad     4(2)
                                               International, Inc.      International, Inc.

March 31, 1999        Common         670,592   Former stockholders        All outstanding     Section
                       Stock                        of GeoData           shares of GeoData    4(2)
                                                 Solutions, Inc.          Solutions, Inc.

March 31, 1999        Common         234,109   Former stockholders        All outstanding     Section
                       Stock                        of Dowling           shares of Dowling    4(2)
                                                 Associates, Inc.         Associates, Inc.

</TABLE>

(1)  Does  not  take  into  account  assumed  debt  or cash  paid to  dissenting
shareholders or for fractional shares.


<PAGE>

Item 6.   Selected Financial Data.

     The following  financial and operating  data should be read in  conjunction
with the  information set forth under  "Management's  Discussion and Analysis of
Financial  Condition and Results of Operations" and the  consolidated  financial
statements of the Company and related notes thereto appearing  elsewhere in this
report.
<TABLE>
<CAPTION>

                                                                              Years Ended December 31,
                                                                              (1)
                                                       1999        1998        1997         1996       1995
                                                       ----        ----        ----         ----       ----


Statement of Operations Data:
<S>                                                   <C>         <C>         <C>          <C>        <C>
Revenues.........................................     $397,694    $287,626    $228,731     $181,375   $154,426
Cost of services.................................      266,080     174,175     145,144      117,559     99,879
                                                     ----------  ----------  ----------   ----------- --------
Gross profit.....................................      131,614     113,451      83,587       63,816     54,547
General and administrative expenses(2)...........      107,274      62,093      55,579       48,031     53,930
Amortization.....................................       24,300         --          --           --        --
Merger related costs and restructuring charges
   (benefit).....................................         (206)     12,778       1,312          --        --
Stock option compensation expense................        3,850         --          --           --        --
                                                      --------     -------       -----         ----      ----


Operating income (loss)..........................       (3,604)     38,580      26,696       15,785        617
Other expense (income), net(2)...................        2,191      (2,638)     (1,205)         332     (5,270)
                           --                            -----      ------      ------          ---     ------

Income (loss) before income tax expense..........       (5,795)     41,218      27,901       15,453      5,887
Income tax expense(3)............................        8,827      25,637       9,237           97        480
                  --                                     -----      ------       -----           --        ---

Net income (loss)................................    $ (14,622)    $15,581     $18,664      $15,356    $ 5,407
                                                     =========     =======     =======      =======    =======

Net income (loss) per basic share................       $ (.35)     $ 0.43      $ 0.56       $ 0.47     $ 0.17
                                                        ======      ======-     ======-      ======     ======
Net income (loss) per diluted share..............       $ (.35)     $ 0.41      $ 0.55       $ 0.47     $ 0.17
                                                        ======      ======-     ======-      ======     ======
</TABLE>
<TABLE>
<CAPTION>


                                                                                    As of December 31,
                                                                              (1)
                                                       1999        1998        1997         1996       1995
                                                   ----------- ----------- ----------- ---- ------ --------

Balance Sheet Data:
<S>                                                    <C>        <C>          <C>          <C>        <C>
Cash and cash equivalents........................      $42,345    $119,704     $45,972      $33,859    $ 1,999
Working capital..................................       67,598     146,509      58,708       45,551     11,112
Total assets.....................................      414,676     230,517     125,827       94,542     52,280
Long-term debt, less current portion.............          --          --          319        1,561      1,202
Total stockholders' equity.......................     $300,669    $164,904     $69,215      $50,686    $12,558

</TABLE>

(1)  The amounts above have been restated and  reclassified as described in Note
     3 of Notes to Consolidated Financial Statements.  Certain billable expenses
     which had  previously  been  presented  net of related  revenues  have been
     reclassified.  As a result,  both  revenue  and cost of sales for the years
     1998,  1997, 1996 and 1995 have increased by $13.9 million,  $12.9 million,
     $12.7 million and $13.9 million, respectively.

(2)  For the year ended December 31, 1995, general and  administrative  expenses
     include  $4.3   million   reported  by  Peterson   Consulting   LLC  for  a
     restructuring  charge  related  to  the  settlement  of  obligations  under
     non-cancelable  operating  leases and other  moving and  transition  costs.
     Other income for the year ended December 31, 1995 includes an extraordinary
     gain  of  $5.7  million   recorded  by  Peterson  in  connection  with  the
     extinguishment of certain other debt obligations.

(3)  During the periods  presented,  certain of our operating  subsidiaries were
     entities not subject to federal income  taxation.  The provision for income
     taxes for the year ended  December 31, 1998  reflects a one-time,  non-cash
     charge of $7.2 million  resulting  from the conversion of Peterson from the
     modified cash basis to the accrual basis for tax purposes.


<PAGE>




                                     PART II

Item 7.   Management's Discussion and Analysis of Financial Condition and
Results of Operations

     This  Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations relates to the Consolidated  Financial Statements included
in this annual report on Form 10-K.

Overview

     We are a  nationwide  provider of  consulting  services to electric and gas
utilities,  insurance companies and pharmaceutical  companies,  as well as other
Fortune 100 companies. We derive substantially all of our revenues from fees for
professional  services.  Over the last three years, the substantial  majority of
our revenues have been generated  under standard hourly or daily rates billed on
a time-and-expenses basis. Our clients are typically invoiced on a monthly basis
with revenue recognized as the services are provided.

     Our most significant expenses are project personnel costs, which consist of
consultant salaries and benefits, and travel-related direct project expenses. We
typically  employ our  project  personnel  on a  full-time  basis,  although  we
supplement our project personnel through the use of independent contractors.  We
retain contractors for specific client engagements on a task-specific,  per diem
basis during the period their expertise or skills are required.  We believe that
retaining  contractors  on a  per-engagement  basis  provides  us  with  greater
flexibility  in  adjusting  project  personnel  levels in response to changes in
demand for our services.

Acquisitions

     As  part  of  our  growth  strategy,   we  expect  to  continue  to  pursue
complementary  acquisitions to expand our geographic  reach,  expand the breadth
and  depth  of our  service  offerings  and  enhance  our  consultant  base.  In
furtherance of this growth strategy,  we acquired  twenty-four  consulting firms
since our initial public offering in October 1996.

     During 1997, we acquired five companies: Resource Management International,
Inc. (RMI), Reed Consulting Group, Inc. (Reed),  Sterling Consulting Group, Inc.
(Sterling),  Reed-Stowe & Co., Inc. (RSC),  and L.E. Burgess  Consultants,  Inc.
(Burgess).  These transactions were accounted for as poolings of interests.  The
Company's  consolidated financial statements have been restated as if RMI, Reed,
Sterling and RSC had been combined for all periods presented.  The stockholders'
equity and the  operations of Burgess were not  significant in relation to those
of the  Company.  As such,  the  Company  recorded  the Burgess  transaction  by
restating  stockholders'  equity  as of  the  date  of the  acquisition  without
restating prior period financial statements.

     RMI. As of July 31, 1997, we acquired substantially all of the common stock
of RMI in exchange  for 3.2 million  shares of our common  stock  (valued at the
time of closing at  approximately  $75.3  million) and  acquired  the  remaining
minority interest in exchange for cash. RMI, based in Sacramento, California, is
a provider of consulting  services to gas, water, and electric  utilities,  with
operations  in  the  western  and  eastern   United  States  and   international
marketplace. RMI's broad range of engineering, technical and economic regulatory
services  complemented  our  management  consulting and  information  technology
services.

     Reed.  As of August 15, 1997, we acquired  substantially  all of the common
stock of Reed in exchange for 0.8 million  shares of our common stock (valued at
the time of closing at  approximately  $17.6 million) and acquired the remaining
minority interest in exchange for cash. Reed, based in the Boston, Massachusetts
area,  provides  strategic  planning,  operations  management  and  economic and
regulatory  services to electric and natural gas  utilities.  Reed's  operations
expanded  our  services  and  client  base in the  northeast  United  States and
internationally.

     Other 1997 Acquisitions.  We acquired all of the common stock of Burgess as
of January 1, 1997,  and all of the common  stock of  Sterling  and of RSC as of
December 1, 1997. In the aggregate for these three  transactions,  we issued 0.7
million  shares  of  our  common  stock  (valued  at  the  time  of  closing  at
approximately $18.5 million). The consulting operations of these three companies
were  complementary to our existing  businesses and have been integrated  within
the operations of other existing or acquired companies.

     During 1998, we acquired  eight  companies:  LECG,  Inc.  (LECG),  Peterson
Consulting, LLC (Peterson),  Saraswati Systems Corporation (SSC), Applied Health
Outcomes,  Inc.  (AHO),  AUC  Management  Consultants,  Inc.  (AUC),  Hydrologic
Consultants, Inc. of California (HCI), American Corporate Resources, Inc. (ACR),
and The Vision  Trust  Marketing  Group,  LLC  (VTM).  These  transactions  were
accounted for as poolings of interests.  The  Company's  consolidated  financial
statements have been restated as if LECG,  Peterson,  SSC, AHO, AUC, and HCI had
been  combined  for all  periods  presented.  The  stockholders'  equity and the
operations  of ACR and VTM  were not  significant  in  relation  to those of the
Company. As such, the Company recorded the ACR and VTM transactions by restating
stockholders'  equity as of the dates of the acquisition without restating prior
period financial statements.

     LECG.  As of August 19, 1998, we acquired  substantially  all of the common
stock of LECG in exchange for 7.3 million  shares of our common stock (valued at
the time of closing at approximately  $228.9 million) and acquired the remaining
minority  interest  in  exchange  for cash.  LECG,  based in the San  Francisco,
California  area, is a provider of economic  consulting and  litigation  support
services.  LECG's  operations  further  increased  our economic  and  regulatory
expertise and expanded our presence in the telecommunications industry.

     Peterson.  As of August 31,  1998,  we  acquired  substantially  all of the
common stock of Peterson in exchange for 5.6 million  shares of our common stock
(valued at the time of closing at approximately $156.7 million) and acquired the
remaining minority interest in exchange for cash. Peterson, based in the Chicago
area, is a provider of information  management services.  Peterson's  operations
expanded our service offerings in claims  management,  litigation  support,  and
information management.

     Other 1998  Acquisitions.  We acquired all of the common stock of AUC, HCI,
ACR as of April 3, 1998 and all of the  common  stock of VTM as of June 1, 1998.
We acquired all of the common  stock of SSC and AHO as of September 1, 1998.  In
the aggregate for these six  transactions,  we issued 1.2 million  shares of our
common stock (valued at the time of closing at approximately $35.3 million). The
consulting  operations of all six companies were  complementary  to our existing
businesses and have been  integrated  within the operations of other existing or
acquired companies.

     1999 Acquisitions.  During 1999, the Company completed eleven  acquisitions
(collectively,  the "1999  Acquisitions").  The 1999 Acquisitions were accounted
for by the  purchase  method of  accounting  and,  accordingly,  the  results of
operations have been included in the consolidated  financial statements from the
respective  dates of  acquisition.  On February 7, 1999,  the Company issued 2.4
million  shares of common stock (valued at the time of closing at  approximately
$123.7  million)  for  substantially  all of the  outstanding  common  stock  of
Strategic  Decisions  Group and  acquired  the  remaining  minority  interest in
exchange for cash. On
      March 31,  1999,  the Company  completed  the  acquisitions  of all of the
outstanding stock of Triad  International,  Inc., GeoData  Solutions,  Inc., and
Dowling  Associates,  Inc. in exchange for 1.8 million  shares of the  Company's
common stock (valued at the time of closing at approximately $57.3 million).  On
September  30,  1999,  the Company  completed  its  acquisition  of the business
operations  and certain  assets of Penta  Advisory  Services LLC (Penta) and the
stock of Scope  International,  Inc.  (Scope) for a total cash purchase price of
$15.1  million.  The  purchase  agreements  for Penta and Scope also provide for
additional payments,  payable in cash or Company common stock, over the next two
to five years contingent on future revenue growth and gross margin targets.  The
additional payments,  if any, will be accounted for as additional  goodwill.  On
October 1, 1999,  the Company  completed the  acquisition of the stock of Brooks
International AB, Brooks  International  Consulting OY, and Brooks International
SPRL for an aggregate cash purchase price of $3.3 million.  On November 1, 1999,
the Company completed the acquisition of the stock of The Barrington  Consulting
Group,  Inc.  (Barrington) in exchange for $14.4 million in cash paid at closing
and total  deferred cash  payments of $7.8 million,  payable in two equal annual
installments. The purchase agreement for Barrington also provides for additional
cash payments of up to $7.8 million in the  aggregate,  which are  contingent on
continued employment with the Company of certain Barrington shareholders and are
payable in cash in two annual  installments.  On December  1, 1999,  the Company
completed the acquisition of all of the assets of Glaze Creek  Partners,  LLC in
exchange for $0.8 million in cash.  There were no  pre-acquisition  intercompany
transactions between the Company and the 1999 Acquisitions.

     An inability to  effectively  integrate the  acquisitions  or any companies
acquired in the future may adversely  affect our ability to bid  successfully on
engagements  and to grow our  business.  Performance  problems  or  dissatisfied
clients  at one  company  could have an adverse  effect on our  reputation  as a
whole.  If our reputation were damaged,  for those or other reasons,  this could
make it more difficult to market our services or to acquire additional companies
in the future. In addition, acquired companies may not operate profitably.

     Acquisitions  also involve a number of additional risks,  including,  among
others, the following:

    --  Diversion of management's attention;

    --  Potential loss of key clients or personnel;

    --  Risks associated with unanticipated assumed liabilities and problems;and

     --  Risks of  managing  businesses  or  entering  markets  in which we have
limited or no direct expertise.

     We expect to  continue  to  acquire  companies  as an element of our growth
strategy.  Acquisitions involve certain risks that could cause our actual growth
to differ from our expectations. For example

     -- We may  not  be  able  to  continue  to  identify  suitable  acquisition
        candidates or to acquire additional consulting firms on favorable terms.

     -- We compete with other companies to acquire  consulting  firms. We cannot
        predict  whether this  competition  will increase.  If competition  does
        increase,  there may be fewer suitable  consulting firms available to be
        acquired and the price for suitable acquisitions may increase.

     -- We may not be able to integrate the operations  (accounting  and billing
        functions,  for  example)  of  businesses  we  acquire  to  realize  the
        economic, operational and other benefits we anticipate.

     -- We may not be able to successfully  integrate  acquired  businesses in a
        timely  manner  or we may  incur  substantial  costs,  delays  or  other
        operational or financial problems during the integration process.

     -- It may be  difficult  to integrate a business  with  personnel  who have
different business backgrounds and corporate cultures.

Results of Operations

     The  following  table  sets  forth,  for the  periods  indicated,  selected
statement of operations data as a percentage of revenues:
<TABLE>
<CAPTION>

                                                           Years Ended December 31,
                                                           1999       1998      1997
                                                        ---------   - ------- - ----

<S>                                                        <C>       <C>       <C>
Revenues..............................................     100.0 %   100.0 %   100.0 %
     Cost of services.................................      66.9      60.6      63.5
                                                        ----------------------------
Gross profit..........................................      33.1      39.4      36.5
     General and administrative expenses..............      26.9      21.6      24.3
     Amortization expense.............................       6.1       --        --
     Merger-related costs and restructuring charges...       --        4.4       0.5
     Stock option compensation expense................       1.0       --        --
                                                        ----------------------------
Operating income......................................      (0.9)     13.4      11.7
     Other expense (income), net......................       0.6      (0.9)     (0.5)
                                                        -----------------------------

Income before income tax expense......................      (1.5)     14.3      12.2
     Income tax expense...............................       2.2       8.9       4.0
                                                        ----------------------------

Net income (loss).....................................      (3.7)%     5.4 %     8.2 %
                                                        ============================
</TABLE>


1999 Compared to 1998

     Revenues.  Revenues increased $110.1 million,  or 38%, to $397.7 million in
the year ended  December  31,  1999 from $287.6  million in 1998.  The growth in
revenue was primarily  due to  acquisitions,  expansion of services  provided to
existing  clients,  engagements  with new  clients,  and  increased  selling and
business  development  efforts.  During  1999,  the  Company  made  acquisitions
consistent  with its strategy of  acquiring  consulting  companies  that provide
complementary  services or broaden the Company's geographic  presence.  The 1999
Acquisitions had pre-acquisition revenues for 1999 and 1998 of $39.4 million and
$115.0  million,  respectively,   which  were  not  included  in  the  Company's
consolidated results of operations. Pro forma revenues,  adjusted for the effect
of the 1999 acquisitions,  increased $34.4 million,  or 9%, to $437.1 million in
the year ended December 31, 1999 from $402.7 million in 1998.

     The Company's  consolidated 1998 revenues included certain operations which
were not  reflected in 1999.  The 1998 reported and pro forma  revenues  include
revenues  of $5.3  million  related  to certain  principals  who  departed  from
Peterson in July 1998 and $3.4  million of revenues  related to  Insurance  Data
Resources, Inc., a subsidiary of Peterson, which was disposed of on September 1,
1998.  Excluding  the  effects  of the  departed  principals  and  the  disposed
operations,  the revenue increase in 1999 would have been $43.1 million, or 11%,
to $437.1 million from $394.0 million in the prior year. Consulting  engagements
with new  clients  and an  increase  in the  average  size of client  consulting
engagements  contributed  $34.6 million and $8.5 million,  respectively,  of the
$43.1 million of organic revenue growth in 1999.

     Gross  Profit.  Gross  profit  consists of revenues  less cost of services,
which includes consultant  compensation and benefits and direct  project-related
expenses.  Gross profit  increased  $18.1 million,  or 16%, to $131.6 million in
1999 from $113.5 million in 1998.  Higher 1999 revenues would have resulted in a
$43.4  million  increase  in gross  profit  had 1999 gross  profit  margins as a
percentage of revenue been  consistent  with those in 1998.  However,  the gross
margin in 1999  declined to 33.1% of revenue from 39.4% in 1998.  The decline in
gross margin in 1999 was  primarily  due to higher  consultant  compensation  of
$23.1 million.

     General and Administrative  Expenses.  General and administrative  expenses
include  facilities  costs,  salaries  and  benefits of  management  and support
personnel,  allowances  for  uncollectible  accounts  receivable,   depreciation
expense,  outside  professional  fees,  and all other  corporate  support costs.
General and  administrative  expenses for 1999 increased $45.2 million to $107.3
million from $62.1 million in 1998.  The $45.2  million  increase in general and
administrative  expenses in 1999 is comprised  of: $10.6  million in  facilities
costs, $2.3 million in personnel  related expenses,  $12.8 million in allowances
for uncollectible  accounts  receivable,  $8.8 million in depreciation  expense,
$7.1 million in professional  fees, and $3.6 million in other corporate  support
costs. In total, general and administrative  expenses as a percentage of revenue
increased to 27.0% in 1999 from 21.6% in 1998.  This higher level of expenses as
a percentage of revenue in 1999 represents approximately $21.4 million of growth
in expenses in excess of the rate of growth in revenues.  The incremental  $21.4
million of general and administrative  expenses is the result of $0.9 million in
higher  facilities  costs,  $11.8 million in higher allowances for uncollectible
accounts  receivable  established in the fourth quarter of 1999, $6.3 million in
higher  depreciation  expense  principally  from  impairments  of certain  fixed
assets,   $5.7  million  in  higher   professional  fees  primarily  related  to
litigation,  partially  offset  by  $3.3  million  in  lower  personnel  related
expenses.

     Amortization  Expense.  The excess of cost over the net assets acquired for
the 1999  Acquisitions  of  approximately  $226.4  million has been  recorded as
intangible assets, including goodwill, and is being amortized on a straight-line
basis  over 7  years.  The  $24.3  million  non-cash  expense  recorded  in 1999
represents  the pro rata  amortization  from the  respective  acquisition  dates
through  December 31, 1999.  Amortization  would have been  approximately  $32.4
million had the 1999 Acquisitions occurred as of January 1, 1999.

     Merger  Related  Cost and  Restructuring  Charges  (Benefit).  In the third
quarter of 1998,  the Company  incurred  merger-related  costs of $12.8  million
related to the  acquisitions  of LECG and Peterson,  which were accounted for as
poolings  of  interests.  These  costs  included  legal,  accounting  and  other
transaction  related  fees and  expenses,  as well as  accruals  to  consolidate
certain  facilities.  The Company has reviewed the  merger-related  accruals and
determined that certain amounts previously accrued are no longer necessary given
subsequent  acquisition  activity  and changes in the  Company's  organizational
structure.  The  results of  operations  for the year ended  December  31,  1999
reflect a benefit of $1.4  million for the  reversal of the  previously  accrued
amounts.  The Company  recognized  $1.2  million of expense in 1999 for employee
separations  associated  with  consolidation  of  certain  accounting  and human
resources  functions.  In July  1999,  the  Company  announced  a  restructuring
initiative  and offered  involuntary  severance  packages to 73 employees in the
administrative, accounting and human resources functions.

     Stock Option  Compensation  Expense.  The Company recorded $3.5 million for
stock option  compensation  expense in 1999  attributable  to 0.3 million option
grants to a total of sixteen  individuals which were issued at prices below fair
market value.  The amount charged to expense was calculated  using the intrinsic
value  method for  employees  and the  Black-Scholes  option  pricing  model for
non-employees  and  approximates  the aggregate dollar amount by which the grant
prices of the options  differ  from the market  prices as of the dates for which
the Company has independent evidence to support the issuance of the options. The
Company recorded an additional $0.4 million of stock option compensation expense
to amortize  the value of certain  options  retained by a former  employee  upon
separation from the Company.

     Other Income (Expense),  Net. Other income (expense), net includes interest
expense,  interest income and other non-operating income and expenses. For 1999,
the  Company  incurred  a net  non-operating  expense  of  $2.2  million,  which
represented $4.8 million of net incremental  expense from the $2.6 million other
income realized in 1998. The incremental expense was principally the result of a
$5.3 million charge to earnings in 1999 to reflect the likely  impairment in the
value of certain loans receivable from  shareholders.  This incremental  expense
was partially offset by higher interest income in 1999.

     Income Tax  Expense.  Income tax expense  decreased  $16.8  million to $8.8
million for 1999 from $25.6 million in 1998. The Company's results of operations
in 1999 included $24.3 million of non-cash, non-deductible amortization expenses
resulting   from  the  1999   acquisitions   and  $3.9   million  of   non-cash,
non-deductible stock options compensation expense. Excluding the effect of these
non-deductible items, the effective tax rate for 1999 would have been 39.5%. The
Company's effective income tax rate for 1998 would have been 39.8% excluding the
effect of the  one-time,  non-cash  charge to income tax expense of $7.2 million
related  to the  conversion  of  Peterson  from the  modified  cash basis to the
accrual  basis  of  accounting  for tax  purposes  and  the  effect  of  certain
merger-related  costs  resulting  from the  mergers  completed  during the third
quarter of 1998 that are not tax deductible.

     Net Income (Loss).  The Company's 1999 net loss of $14.6 million represents
a $30.2 million  decline from the 1998 net income of $15.6 million.  Higher 1999
revenues  resulted in a $18.1  million  increase in gross profits over the prior
year,  which was more than offset by increases  of $45.2  million in general and
administrative  expense, $24.3 million in amortization expenses, $3.9 million in
stock  option  compensation  expense  and $4.8  million  of other  non-operating
expenses.  These expense  increases  were  partially  offset by $16.8 million in
lower income tax expenses and $13.0 million in lower merger-related costs.


1998 Compared to 1997

     Revenues.  Revenues  increased $58.9 million,  or 26%, to $287.6 million in
1998 from $228.7  million in 1997 due to continued  strong demand for management
consulting  services,  and increased selling and business  development  efforts.
Selling and business development efforts in support of the Company's strategy to
expand the client base and leverage  existing client  relationships  resulted in
$57.2 million of the incremental  $58.9 million 1998 revenues.  Engagements with
new  clients  and  an  increase  in  the  average  size  of  client  engagements
contributed $40.4 million and $16.8 million of that total, respectively.

     Gross  Profit.  Gross profit  increased  $29.9  million,  or 36%, to $113.5
million in 1998 from $83.6  million in 1997.  Higher 1998  revenues  contributed
$21.5 million of the increase in gross profit. The remaining $8.4 million of the
increase in gross profit reflects an increase in gross profit as a percentage of
revenues  to 39.4% in 1998 from 36.5% in 1997.  The  increase  in the 1998 gross
profit  margin  was  the  result  of  increased  utilization  of  the  Company's
professional  consultants  coupled with higher average billing rates and a lower
proportion of non-margin billable expenses to fee revenues.

     General and Administrative  Expenses.  General and administrative  expenses
for the year ended December 31, 1998  increased  $6.5 million,  or 12%, to $62.1
million,  which  represented  21.6% of revenues,  compared to $55.6 million,  or
24.3% of revenues,  in the comparable  1997 period.  The increase in general and
administrative  costs was primarily due to a $3.3 million increase in facilities
expenses, a $1.8 million increase in administrative salaries, and a $1.3 million
increase in  incentive  compensation.  However,  these  expenses  increased at a
slower  rate  than the  Company's  revenues  and  overall  volume  of  business,
resulting in a 2.7% decrease in general and administrative expenses as a percent
of revenue.  This  improvement  is  attributable  to increased  efficiencies  in
certain support functions (i.e.,  human resources,  benefits  administration and
accounting),  improved  economies of scale and the closing of certain  duplicate
facilities at the beginning of 1998.

     Merger-Related  Cost  and  Restructuring   Charges.   Merger-related  costs
increased  $11.5  million to $12.8  million  in 1998 from $1.3  million in 1997.
During 1998, the Company incurred  merger-related costs of $12.8 million related
to the  acquisitions of LECG and Peterson,  which were accounted for as poolings
of interests.  These costs include legal,  accounting  and other  merger-related
fees and expenses, as well as accruals to consolidate certain facilities. In the
prior  year  period,   the  Company   incurred   legal,   accounting  and  other
merger-related  fees and expenses of $1.3 million related to the acquisitions of
RMI and Reed,  which were accounted for as poolings of interests.  The increased
direct  merger-related  costs in 1998 were the  result of the  greater  size and
complexity of the 1998 transactions.

     Other  Income,  Net. For the fiscal year ended  December  31,  1998,  other
income,  net increased  $1.4 million to $2.6 million from $1.2 million for 1997.
This  increase  was largely the result of higher  interest  income due to larger
average cash balances  outstanding  during the period.  The larger  average cash
balance in 1998 was largely the result of $86.4 million in net proceeds from two
offerings  of the  Company's  common  stock  supplemented  by $21.2  million  of
operating  cash flows and $10.6 million of cash inflow  primarily  from employee
stock option  exercises.  These sources of cash were  partially  offset by $13.6
million  of capital  spending,  $18.9  million  of cash used to acquire  certain
minority interests in business combinations,  $8.2 million of payments to retire
pre-existing short-term debt of acquired companies, and $6.1 million in payments
of pre-acquisition undistributed earnings of purchased companies.

     Income Tax Expense.  Income tax expense  increased  $16.4  million to $25.6
million in 1998 from $9.2 million in 1997.  The Company's  effective  income tax
rate was 62.2% for the year ended December 31, 1998. The effective rate for this
period would have been 39.8%,  excluding  the effect of the  one-time,  non-cash
charge to income  tax  expense of $7.2  million  related  to the  conversion  of
Peterson from the modified cash basis to the accrual basis of accounting for tax
purposes and the effect of certain  merger-related  expenses  resulting from the
acquisitions  of LECG and Peterson  that are not tax  deductible.  The Company's
effective  income tax rate was 33.1% for the year ended  December 31, 1997.  The
effective rate would have been 38.2%, including federal and certain state income
taxes that would have been  required  had all the  Company's  subsidiaries  been
taxable entities during this period.

     Net  Income.  Net  Income  decreased  approximately  $3.1  million to $15.6
million in 1998 from $18.7 million in 1997.  Higher 1998 revenues  resulted in a
$29.9 million increase in gross profits over the prior year. However, the higher
level of 1998 gross profits was offset by a $6.5 million increase in general and
administrative expenses, a $11.5 million increase in merger-related costs, and a
$16.4  million  increase in income tax  expense.  An increase in other income in
1998 of $1.4  million  accounted  for the  remainder of the change in net income
between the periods.


<PAGE>





Unaudited Quarterly Results

     The  following  table  sets forth  certain  unaudited  quarterly  operating
information.  These data have been  prepared  on the same  basis as the  audited
financial  statements  contained  elsewhere  in this Form 10-K and  include  all
normal  recurring  adjustments  necessary  for  the  fair  presentation  of  the
information  for the  periods  presented,  when  read in  conjunction  with  the
Company's Consolidated  Financial Statements and related Notes thereto.  Results
for any previous  fiscal quarter are not  necessarily  indicative of results for
the full year or for any future quarter.
<TABLE>
<CAPTION>


                                                                       Quarters  Ended
                                     Mar. 31, June 30, Sept. 30, Dec. 31,  Mar. 31,  June 30, Sept. 30,  Dec. 31,
                                     -------- -------- --------- --------  --------  -------- ---------  --------
                                       1998     1998     1998      1998     1999      1999      1999      1999
                                       -----    -----    -----     -----    -----     ------    ------    ----
                                                       (In thousands, except per share amounts)
<S>                                  <C>      <C>       <C>      <C>       <C>      <C>       <C>       <C>
Revenues...........................  $ 66,134 $ 70,231  $ 73,967 $ 77,294  $ 84,388 $ 104,732 $ 107,452 $ 101,123
Cost of services...................    41,254   42,254    44,302   46,364    50,418    59,118    61,735    94,809
                                       ------   ------    ------   ------    ------    ------    ------    ------

Gross profit.......................    24,880   27,977    29,665   30,930    33,970    45,614    45,717     6,314
General and administrative expenses    16,355   18,232    13,552   13,955    15,343    20,964    21,077    49,890
Amortization expense...............       --       --        --       --      2,800     6,830     6,830     7,840
Merger-related costs and
restructuring                             --       --     12,778      --        --        --       (206)      --
  charges..........................
Stock option compensation expense..       --       --        --               1,698       532     1,063       557
                                        ------   ------   ------    -----     -----       ---     -----       ---

Operating income (loss)............     8,525    9,745     3,335   16,975    14,129    17,288    16,953   (51,973)
Other (income) expense, net........      (550)    (791)     (523)    (773)   (1,115)   (1,037)   (1,218)    5,561
                                        ------   ------    ------   ------             -------   -------    -----
Income (loss) before income tax         9,075   10,536     3,858   17,748    15,244    18,325    18,171   (57,534)
expense............................
Income tax expense (benefit).......     3,773    4,215    10,680    6,968     8,020    10,186    10,310   (19,689)
                                        -----    -----    ------    -----     -----    ------    ------   -------

Net income (loss)..................   $ 5,302   $6,321   $(6,822)$ 10,780   $ 7,224   $ 8,139   $ 7,861  $(37,845)
                                      =======   ======  ========= ========   =======   =======  =======   =======

Net income (loss), per diluted share   $ 0.15   $ 0.17    $(0.19)  $ 0.28    $ 0.17    $ 0.19    $ 0.17    $(0.91)
                                       ======   ======    ======    ======    ======   ======   ======     =====

Diluted shares.....................    36,477   37,752    36,610   39,093    41,786    43,508    45,357    41,798
                                       ======   ======    ======   ======    ======    ======    ======    ======
</TABLE>


     Revenues  and  operating  results  fluctuate  from  quarter to quarter as a
result of a number of factors,  including the significance of client engagements
commenced  and  completed  during a quarter,  the number of  business  days in a
quarter and employee hiring and utilization rates. The timing of revenues varies
from quarter to quarter due to factors such as the  Company's  sales cycle,  the
ability of clients to terminate  engagements without penalty, the size and scope
of assignments and general economic conditions. Because a significant percentage
of the Company's  expenses are  relatively  fixed,  a variation in the number of
client  assignments  or the timing of the initiation or the completion of client
assignments can cause  significant  variations in operating results from quarter
to quarter.  Furthermore,  the Company  has on occasion  experienced  a seasonal
pattern in its  operating  results,  with a smaller  proportion of the Company's
revenues and lower operating  income occurring in the fourth quarter of the year
or a smaller sequential growth rate than in other quarters.

     During the quarter ended  December 31, 1999, the Company  incurred  certain
pre-tax  expenses which varied  significantly  from expense  levels  recorded in
prior interim periods during the year. The aggregate of these expenses  amounted
to $62.6  million and  consisted of the  following:  $28.5 million of additional
costs  of  sales,  $28.2  million  of  incremental  general  and  administrative
expenses,  and $5.9 million of other  incremental  non-operating  expenses.  The
higher  fourth  quarter cost of sales was  principally  due to $26.3  million of
incremental  compensation  expense accruals to provide for competitive levels of
incentive  compensation and promote employee  retention.  Fourth quarter general
and  administrative  expenses  included the  following  significant  incremental
expenses:  $12.8 million of allowances for  uncollectible  accounts  receivable;
$5.5  million  of  write-downs   of  certain  fixed  assets,   $5.5  million  of
professional  fees and  other  costs  related  to  settlement  of  certain  then
outstanding  litigation;  $1.2  million of  compensation  expense to provide for
competitive levels of incentive compensation and promote employee retention; and
$0.5 million of stock option compensation expense. The increase in non-operating
expenses for the fourth  quarter was primarily the result of a loss  contingency
accrued  at  December  31,  1999 in the amount of $5.3  million,  related to the
impairment of notes receivable from certain former company officers.


<PAGE>




     The following table sets forth select  unaudited  quarterly  information as
previously  reported and as amended.  The amended  amounts have been restated to
retroactively   reflect  the  results  of   operations   for  certain   business
combinations  completed  in  1998  which  were  accounted  for  as  poolings  of
interests.  At the respective  dates of acquisition,  the Company had determined
that the stockholders'  equity and the results of operations of these businesses
were not material, individually or in the aggregate, in relation to those of the
Company.  As such,  the Company had  recorded  these  combinations  by restating
stockholders'  equity  as of the  effective  date  of each  acquisition  without
restating prior period financial statements.  However, based in part on comments
received from the Securities and Exchange  Commission,  the Company has restated
the financial  statements  for 1998 to reflect the results of operations of AUC,
HCI, SSC, and AHO.

     The amended amounts also incorporate certain  reclassifications  to conform
the  presentation  of revenue and cost of sales for 1998 and  previously  issued
interim 1999 periods to the 1999  presentation.  Certain billable expenses which
had previously  been presented net of related  revenues have been  reclassified.
The  amended  amounts  for  the  first  three  quarters  of  1999  also  reflect
adjustments to correct the application of certain accounting  principles related
to stock option  compensation  expense.  See also Note 13, "Long-Term  Incentive
Plan".
<TABLE>
<CAPTION>


                                                                                         Quarters
                                                                           Ended
                                             Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31,  June 30, Sept. 30,
                                             -------- -------- --------- -------- --------  -------- ---------
                                              1998      1998     1998      1998    1999      1999      1999
                                              -----     -----    -----     ----    -----     ------    ----
                                                         (In thousands, except per share amounts)
<S>                                          <C>      <C>       <C>      <C>      <C>      <C>       <C>
Total revenue as previously reported.......  $ 60,809 $ 64,863  $ 68,311 $ 72,894 $ 82,151 $ 103,623 $ 106,185
Retroactive effect of pooling accounting...     2,854    2,269     1,721       --      --        --        --
Reclassifications..........................     2,471    3,099     3,935    4,400    2,237     1,109     1,267
                                                -----    -----     -----    -----    -----     -----     -----
Revenues, as amended.......................  $ 66,134 $ 70,231  $ 73,967 $ 77,294 $ 84,388 $ 104,732 $ 107,452
                                             ========-========- ========-======== ========-=========-=========
Gross profit, as previously reported.......  $ 24,786 $ 27,848  $ 28,991 $ 30,930
Retroactive effect of pooling accounting...
                                                   94      129       673      --
                                                   --      ---       ---     ---

Gross profit, as amended...................  $ 24,880 $ 27,977  $ 29,664 $ 30,930
                                             ========-========- ========-========
Operating income, as previously reported...   $ 8,899 $ 10,101   $ 2,909 $ 16,975 $ 15,827   $17,820   $18,016
Retroactive effect of pooling accounting...      (374)    (356)      426       --      --        --        --
Stock option compensation expense..........        --       --        --       --   (1,698)     (532)   (1,063)
                                              ======= ========  ======== ========  =======    =======   =======

Operating income (loss), as amended           $ 8,525   $9,745   $ 3,335 $ 16,975 $ 14,129   $17,288   $16,953
                                              =======-  ======-  =======-======== ========-  =======-  =======
Net income (loss) as previously reported...   $ 5,658   $6,658    (6,973)$ 10,780  $ 8,922   $ 8,671   $ 8,924
Retroactive effect of pooling accounting...      (356)    (337)      151       --      --        --        --
Stock option compensation expense..........        --       --        --       --   (1,698)     (532)   (1,063)
                                            ------------------------------------------------------------------

Net income (loss), as amended..............   $ 5,302   $6,321   $(6,822)$ 10,780  $ 7,224   $ 8,139   $ 7,861
                                              =======-  ======-========= ========  =======-  =======-  =======
Net income (loss) per share as previously      $ 0.16   $ 0.18   $ (0.19)  $ 0.28   $ 0.21    $ 0.20    $ 0.20
reported...................................
Retroactive effect of pooling accounting...     (0.01)   (0.01)      --        --      --        --        --
Stock option compensation expense..........
                                                  --       --        --       --     (0.04)    (0.01)    (0.03)
                                                  ----     ----      ----     ---    ------    ------    ------
Net income (loss) per diluted share, as        $ 0.15   $ 0.17    $(0.19)  $ 0.28   $ 0.17    $ 0.19    $ 0.17
                                               ======   ======     =====    ======   ======    ======    ======
amended....................................
Diluted shares, as previously reported.....    35,566   37,031    36,129
Retroactive effect of pooling accounting...
                                                  911      721       481
                                                  ===      ===       ===

Diluted shares, as amended.................    36,477   37,752    36,610
                                               ======   ======    ======

</TABLE>


Liquidity and Capital Resources

     Net cash  provided by operating  activities  was $17.4 million for the year
ended December 31, 1999.  During the year, the primary  sources of cash provided
by  operating  activities  was net  income  adjusted  for  non-cash  charges  of
depreciation,  amortization,  stockholder  notes impairment  provision and stock
compensation  expense.  Net income adjusted for these non-cash charges was $32.5
million.  Operating  cash flow was also  positively  affected  by  increases  in
accrued  compensation  and  project  costs of $10.6  million  and other  current
liabilities of $3.4 million.  Operating cash flow was negatively affected by the
increase in accounts  receivable of $19.5 million,  the decrease in income taxes
payable of $13.0  million and the non-cash  charge  relating to deferred  income
taxes of $11.0 million.

     The Company used $18.6  million for capital  spending to support  growth in
personnel and  services.  These  investments  included  leasehold  improvements,
furniture  and  equipment  for new leased  facilities,  additional  computer and
related  equipment  for  information  management  consulting  services  and  the
purchase and implementation of enterprise financial and project software system.
The Company used $42.1 million in cash during 1999 in conjunction  with the 1999
Acquisitions.

     Net cash used in financing activities was $32.5 million in 1999. During the
year,  the Company  received net cash and related tax benefits of $17.4  million
from  transactions   related  to  stock  option  exercises  and  employee  stock
purchases.  In addition,  the Company  received  proceeds of $10.0  million from
borrowings  on the line of credit  facility.  The Company used $40.0  million to
purchase treasury shares in 1999.  Borrowing by stockholders used  approximately
$17.0 million of funds during the year.

     As of December 31, 1999,  the Company had no  significant  commitments  for
capital expenditures, except for those related to rental expense under operating
leases and related leasehold  improvements.  The total amount of operating lease
payments in 2000 is expected to be approximately $15.2 million. The total amount
of capital  spending  in the year 2000  related  to  leasehold  improvements  is
expected to be approximately $6.9 million.

     The Company had approximately $42.3 million in cash and cash equivalents at
December 31, 1999, resulting principally from cash flows from operations and the
various  public stock  offerings  during the previous  three years.  The company
believes that the current cash and cash equivalents,  the future cash flows from
operations  and the $50 million line of credit  facility  will provide  adequate
cash to fund  anticipated  short-term  and  long-term  cash  needs  from  normal
operations.  In the event the Company were to make significant cash expenditures
in the future for major  acquisitions  or other  non-operating  activities,  the
Company would seek additional  debt or equity  financing,  as  appropriate.  The
Company had no plans or  intentions  for such  expenditures  as of December  31,
1999.


Recently Issued Financial Accounting Standards

     The Financial  Accounting  Standards  Board  ("FASB")  issued  Statement of
Financial  Accounting  Standards  ("SFAS") No. 133,  Accounting  for  Derivative
Instruments  and Hedging  Activities in June 1998.  This  statement  establishes
accounting and reporting standards for derivative instruments, including certain
derivative  instruments  embedded in other contracts and for hedging activities,
It  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. This statement is effective for fiscal years beginning after June
15, 1999.  The Company does not currently  have any  derivative  instruments  or
complete any hedging  activities.  The adoption of this standard is not expected
to be significant.


Item 7A.   Quantitative and Qualitative Disclosures About Market Risks

     The  Company's  primary  exposure  to market  risks  relates  to changes in
interest rates associated with its investment portfolio and its borrowings under
the line of credit. The Company's general investment policy is to limit the risk
of principal loss by limiting  market and credit risks. As of December 31, 1999,
the  Company's  investments  were  primarily  limited  to fully  collateralized,
Double-A or Triple-A rated securities with maturity dates of 90 days or less. If
interest  rates average 25 basis points less in fiscal year 2000,  than they did
in 1999, the Company's interest income would be decreased by $0.1 million.  This
amount is determined by  considering  the impact of this  hypothetical  interest
rate on the  Company's  investment  portfolio at December 31, 1999.  The Company
does not expect any loss with respect to its investment portfolio. The Company's
market risk  associated  with its line of credit  relates to changes in interest
rates.  Borrowings  under the line of credit  bear  interest,  at the  Company's
option, based on either the London Interbank Offered Rate (LIBOR) or the primate
rate. If interest rates average 25 basis points higher in 2000, than they did in
1999,  the Company's  interest  expense would increase by less than $.1 million.
This amount is determined based on the amount of short-term debt at December 31,
1999.  The Company does not  currently  have any long-term  debt,  interest rate
derivatives,  forward exchange  agreements,  firmly  committed  foreign currency
sales transactions, or derivative commodity instruments.

     The Company  operates in foreign  countries which exposes it to market risk
associated with foreign currency exchange rate fluctuations;  however, such risk
is immaterial at this time to the Company's consolidated financial statements.


Item 8.   Consolidated Financial Statements and Supplemental Data.

     The  Consolidated  Financial  Statements  of the Company are annexed to the
report as pages F-1 through  F-22.  An index to such  materials  appears on page
F-1.


Item 9.   Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

     None.


                                    PART III

Item 10.   Directors and Executive Officers of the Registrant.

     The Board of  Directors  is  divided  into three  classes,  with a class of
directors elected each year for a three-year term.

     A listing of the principal occupation,  other major affiliations and age of
the directors of Navigant Consulting is set forth below:


Directors Whose Terms Continue Until the Annual Meeting of Shareholders in 2000:

     Mitchell H. Saranow,  54, has served as one of our directors since 1996 and
became  Chairman of the Board and Co-Chief  Executive  Officer in November 1999.
Since 1984, Mr.  Saranow has served as Chairman of The Saranow Group L.L.C.  and
its affiliated companies. He founded Fluid Management, L.P., the world's leading
manufacturer  of color  formulation  equipment,  in April  1987  and  served  as
Chairman and Chief Executive  Officer until January 1997. From 1979 to 1983, Mr.
Saranow  was  Vice  President   Finance  and  Chief  Financial  Officer  of  CFS
Continental,  then the nation's  second  largest food service  distributor.  Mr.
Saranow  also  serves on the boards of Lawson  Products,  Inc.,  ELF  Machinery,
L.L.C., and BroadBridge Media, L.L.C.

     Peter B. Pond, 55, has served as one of our directors  since November 1996.
He served as the Midwest  Head of  Investment  Banking for  Donaldson,  Lufkin &
Jenrette  Securities  Corporation  from June 1991 to March  2000.  Mr. Pond is a
director  of Maximus,  Inc.,  a provider of program  management  and  consulting
services  to  state,  county  and local  government  health  and human  services
agencies.


Directors Whose Terms Continue Until the Annual Meeting of Shareholders in 2001:

     John J. Reed, 45, has served as our  Vice-Chairman  and Co-Chief  Executive
Officer  since  November  1999.  He was  appointed  a director of the company on
November 21, 1999.  Prior to being named  Vice-Chairman  and Co-Chief  Executive
Officer,  Mr.  Reed  was  the  Executive  Managing  Director  of our  Management
Consulting  practice.  From 1988 until  1999,  Mr.  Reed was  President  of Reed
Consulting Group, which we acquired in August 1997.

     James R.  Thompson,  63, has served as one of our  directors  since  August
1998.  Governor Thompson was named Chairman of the Chicago law firm of Winston &
Strawn in January  1993.  He joined the firm in January  1991 as Chairman of the
Executive  Committee  after  serving  four  terms as  Governor  of the  State of
Illinois from 1977 until January 1991. Prior to his terms as Governor, he served
as U.S.  Attorney  for the  Northern  District  of  Illinois  from 1971 to 1975.
Governor  Thompson  served as the Chief of the Department of Law Enforcement and
Public  Protection  in the Office of the  Attorney  General of  Illinois,  as an
Associate  Professor  at  Northwestern  University  School  of  Law,  and  as an
Assistant  State's  Attorney  of Cook  County.  He is a former  Chairman  of the
President's  Intelligence  Oversight  Board.  Governor  Thompson is  currently a
member of the  Boards of  Directors  of Union  Pacific  Resources,  Inc.,  Prime
Retail,  Inc.,  American National Can Co., Metal  Management,  Inc., Prime Group
Realty Trust, FMC  Corporation,  and Hollinger  International.  He serves on the
Board of the Chicago  Historical  Society,  the Art  Institute  of Chicago,  the
Museum of  Contemporary  Art,  the Lyric Opera and the  Illinois  Math & Science
Academy Foundation.

     Samuel K. Skinner, 61, has served as a director since December 15, 1999. He
currently  serves  as  Co-Chairman  of  Hopkins &  Sutter,  a law firm  based in
Chicago.  Mr. Skinner recently  retired as President of the Commonwealth  Edison
Company  and  its  holding   company  Unicom   Corporation.   Prior  to  joining
Commonwealth Edison, he served as Chief of Staff to President George Bush. Prior
to his White House service,  Mr. Skinner served in the  President's  cabinet for
nearly  three  years as  Secretary  of  Transportation.  From 1977 to 1989,  Mr.
Skinner  practiced  law as a senior  partner in the  Chicago  law firm  Sidley &
Austin.  From 1984 to 1988,  while  practicing  law full time, he also served as
Chairman of the Regional  Transportation  Authority of northeastern Illinois and
was appointed by President  Reagan as Chairman of the President's  Commission on
Organized  Crime.  From 1968 to 1975,  Mr.  Skinner  served in the office of the
United  States  Attorney  for the  Northern  District of  Illinois  and in 1977,
President  Ford  appointed  him United  States  Attorney,  one of the few career
prosecutors ever to hold such position.


Directors Whose Terms Continue Until the Annual Meeting of Shareholders in 2002:

     Carl S.  Spetzler,  58, has served as our President and Co-Chief  Executive
Officer  since  November  1999.  He was  appointed  a director of the company on
November  21,  1999.  Prior to being  named  President  and  Co-Chief  Executive
Officer,  Dr.  Spetzler was the  Executive  Managing  Director of our  Strategic
Consulting  practice.  From 1986 until 1999,  Dr.  Spetzler was the President of
Strategic Decisions Group, which we acquired in February 1999.

     William M. Goodyear,  51, has served as a director since December 15, 1999.
He is immediate  past  chairman and former  Chief  Executive  Officer of Bank of
America, Illinois. In addition, he was President of the Bank of America's Global
Private  Bank until  January of 1999.  He was Vice  Chairman and a member of the
Board of  Directors  of  Continental  Bank,  prior to the  1994  merger  between
Continental  Bank Corporation and BankAmerica  Corporation.  Mr. Goodyear joined
Continental  Bank  in  1972  and  subsequently  held a  variety  of  assignments
including corporate finance, large corporate lending,  trading and distribution.
He was  stationed  in London  from  1986 to 1991  where he was  responsible  for
European and Asian  Operations.  Mr. Goodyear is currently a member of Chicago's
Commercial  Club,  the board of Trustees  for the Museum of Science and Industry
and the finance  council of the  Archdiocese  of Chicago.  He is a member of the
board of trustees of the  University of Notre Dame,  the Chicago  Public Library
Foundation and serves on the Rush-Presbyterian Hospital Board. Mr. Goodyear is a
director  of Equity  Office  Properties  Trust where he is Chairman of its audit
committee.  He is an advisory  director of Shorebank in Chicago and a member and
director of the executive committee of Home Place of America, Inc.

     Information  as to our  executive  officers is  provided  under the caption
"Executive  Officers of the Registrant" under Item 4 of this Form 10-K. Officers
of the company are elected annually for a term of one year.


Compliance with Section 16(a) of the Securities Exchange Act of 1934

     Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and  executive  officers,  and any  persons who  beneficially  own more than ten
percent of our common stock,  to file with the SEC initial  reports of ownership
and reports of changes in ownership of common  stock.  To our  knowledge,  based
solely  on  review  of the  copies  of  such  reports  sent  to us  and  written
representations that no other reports were required,  we believe that during the
year  ended  December  31,  1999,  our  directors,   officers  and  ten  percent
shareholders complied with their Section 16(a) filing requirements,  except that
Messrs. Reed and Spetzler filed their Initial Statements of Beneficial Ownership
on Form 3 late.


Item 11.   Executive Compensation.

General

     The following table sets forth compensation  awarded or earned by our three
Co-Chief  Executive  Officers,  one other executive officer who earned more than
$100,000  during  the year  ended  December  31,  1999 and two  other  executive
officers who earned more than  $100,000  during that year but were not executive
officers at December 31, 1999:
<TABLE>
<CAPTION>

                           Summary Compensation Table

                                           Annual Compensation                               Long-Term
                                                                                            Compensation
                                                                                             Securities         All
                                                                          Other Annual       Underlying        Other
  Name and Principal Position        Year        Salary        Bonus      Compensation      Options (No.    Compensation
  ----------------------------       ----        ------        -----      ------------      ------------    ------------
             Salary                               ($)           ($)            ($)          of Shares)
             ------                               ---           ---            ---          ----------

<S>                                      <C>         <C>          <C>      <C>             <C>              <C>
Mitchell H. Saranow                      1999        69,232       35,000          --                 19,500       --
   Chairman and Co-Chief
   Executive Officer(1)


John J. Reed                             1997       145,000      217,861          --                     --        204(9)
   Vice Chairman and                     1998       164,430      315,668          --                100,000        255(9)
   Co-Chief                              1999       246,474      363,525          --                 50,000        908(9)
   Executive Officer(2)


Carl S. Spetzler                         1999       311,058      298,942          --                108,895      2,516(9)
   President and Co-Chief
   Executive Officer(3)


James F. Hillman                         1997       206,250           --           625(7)            37,500       --
   Chief Financial Officer (4)           1998       250,000           --     1,994,063(8)            75,000        204(9)
                                         1999       162,692           --          --                     --        204(9)


Robert P. Maher                          1997       411,250           --         1,500(7)           150,000       --
   Former Chairman,                      1998       462,060           --          --                375,000        717(9)
   President and Chief                   1999       426,613           --          --                112,500      1,188(9)
   Executive Officer (5)


Timothy D. Kingsbury                     1997       223,958       85,619         4,500(7)                --      1,530(9)
   Former Chief Financial                1998       225,000           --         4,500(7)             6,000      1,734(9)
   Officer and Treasurer (6)             1999       240,625       87,500          --                144,000        324(9)

</TABLE>


(1)  Mr.  Saranow  was  elected  to his  positions  as an  executive  officer in
     November  1999.  Prior to that time he was a  non-employee  director of the
     company.  See also the  discussion of Mr.  Saranow's  employment  agreement
     under "Employment Agreements," below.

(2)  Mr. Reed was elected to his positions in November 1999.  Prior to that time
     he was an employee  but not an executive  officer of the company.  Mr. Reed
     joined the company in August 1997 when it acquired Reed  Consulting  Group.
     See  also  the  discussion  of  Mr.  Reed's   employment   agreement  under
     "Employment Agreements," below.

(3)  Mr.  Spetzler was elected to his positions in November 1999.  Prior to that
     time he was an employee  but not an executive  officer of the Company.  Mr.
     Spetzler  joined the  company in February  1999 when it acquired  Strategic
     Decisions  Group.  See also the  discussion  of Mr.  Spetzler's  employment
     agreement under "Employment Agreements," below.

(4)  Mr. Hillman has been our Chief  Financial  Officer and Treasurer from April
     1996 to May 1999 and since  November  1999.  See also the discussion of Mr.
     Hillman's employment arrangement under "Employment Agreements," below.

(5)  Mr. Maher was our Chairman,  President and Chief Executive Officer until he
     resigned in November 1999.

(6)  Mr.  Kingsbury was our Chief Financial  Officer and Treasurer from May 1999
     until he resigned from those  positions in November 1999.  Before and after
     this period he has served as an employee  but not an  executive  officer of
     the Company.

(7)  Represents  matching  payments and profit sharing under  applicable  401(k)
Plan.

(8)  Consists of compensation resulting from the exercise of stock options.

(9)  Represents earnings associated with group term life insurance.


Executive Option Grants

     The  following  table sets forth the stock option grants we made to each of
the named executive officers in 1999.

<TABLE>
<CAPTION>

                          Options Grants in Fiscal 1999

                           Individual Grants (1), (9)

                                          Percent of
                                             Total
                                Number of Options
                              Securities Granted to
                             Underlying    Employees   Exercise               Grant Date
                               Options     in Fiscal   Price Per  Expiration    Present
Name                          Granted     Year 1999     Share       Date      Value (1)
----                          ---------   -----------   -------     -----     ---------
<S>                             <C>        <C>         <C>         <C>        <C>
Mitchell H. Saranow.......      19,500(2)         .44%   $26.5625   6/30/2009    $ 272,000
John J. Reed..............      50,000(3)        1.12%   $30.5000   3/22/2009    $ 802,000
Carl S. Spetzler..........      25,000(4)         .56%   $26.5625   6/30/2009    $ 349,000
                                 8,895(5)         .20%   $30.5000   3/22/2009    $ 143,000
                                75,000(6)        1.67%   $50.7500    2/7/2009   $2,026,000
James F. Hillman..........        --            --             --          --           --
Robert P. Maher...........     112,500(7)        2.51%   $26.5625   2/20/2002   $1,571,000
Timothy D. Kingsbury......     144,000(8)        3.21%   $26.5625   6/30/2009   $2,011,000

</TABLE>

(1)  The fair value of the  option  grant is  estimated  as of the date of grant
     using the  Black-Scholes  option pricing model.  The following  assumptions
     were used

Expected Volatility...... 75%
Risk-free interest rate.. 5.5%
Dividend yield........... 0%
Expected life............  3 years

(2)  The options were granted on July 1, 1999 at the fair market value of common
     stock on that date; 50% of these options become exercisable on July 1, 2001
     and the remainder become exercisable 25% on July 1, 2002 and 25% on July 1,
     2003.

(3)  The options  were  granted on March 23,  1999 at the fair  market  value of
     common stock on that date and become exercisable 50% on March 23, 2001, 25%
     on March 23, 2002 and 25% on March 23, 2003.

(4)  The options were granted on July 1, 1999 at the fair market value of common
     stock on that date and became exercisable 100% on February 8, 2000.

(5)  The options  were  granted on March 23,  1999 at the fair  market  value of
     common stock on that date and became exercisable 100% on March 23, 2000.

(6)  The options  were  granted on February 8, 1999 at the fair market  value of
     common  stock on that date;  33% of these  options  become  exercisable  on
     February 8, 2001 and the remainder  become  exercisable  33% on February 8,
     2002 and 33% on February 8, 2003.

(7)  The options were granted on July 1, 1999 at the fair market value of common
     stock on that date; 37,500 of these options become  exercisable on November
     21, 2000. Pursuant to Mr. Maher's Consulting  Agreement signed in November,
     1999 he relinquished the remaining 75,000 options granted on July 1, 1999.

(8)  The options were granted on July 1, 1999 at the fair market value of common
     stock on that date; 50% of these options become exercisable on July 1, 2001
     and the remainder become exercisable 25% on July 1, 2002 and 25% on July 1,
     2003.

(9)  See also the  discussion  of options  granted  in  January  2000 to Messrs.
     Saranow, Reed, Spetzler and Hillman under "Employment Agreements," below.


Option Exercises and Holdings

     The following  table sets forth the exercise of options  during 1999 by the
named executive  officers and the number of options and  approximate  values for
in-the-money  options at December  31, 1999.  Because the exercise  price of all
such stock  options is greater than $10.875 per share,  the closing price of the
common  stock as reported by the New York Stock  Exchange on December  31, 1999,
the table shows that there were no in-the-money options at that date.

<TABLE>
Price

<CAPTION>


                     Aggregated Option Exercises in 1999 and
                          Fiscal Year End Option Values

                            Shares                          Number of Shares
                           Acquired                      Underlying Unexercised           Value of Unexercised
                              on          Value          Options at Fiscal Year           In-The-Money Options
Name                    Exercise(#)    Realized($)             End(#)(3)                   at Fiscal Year End
                                                       Exercisable    Unexercisable    Exercisable   Unexercisable
<S>                       <C>           <C>              <C>             <C>             <C>             <C>
Mitchell H. Saranow                  0        $ 0.00           24,750          75,250          $0.00           $0.00
John J. Reed                         0        $ 0.00                0         150,000          $0.00           $0.00
Carl S. Spetzler                     0        $ 0.00                0         108,895          $0.00           $0.00
James J. Hillman             --            --              --              --              --             --
Robert P. Maher                112,500        $ 0.00           75,000         225,000          $0.00           $0.00
Timothy D. Kingsbury                 0        $ 0.00                0         150,000          $0.00           $0.00

</TABLE>
Price
Employment Agreements

     In January 2000, the company  entered into  employment  agreements with its
three Co-Chief Executive  Officers,  Messrs.  Saranow,  Reed and Spetzler.  Each
agreement  provides for a three year term ending  November  12, 2002,  an annual
base  salary  of  $500,000  with  annual  increases  in  the  discretion  of the
compensation  committee,  a maximum  annual  bonus  opportunity  of 100% of base
salary  and a target  payment of 65% of the base  salary.  Each  agreement  also
provides for a grant to the  executive of an option to purchase  300,000  shares
under the company's  long-term  incentive  plan at an exercise  price of $10 per
share, which option vests and becomes  exercisable 50% on the date of grant, 25%
six  months  after the date of grant  and 25% 18 months  after the date of grant
(subject to immediate  vesting in the event of a change of control,  termination
of the executive  without cause (as defined in the  agreement) or termination of
the executive for good reason (as defined in the agreement)).  (Because the date
of grant is January 18, 2000,  these options are not shown in the tables above.)
Each agreement  provides that if either the company  terminates the  executive's
employment (other than for cause, death or disability), the executive terminates
his employment for good reason or the executive  terminates his employment after
change of control for any reason,  then the company will pay to the executive an
amount equal to two times the sum of his base salary and most recent bonus. Each
agreement also provides that if the executive's employment terminates because of
the  executive's  death or disability,  the company will pay to the executive an
amount equal to his base salary and most recent  bonus.  If a payment or benefit
received by the executive  would be subject to excise tax as a result of Section
280G of the Internal Revenue Code, the agreement provides for a reduction of the
post-termination  payments to the  executive  if, as a result of the excise tax,
the net amount of  post-termination  payments  retained by the executive (taking
into  account  income  and excise  taxes) are  increased  by the  reduction.  In
addition,  the employment  agreement  with Mr. Saranow  provides that he will be
nominated  to serve as a  director  of the  company  at the  annual  meeting  of
shareholders in 2000 and that he shall be required to devote a reasonable amount
of his time (which shall be less than  full-time) to the business and affairs of
the company.

     The company has employment agreements with other of its executive officers.
The employment agreement with Mr. Steptoe,  our Vice President,  General Counsel
and Secretary,  provides for an annual base salary of $250,000, a maximum annual
bonus  opportunity of 50% of base salary and a grant to Mr. Steptoe of an option
to purchase  100,000 shares under the company's  long-term  incentive plan at an
exercise price of $9 per share, which option vests and becomes exercisable as to
25,000  of  those  shares  six  months  after  the  date of  grant  and as to an
additional  25,000 of those  shares  every six  months  thereafter  (subject  to
immediate vesting in the event of a change of control).  The agreement  provides
that if the company  terminates Mr.  Steptoe's  employment  without  cause,  the
company will continue his base salary for six months.  The arrangement  with Mr.
Hillman,  our Chief  Financial  Officer,  provides  for an annual base salary of
$350,000,  a maximum annual bonus  opportunity of 50% of base salary and a grant
to Mr.  Hillman of an option to  purchase  150,000  shares  under the  company's
long-term incentive plan at an exercise price of $10.125 per share, which option
vests and becomes exercisable as to 100,000 of those shares on the date of grant
and as to the remaining 50,000 of those shares one year after the date of grant.
The arrangement  also provides for payments to Mr. Hillman in  consideration  of
his  execution  of a release of the  company  of  $200,000  in January  2000 and
$200,000 one year thereafter. If the company terminates Mr. Hillman's employment
without cause, the company will continue his base salary for six months.


Director Compensation

     Under our current  long-term  incentive  plan,  we grant each  director not
employed by us an option to purchase  3,000 shares of common stock for each year
of the term to be served upon the director's  initial election or re-election to
the Board. Thus, a director elected to a three-year term receives 9,000 options.
The options have an exercise  price equal to the fair market value of the common
stock on the date of grant and become exercisable in equal installments over the
term to be served  beginning on the first  anniversary of the date of grant,  so
that 3,000  options  become  exercisable  each year.  From time to time, we also
grant our non-employee directors additional options after reviewing the level of
compensation  other companies  similarly  situated to us pay their  non-employee
directors.

     Beginning in January 2000, we also pay each Non-Employee Director an annual
retainer  of $35,000  and a fee of $1,500 for each  Board  meeting or  Committee
meeting  attended.  All directors are reimbursed for travel expenses incurred in
connection with attending Board and Committee meetings.


Compensation Committee Interlocks and Insider Participation

     Prior to December 1999 the Compensation Committee of our Board of Directors
consisted of Messrs. Maher, Pond, Saranow and Thompson. Prior to his resignation
in November, 1999, Mr. Maher was the Chairman and Chief Executive Officer of the
company.  In November 1999, Mr. Saranow was elected as our Chairman and Co-Chief
Executive  Officer.  In December 1999 the Board  appointed  Messrs.  Skinner and
Goodyear as the sole members of the Compensation Committee. In February 2000 the
Board   reconstituted  the  Compensation   Committee  as  the  Compensation  and
Organization  Committee.  Messrs.  Skinner and  Goodyear  continued  as the sole
members of this Committee.


Item 12.   Security Ownership of Certain Beneficial Owners and Management.

     The following table sets forth certain information regarding the beneficial
ownership  of common  stock as of April 14,  2000 by: (i) each person we know to
own  beneficially  more than five  percent of the  outstanding  shares of common
stock;  (ii)  each of our  directors  and  nominees;  (iii)  each  of the  named
executive  officers;  and (iv) all of our directors and executive  officers as a
group.  We believe that each person  named below has sole voting and  investment
power with respect to all shares of common stock shown as beneficially  owned by
such holder,  subject to community property laws where applicable.  Except where
noted otherwise, the address of each person named below is care of our principal
executive offices.

<TABLE>
<CAPTION>
                                                                                              Shares Beneficially
Officers, Directors and 5% Shareholders                                                            Owned(1)
                                                                                                Number   Percent

<S>                                                                                          <C>          <C>
Blum Capital Partners, L.P., Richard C. Blum Associates, Inc. and Richard C. Blum (2)......     2,506,200    6.10%
Mitchell H. Saranow (3)....................................................................       254,875     *
John J. Reed (4)...........................................................................       152,446     *
Carl S. Spetzler (5).......................................................................       323,435     *
James F. Hillman (6).......................................................................       100,000     *
Peter B. Pond (7)..........................................................................        34,875     *
William M. Goodyear........................................................................             0     *
Samuel K. Skinner..........................................................................             0     *
James R. Thompson (8)......................................................................         3,000     *
Robert P. Maher (9)........................................................................       170,481     *
Timothy D. Kingsbury.......................................................................       128,123     *
All current directors and executive officers as a group (9 persons)........................       890,956    2.10%
</TABLE>


     *less than 1%

(1)  Applicable  percentage  of  ownership  as of April 14,  2000 is based  upon
     approximately 41.3 million shares of common stock  outstanding.  Beneficial
     ownership is a technical  term  determined in accordance  with the rules of
     the SEC.  Beneficial  ownership generally means that a shareholder can vote
     or sell the stock either directly or indirectly.

(2)  Based on  information  provided in the  Schedule  13D filed by Blum Capital
     Partners, L.P., Richard C. Blum & Associates, Inc. and Richard C. Blum with
     the  Securities  and Exchange  Commission  on April 7, 2000,  those persons
     share voting and dispositive power with respect to such shares. The address
     of  each  of  those  persons  is 909  Montgomery  Street,  Suite  400,  San
     Francisco, California 94133.

(3)  Includes  184,875  shares of common  stock  subject to options  that are or
become exercisable within 60 days of April 14, 2000.

(4)  Includes  150,000  shares of common  stock  subject to options  that are or
become exercisable within 60 days of April 14, 2000.

(5)  Includes  183,895  shares of common  stock  subject to options  that are or
become exercisable within 60 days of April 14, 2000.

(6)  Includes  100,000  shares of common  stock  subject to options  that are or
become exercisable within 60 days of April 14, 2000.

(7) Includes 34,875 shares of common stock subject to options that are or become
exercisable within 60 days of April 14, 2000.

(8) Includes  3,000 shares of common stock subject to options that are or become
exercisable within 60 days of April 14, 2000.

(9)  Includes  75,000  shares of common  stock  subject to  options  that are or
     become exercisable within 60 days of April 14, 2000. Mr. Maher's address is
     c/o Robert T. Markowski,  Jenner & Block, One IBM Plaza, Chicago,  Illinois
     60611.


Item 13.   Certain Relationships and Related Transactions.

     In April 1999,  Mr.  Maher,  the  company's  Chairman  and Chief  Executive
Officer at that time,  borrowed  $2.7  million from the company so that he could
exercise  his  then-vested  options.  Mr.  Maher  exercised  all  112,500 of his
then-vested  options at an exercise  price of $24.00 per share.  In August 1999,
Mr. Maher  borrowed an additional  $10 million from the company.  The applicable
interest rate for this loan was 5.75%,  payable annually.  In November 1999, the
company  received  from Mr. Maher 605,684  shares of the company's  common stock
with a then market value of $12.9 million as payment for the principal amount of
the loans plus accrued interest.

     Five non-employees related by blood or marriage to Mr. Maher received stock
option  grants.  Mr. Maher has  informed the company that each of these  persons
provided  services  to the  company  from  time to time  and  received  no other
compensation for those services. In addition,  one other individual not employed
by the  company,  but who was an  employee  of an  unrelated  company  owned  or
controlled by Mr. Maher,  received stock option  grants.  Mr. Maher has informed
the company that this individual  provided  certain services to the company from
time to time.  These  persons  are  among  sixteen  as to whom the  company  has
determined, based in part on the absence of contemporaneous documentation,  that
0.3 million  nonqualified  options issued to a total of sixteen individuals were
issued at prices  below fair market  value.  The company  recorded an expense in
1999 of $3.5 million for stock option compensation  expense attributable to such
options  issued  to  the  sixteen   individuals.   Of  the  total  stock  option
compensation expense of $3.5 million,  $0.6 million is attributable to the first
six persons described above.

     In April 1999, Mr. Cain and Mr. Demirjian, respectively the company's Chief
Administrative  Officer and the  company's  General  Counsel at that time,  each
borrowed  $425,063 from the company to exercise all 18,750 of their  then-vested
options at an exercise price of $22.67 per share. The notes which evidence these
borrowings are full recourse,  are due on or before the third  anniversary  date
and bear  interest at a rate equal to 5.75%,  payable  annually.  The notes were
accompanied  by pledge  agreements  which pledge the exercised  option shares as
collateral  security for repayment of the notes, which shares are currently held
by the company.  In late August,  Mr. Cain, Mr. Demirjian and Mr. Kingsbury (the
company's Chief Financial Officer at that time) borrowed $2.625 million,  $2.625
million and $1.75  million,  respectively,  from the  company,  related to their
purchases of 75,000,  75,000 and 50,000 shares,  respectively,  of the company's
common stock from third parties at $35 per share. The notes which evidence these
borrowings are full recourse,  are due on or before the third  anniversary  date
and bear interest at a rate equal to 5.75%,  payable annually.  These notes were
accompanied by pledge agreements which pledge the shares as collateral  security
for  repayment  of the notes,  which shares are  currently  held by the company.
Although the notes receivable are full recourse, are not due until the year 2002
and there has been no event of default,  the company is not certain that it will
be able to collect the full amount due.  In March  2000,  the  borrowers  either
challenged the  enforceability  or declined to confirm their intention to comply
with the terms of the notes and each have  refused to provide the  company  with
personal financial  information that would support their ability to pay the full
amounts due. The company has accrued a loss  contingency at December 31, 1999 in
the amount of $5.3 million,  representing  the difference  between the principal
amount of the notes  receivable  and the value of the shares held by the company
as collateral. The company is negotiating with the borrowers concerning deferral
or compromise of their obligations under their notes.

     In November  1999,  the company  entered into an agreement  with Mr. Maher,
pursuant to which,  among other  things,  Mr.  Maher  agreed to provide  certain
consulting  services to the company over a two year period,  including providing
information  about  past  transactions  or other  matters  as to which he may be
familiar,  and the company agreed to pay Mr. Maher twenty-four  monthly payments
of $25,000.  To date,  the company has made one such  payment to Mr.  Maher,  in
December 1999.

     Mr. Pond,  one of our  directors,  was a principal of  Donaldson,  Lufkin &
Jenrette  Securities  Corporation  prior to March 2000.  DLJ has provided in the
past and may  provide us in the future with  investment  banking  services.  DLJ
served as an advisor on certain matters during 1999.

     Mr. Thompson, one of our directors,  is Chairman of the law firm of Winston
& Strawn.  Winston & Strawn has  provided  in the past and may provide us in the
future with legal representation.


                                     Part IV

Item 14   Exhibits, Financial Statements and Reports on Form 8-K

     (a) The consolidated  financial statements filed as part of this report are
listed in the  accompanying  Index to  Consolidated  Financial  Statements.  The
financial statement schedule filed as part of this report is listed below.

     (b) The Registrant  filed the following  Current Reports on Form 8-K during
the quarter ended December 31, 1999:

          (1) A Form 8-K dated November 22, 1999 reporting  under Item 5 of Form
     8-K  certain  changes  to the  Board of  Directors  and  management  of the
     Registrant.

          (2) A Form 8-K dated December 15, 1999 reporting  under Item 5 of Form
     8-K the  adoption  of a  Stockholder  Rights  Plan and the  addition of two
     directors to the Board of Directors of the Registrant.

     (c) The exhibits filed as part of this report are listed below:

a.       Exhibits:
<TABLE>
<CAPTION>

Exhibit No.       Description

<S>               <C>
2.1*              Plan and Agreement of Merger, dated as of February 7, 1999, by and among the Metzler Group,
                  Inc., MGI Acquistion III, Inc., Strategic Decisions Group (SDG), and certain SDG Executives
3.1               Amended and Restated Certificate of Incorporation of the Registrant (1)
3.2               Amendment No. 1 to Amended and Restated Certificate of Incorporation of the Registrant (2)
3.3               Amendment No. 2 to Amended and Restated Certificate of Incorporation of the Registrant (3)
3.4               Amended and Restated By-Laws of the Registrant (4)
4.2               Form of Registration Agreement (6)
4.3               Rights  Agreement  dated as of December  15, 1999  between the
                  Registrant and American  Stock  Transfer & Trust  Company,  as
                  Rights  Agent,  (which  includes  the form of  Certificate  of
                  Designations  setting  forth the terms of the  Series A Junior
                  Participating Preferred Stock as Exhibit A, the form of Rights
                  Certificate as Exhibit B and the Summary of Rights to Purchase
                  Preferred Stock as Exhibit C) (7)
10.1+             Form of Indemnification Agreement (5)
10.2*+            The Metzler Group, Inc. Long-Term Incentive Plan
10.3+             The Metzler Group, Inc. Employee Stock Purchase Plan (8)
10.4+             Amendment No. 1 to The Metzler Group, Inc. Employee Stock Purchase Plan (6)
10.5+             Amendment No. 2 to The Metzler Group, Inc. Employee Stock Purchase Plan (6)
10.6*+            Amendment No. 3 to The Metzler Group, Inc. Employee Stock Purchase Plan
10.7*+            Amendment No. 4 to The Metzler Group, Inc. Employee Stock Purchase Plan
10.8*+            Employment Agreement dated as of November 12, 1999 between the Registrant and Mitchell H.
Saranow
10.9*+            Employment Agreement dated as of November 12, 1999 between the Registrant and John J. Reed
10.10*+           Employment Agreement dated as of November 12, 1999 between the Registrant and Carl S.
Spetzler
10.11*+           Letter agreement dated February 1, 2000 between the Registrant and Philip P. Steptoe
10.12*+           Consulting Agreement and General Release dated as of November 21, 1999 between the Registrantand Robert P. Maher
10.13*+           Letter agreement dated February 27, 2000 between the Registrant and Barry S. Cain
21.1*             Significant Subsidiaries of the Registrant.
23.1*             Consent of KPMG LLP
23.2 Consent of Arthur Andersen LLP and Report of Independent  Accountants  23.3
Consent of PricewaterhouseCoopers LLP and Report of Independent Accountants 23.4
Consent of Crowe,  Chizek and Company LLP and Report of Independent  Accountants
27.1* Financial Data Schedule--for the period ended December 31, 1999
</TABLE>
----------
(1)  Incorporated  by  reference  from the  Registrant's  Registration
Statement on Form S-1 (Registration No. 333-9019) filed with the SEC
on July 26, 1996
(2)  Incorporated  by  reference  from the  Registrant's  Registration
Statement on Form S-3  (Registration No. 333-40489) filed with the SEC
on November 18, 1997.
(3) Incorporated by reference from the Registrant's Form 8-A12B filed with the
SEC on July 20, 1999.
(4) Incorporated by reference from the Registrant's Amendment No. 1 to
Registration Statement on Form S-3 (Registration No. 333-40489) filed
with the SEC on February 12, 1998
(5) Incorporated by reference from the Registrant's Amendment No. 2 to
Registration Statement on Form S-1 (Registration No. 333-9019) filed with the
SEC on September 20, 1996.
(6) Incorporated by reference from the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1998.
(7) Incorporated by reference from the Registrant's Current Report on Form 8-K
dated December 15, 1999.
(8) Incorporated by reference from the Registrant's Registration Statement on
Form S-8 (Registration No. 333-30265) filed with the SEC on June 27, 1997.

*Indicates filed herewith.
+Indicates a management contract or compensatory plan or arrangement required to
 be filed as an exhibit to this Form 10-K.

b. Financial Statement Schedule:
Report of Independent Auditors
Schedule II: Valuation and Qualifying Accounts


<PAGE>
                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934,  the Registrant has duly caused this amended report to be signed on
its behalf by the undersigned thereunto duly authorized.

                                   Navigant Consulting, Inc.

                                   By: /s/ William M. Goodyear
                                   ---------------------------
                                           William M. Goodyear
                                           Chairman and Chief Executive Officer
<PAGE>




                        INDEX TO THE FINANCIAL STATEMENTS

                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

     Audited Consolidated Financial Statements as of December 31, 1999 and 1998,
and for each of the three years in the period ended December 31, 1999

Independent Auditors' Reports......................  F-2
Consolidated Balance Sheets........................  F-6
Consolidated Statements of Operations..............  F-7
Consolidated Statements of Stockholders' Equity....  F-8
Consolidated Statements of Cash Flows..............  F-9
Notes to Consolidated Financial Statements.........  F-10


                                       F-1
<PAGE>



                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Navigant Consulting, Inc.:

     We have audited the  accompanying  consolidated  balance sheets of Navigant
Consulting,  Inc.  and  subsidiaries  as of  December  31, 1999 and 1998 and the
related consolidated  statements of operations,  stockholders'  equity, and cash
flows for each of the years in the  three-year  period ended  December 31, 1999.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial  statements  based on our  audits.  We did not  audit the  results  of
operations, stockholders' equity, and cash flows for the year ended December 31,
1997 related to companies  acquired that were accounted for under the pooling of
interests  method,  which  statements  reflect  total  revenues  and net  income
constituting 69 percent and 61 percent,  respectively,  of the related  restated
consolidated  totals.  Those  statements  were audited by other  auditors  whose
reports have been furnished to us, and our opinion, insofar as it relates to the
amounts  included  for  companies  acquired  that were  accounted  for under the
pooling  of  interests  method,  is based  solely  on the  reports  of the other
auditors.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We  believe  that our audits and the  reports  of the other  auditors  provide a
reasonable basis for our opinion.

     The 1998 and 1997 consolidated  financial  statements have been restated as
discussed in note 3 to the consolidated financial statements.

     In our opinion,  based on our audits and the reports of the other auditors,
the consolidated  financial  statements referred to above present fairly, in all
material  respects,  the  financial  position of Navigant  Consulting,  Inc. and
subsidiaries  as of  December  31,  1999  and  1998,  and the  results  of their
operations and their cash flows for each of the years in the  three-year  period
ended  December  31,  1999 in  conformity  with  generally  accepted  accounting
principles.



                                  /S/ KPMG LLP

Chicago, Illinois
March 28, 2000



                                       F-2

<PAGE>



                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors of LECG, Inc.:

We have audited the statements of income, shareholders' equity and cash flows of
LECG,  Inc.  (a  California  corporation)  and  subsidiaries  for the year ended
December 31, 1997, which were audited prior to the restatement (and,  therefore,
are not presented herein) for the  pooling-of-interest as described in Note 3 to
the restated financial statements included on pages F-1 - F-14.

We have audited the statements of income, shareholders' equity and cash flows of
LECG, Inc. (a California  corporation) and subsidiaries as of December 31, 1997.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the results of their operations and their cash flows for
the year  ended  December  31,  1997,  in  conformity  with  generally  accepted
accounting principles.
                                                  /s/ Arthur Andersen & Co.

San Francisco, California
January 30, 1998
















                                       F-3
<PAGE>



                         REPORT OF INDEPENDENT AUDITORS

To the Members Peterson Consulting L.L.C.

We have audited the consolidated statements of operations,  members' equity, and
cash  flows for the year  ended  December  31,  1997 (not  included  herein)  of
Peterson Consulting L.L.C. These financial  statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the results of operations and cash flow for
the year ended  December 31, 1997 of Peterson  Consulting  L.L.C.  in conformity
with generally accepted accounting principles.

                                                  Crowe, Chizek and Company LLP
Oak Brook, Illinois
March 17, 1998


                                       F-4
<PAGE>




                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
Resources Management International, Inc.
Rancho Cordova, California

We  have  audited  the  accompanying  consolidated  balance  sheet  of  Resource
Management International, Inc. and Subsidiaries as of December 31, 1997, and the
related consolidated  statements of operations,  stockholders'  equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,   the  consolidated   financial  position  of  Resource
Management  International,  Inc. and  Subsidiaries at December 31, 1997, and the
consolidated  results  of its  operations  and its cash  flows for the year then
ended, in conformity with generally accepted accounting principles.

                                             /s/ Coopers & Lybrand L.L.P.
Sacramento, California
February 11, 1998


                                       F-5
<PAGE>


<TABLE>
<CAPTION>


                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

                                                                                                   December
                                                                                                     31,
                                                                                            1999        1998


                                        ASSETS
<S>                                                                                       <C>        <C>
Current assets:
     Cash and cash equivalents........................................................      $42,345    $119,704
     Accounts receivable, net.........................................................      116,100      80,163
     Prepaid and other current assets.................................................        7,364       6,979
     Income tax receivable............................................................        8,211         --
     Deferred income taxes............................................................        2,385         --
                                                                                              -----       -----

          Total current assets........................................................      176,405     206,846
Property and equipment, net...........................................................       33,763      22,197
Intangible assets, net................................................................      202,096         --
Other assets                                                                                  2,412       1,474
                                                                                             ------    --------
          Total assets................................................................     $414,676    $230,517
                                                                                           ========    ========


                                    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Short-term debt..................................................................      $10,000      $  --
     Accounts payable and accrued liabilities.........................................       20,709      17,955
     Accrued compensation and project costs...........................................       58,425      28,142
     Income taxes payable.............................................................          --        2,942
     Deferred income taxes............................................................          --        2,171
     Other current liabilities........................................................       19,673       9,127
                                                                                            -------      ------
          Total current liabilities...................................................      108,807      60,337
Deferred income taxes.................................................................          725       5,276
Other non-current liabilities.........................................................        4,475          --
                                                                                             ------      ------
          Total liabilities...........................................................      114,007      65,613
                                                                                            -------      ------
Stockholders' equity:
     Preferred stock, $.001 par value; 3,000 shares authorized; no shares issued or
        outstanding...................................................................          --          --
     Common stock, $.001 par value; 75,000 shares authorized; 43,129 and 38,004
        shares issued and outstanding in 1999 and 1998, respectively..................           43          38
     Additional paid-in capital.......................................................      340,528     134,624
     Treasury stock 2,086 shares at December 31, 1999.................................      (52,811)        --
     Notes receivable from stockholders...............................................       (2,583)        --
     Accumulated other comprehensive income...........................................         (158)        (30)
     Retained earnings................................................................       15,650      30,272
                                                                                            -------      ------
          Total stockholders' equity..................................................      300,669     164,904
                                                                                            -------     -------
          Total liabilities and stockholders' equity..................................     $414,676    $230,517
                                                                                           ========    ========

</TABLE>

See accompanying Notes to the Consolidated Financial Statements.

                                       F-6
<PAGE>

<TABLE>
Price
<CAPTION>



                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)

                                                                   For the Years Ended
                                                                      December 31,
                                                               1999        1998         1997
                                                           ----------- ----------- ---- ----

<S>                                                        <C>         <C>         <C>
Revenues                                                   $397,694    $287,626     $228,731
Cost of services..........................................  266,080     174,175      145,144
                                                           ----------  ----------   -------
     Gross profit.........................................  131,614     113,451       83,587
General and administrative expenses.......................  107,274      62,093       55,579
Amortization                                                 24,300         --           --
Merger related cost and restructuring charges (benefit)...     (206)     12,778        1,312
Stock option compensation expense.........................    3,850         --           --
                                                             ------      ------       ------

     Operating income (loss)..............................   (3,604)     38,580       26,696
                                                             ------      ------      -------
Other expense (income):
     Interest income......................................   (3,857)     (3,063)      (1,184)
     Interest expense.....................................      376         688          446
     Other, net...........................................    5,672        (263)        (467)
                                                              -----        ----         ----
          Total other expense (income)....................    2,191      (2,638)      (1,205)
                                                              -----      ------       ------
Income (loss) before income tax expense...................   (5,795)     41,218       27,901
     Income tax expense...................................    8,827      25,637        9,237
                                                              -----      ------        -----
Net Income (loss).........................................$ (14,622)    $15,581      $18,664
                                                           =========    =======      =======
Earnings (loss) per share:
     Basic                                                  $ (0.35)     $ 0.43       $ 0.56
     Diluted                                                $ (0.35)     $ 0.41       $ 0.55
Weighted average shares outstanding:
     Basic                                                   41,601      36,476       33,289
     Diluted                                                 41,601      37,707       33,798


</TABLE>




    See accompanying Notes to the Consolidated Financial Statements.


                                       F-7
<PAGE>

<TABLE>


                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (In thousands)


<CAPTION>
                                                                           Notes
                                                                           Receiv-  Accum.
                                                                           able     Other
                                                                Additional From     Compre-                            Total
                               Preferred Stock  Common Stock    Paid-In    Share-   hensive  Retained  Treasury Stock  Stockholders'
                               Shares   Amount  Shares  Dollars Capital    holders  Income   Earnings  Shares Amount   Equity
                               ----------------------------------------------------------------------------------------------

<S>                           <C>      <C>     <C>      <C>    <C>       <C>         <C>    <C>       <C>     <C>     <C>
Balance at December 31, 1996     --       --    33,446      34   $41,313   ($3,045)    $6     $12,378    --     --     $50,686
Comprehensive income             --       --       --       --       --        --     (63)     18,664    --     --      18,601
Issuance of common stock         --       --     2,043       2    25,412       (87)    --         780    --     --      26,107
Purchase of common stock         --       --      (535)     (1)   10,340        44     --        (228)   --     --     (10,525)
Distributions                    --       --       --       --       --       (351)    --     (16,182)   --     --     (16,533)
Interest on notes
 receivable from stockholders    --       --       --       --       195      (195)    --         --     --     --         --
Collection of notes receivable
  from stockholders              --       --       --       --       --        879     --         --     --     --         879
                               -----   -----  --------  ------- --------  --------  ------   -------  ------ -----    --------
Balance at December 31, 1997     --       --    34,954      35    56,580    (2,755)   (57)    15,412     --     --      69,215
Comprehensive income             --       --       --       --       --       --       27     15,581     --     --      15,608
Issuance of common stock         --       --     3,645      4     96,965      --       --        --      --     --      96,969
Purchase of common stock         --       --      (595)    (1)   (18,921)     --       --        --      --     --     (18,922)
Distributions                    --       --        --      --      --        --       --       (721)    --     --        (721)
Interest on notes receivable
 from stockholders               --       --        --      --      --        --       --        --      --     --          --
Collection of notes receivable
 from stockholders                                                           2,755                                       2,755
                               -----   -----  --------  ------- --------  --------  ------   -------  ------ -----    --------
Balance at December 31, 1998     --       --    38,004     38   134,624        --    (30)    30,272      --     --    164,904
Comprehensive income (loss)      --       --                                        (128)   (14,622)     --     --    (14,750)
Issuance of common stock         --       --     5,387      5   215,160        --     --        --                    215,165
Purchase of common stock         --       --      (263)         (13,335)       --     --        --   (2,086)(52,811)  (66,146)
Stock option compensation
 expense                         --       --        --     --     3,850        --     --        --                      3,850
Issuance of notes receivable
 from stockholders               --       --        --     --       --     (20,550)   --        --                    (20,550)
Interest on notes receivable
 from stockholders               --       --        --     --       229       (229)   --        --        --    --        --
Collection of notes receivable
 from stockholders               --       --        --     --       --      12,929    --        --        --    --     12,929
Impairment of notes receivable
 from stockholders               --       --        --     --       --       5,267    --        --        --    --      5,267
                               -----   -----    -------    ---  --------  --------  -----    -------  ------ -------- --------
Balance at December 31, 1999     --       --     43,129    $43  $340,528   ($2,583) ($158)   $15,560  (2,086)($52,811)$300,669
                               =====   =====    =======    ===  ========   =======  =====    =======  ====== ======== ========
</TABLE>

See accompanying Notes to the Consolidated Financial Statements.

                                       F-8
<PAGE>



<TABLE>
<CAPTION>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

                                                                                  For the Years Ended December 31,
                                                                                     1999        1998       1997
                                                                                 ----------- ----------- -------

Cash flows from operating activities:
<S>                                                                                <C>           <C>        <C>
     Net income (loss)                                                             $ (14,622)    $15,581    $18,664
     Adjustments to reconcile net income to net cash provided by operating
        activities:
          Depreciation.........................................................       13,460       4,876      3,337
          Amortization.........................................................       24,300         --         --
          Impairment of stockholder notes......................................        5,267         --         --
          Stock option compensation expense....................................        3,850         --         --
          Provision for bad debts..............................................       14,900       1,094        172
          Deferred income taxes................................................      (10,970)      1,777      2,499
          Other non-cash items, net............................................          404        (107)      (728)
          Changes in assets and liabilities, net of acquisitions:
               Accounts receivable.............................................      (19,543)    (20,917)   (12,339)
               Prepaid expenses and other current assets.......................        1,478      (3,467)    (1,292)
               Accounts payable and accrued liabilities........................       (2,069)      7,291      2,099
               Accrued compensation and project costs..........................       10,591      11,029        134
               Income taxes payable............................................      (13,023)       (858)     2,923
               Other current liabilities.......................................        3,426       4,907      1,353
                                                                                       -----       -----      -----

                    Net cash provided by operating activities..................       17,449      21,206     16,822
                                                                                      ------      ------     ------

Cash flows from investing activities:
     Purchase of property and equipment........................................      (18,641)    (13,340)    (7,871)
     Acquisition of businesses, net of cash acquired...........................      (42,055)        --         --
     Other, net                                                                       (1,582)       (296)        54
                                                                                      ------        ----         --

                    Net cash used in investing activities......................      (62,278)    (13,636)    (7,817)
                                                                                     -------     -------     ------

Cash flows from financing activities:
     Issuance of common stock..................................................       17,387      96,969     26,107
     Purchase of common stock..................................................      (40,011)    (18,922)   (10,525)
     Repayment of long-term debt...............................................         (322)       (319)    (1,550)
     Proceeds from long-term debt..............................................          --          --       3,300
     Net repayments of short-term debt.........................................       (2,584)     (8,242)    (3,007)
     Proceeds from short-term debt.............................................       10,000         --         --
     Issuance of notes receivable from stockholders............................      (17,000)        --         --
     Payments of pre-acquisition undistributed income to former
        stockholders...........................................................          --       (6,079)   (10,121)
     Other, net................................................................          --        2,755     (1,096)
                                                                                     -------      -------   --------

                    Net cash (used in) provided by financing activities........      (32,530)     66,162      3,108
                                                                                     -------      ------      -----

Net (decrease) increase in cash and cash equivalents...........................      (77,359)     73,732     12,113
Cash and cash equivalents at beginning of year.................................      119,704      45,972     33,859
                                                                                     -------      ------     ------

Cash and cash equivalents at end of year.......................................      $42,345    $119,704    $45,972
                                                                                     =======    ========    =======

</TABLE>


See accompanying Notes to Consolidated Financial Statements.

                                       F-9

<PAGE>



                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

                          NOTES TO FINANCIAL STATEMENTS

1.   DESCRIPTION OF BUSINESS

     Navigant  Consulting,  Inc.  (the  "Company")  is a provider of  consulting
services to electric and gas utilities,  insurance companies, and pharmaceutical
companies,  as well as other  Fortune  100  companies.  The  Company's  services
include:  management  consulting,  strategic  consulting,  financial  and claims
services,  and economics and policy consulting.  The Company is headquartered in
Chicago,  Illinois and has regional  offices in various cities within the United
States, and several international offices.


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

     The consolidated  financial  statements include the accounts of the Company
and its  subsidiaries.  All  significant  intercompany  transactions  have  been
eliminated in consolidation.


Use of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.


Cash and Cash Equivalents

     Cash  equivalents are comprised of highly liquid  instruments with original
maturities  of  90  days  or  less.  The  carrying  amount  of  these  financial
instruments approximates fair value because of the short maturities.


Property and Equipment

     Property and equipment are recorded at cost. Depreciation is computed using
the straight-line method based on the estimated useful lives, ranging from three
to forty years, of the various  classes of property and equipment.  Amortization
of leasehold  improvements is computed over the shorter of the lease term or the
estimated useful life of the asset.


Intangible Assets

     Intangible  assets  consist  of  identifiable   intangibles  and  goodwill.
Identifiable  intangibles include customer lists,  workforce in place, knowledge
capital, and non-compete agreements.  Intangible assets, including goodwill, are
being amortized on the straight-line method over 7 years.




                                      F-10

<PAGE>

                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Fair Value of Financial Instruments

     The  Company  considers  the  recorded  value of its  financial  assets and
liabilities,  which  consist  primarily of cash and cash  equivalents,  accounts
receivable and accounts payable, to approximate the fair value of the respective
assets and liabilities at December 31, 1999 and 1998.


Revenue Recognition

     The  Company  recognizes  revenues as the related  services  are  provided.
Certain  contracts  are accounted  for on the  percentage  of completion  method
whereby  revenues are recognized  based upon costs incurred in relation to total
estimated  costs at  completion.  Provision  is made for the  entire  amount  of
estimated losses, if any, at the time when they are known.


Stock Based Compensation

     The Company utilizes the intrinsic value-based method of accounting for its
stock-based  compensation  arrangements with employees. The Company utilizes the
fair value method of accounting for its  stock-based  compensation  arrangements
with non-employee consultants, advisors, and independent contractors.


Income Taxes

     Income taxes are accounted  for in accordance  with the asset and liability
method.  Deferred tax assets and  liabilities  are recognized for the future tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets and  liabilities  of a change in tax rates is recognized in income in the
period that includes the enactment date.

     Prior to December 18, 1997, one of the Company's  subsidiaries,  LECG, Inc.
(LECG),  had elected to be taxed under Subchapter S of the Internal Revenue Code
for income tax  purposes.  During such  period,  federal  income  taxes were the
responsibility  of LECG's  stockholders  as were  certain  state  income  taxes.
Therefore,  the financial statements do not include a provision for federal (and
some state) income taxes prior to LECG's initial public offering on December 18,
1997.  LECG's  S-corporation  status  terminated  on December 18, 1997,  thereby
subjecting  LECG's income to federal and certain other state income taxes at the
corporate  level.  Accordingly,  LECG  applied the  provisions  of  Statement of
Financial  Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes,"
for the period ended December 31, 1997. In addition,  LECG converted from a cash
basis to accrual basis for tax purposes in conjunction  with its conversion to a
C-corporation.  Due to  temporary  differences  in  recognition  of revenue  and
expenses, income for financial reporting purposes exceeded income for income tax
purposes. The conversion to accrual basis along with these temporary differences
resulted in the recognition of a net deferred tax liability (and a corresponding
one-time charge to expense) of $2.7 million as of December 31, 1997.

     Prior to August 14, 1998, another of the Company's  subsidiaries,  Peterson
Consulting,  L.L.C.  d/b/a  Peterson  Worldwide  LLC  (Peterson)  was a  limited
liability company, which, for income tax purposes, was treated as a partnership.
Accordingly,  the income of Peterson was reported on the  individual  income tax
returns of its members and federal income taxes, as well as certain state income
taxes, were the  responsibility  of its members.  Subsequent to August 14, 1998,
and  based on events  unrelated  to its  acquisition  by the  Company,  Peterson
elected  C-corporation  status,  thereby  subjecting  its income to federal  and
certain  state  income  taxes  at  the  corporate  level.  As a  result  of  its
acquisition of Peterson, the Company has applied the provisions of SFAS No. 109,
and has converted Peterson from the modified cash basis to the accrual basis for
tax  purposes.  Due to  temporary  differences  in  recognition  of revenue  and
expense,  income for financial  reporting  purposes has exceeded  income for tax
reporting purposes.  The conversion to accrual basis, along with these temporary
differences,  resulted in the recognition of a one-time, non-cash charge of $7.2
million to be recorded during the period in which the merger occurred.
<PAGE>

                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Earnings Per Share

     The following table set forth the components of basic and diluted  earnings
per share:

                                                      Year ended December 31,

                                                    1999       1998      1997
                                                ----------- --------- -------

                                                    (amounts in thousands)
Numerator:
     Net income (loss)........................  $(14,622)   $15,581   $18,664
                                                ========    =======   =======
Denominator:
     Weighted average shares outstanding......    41,601     36,476    33,289
Effect of dilutive securities:
     Employee stock options...................       --       1,231       509
                                                --------    -------    ------

Denominator for diluted earnings per share....    41,601     37,707    33,798


     For the year  ended  December  31,  1999,  the  weighted-average  effect of
employee stock options was 1.68 million shares.  However, the Company incurred a
loss for the period and the effect of these options was anti-dilutive.


Foreign Currency Translation

     The balance  sheets of the Company's  foreign  subsidiaries  are translated
into U.S.  dollars using the year-end  exchange rate, and sales and expenses are
translated  using  the  average  exchange  rate  for  the  year.  The  resulting
translation   gains  or  losses  are   recorded  as  a  separate   component  of
stockholders' equity as other comprehensive income.


3.   RECONCILIATION TO PREVIOUSLY REPORTED AMOUNTS

     The following table sets forth select  operating  information as previously
reported and as amended. The amended amounts have been restated to retroactively
reflect the results of operations for certain business combinations completed in
1998  and 1997  which  were  accounted  for as  poolings  of  interests.  At the
respective   dates  of   acquisition,   the  Company  had  determined  that  the
stockholders'  equity and the results of operations of these businesses were not
material, individually or in the aggregate, in relation to those of the Company.
As such, the Company had recorded these combinations by restating  stockholders'
equity as of the effective  date of each  acquisition  without  restating  prior
period financial  statements.  The Company has restated the financial statements
for 1998 and 1997 to reflect the results of  operations  of Sterling  Consulting
Group,  Inc.,  Reed-Stowe  &  Co.,  Inc.,  AUC  Management  Consultants,   Inc.,
Hydrologic  Consultants,  Inc. of California,  Saraswati Systems Corporation and
Applied Health Outcomes, Inc.

     The amended amounts also incorporate certain  reclassifications  to conform
the  presentation  of  revenue  and cost of sales  for 1998 and 1997 to the 1999
presentation.  Certain billable expenses which had previously been presented net
of related revenues have been reclassified.


<PAGE>

<TABLE>
<CAPTION>


                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                                                                        Years ended
                                                                      December 31,
                                                                      1998         1997

                                                                   (amounts in thousands,
                                                                 except per share amounts)
<S>                                                                   <C>         <C>
            Total revenue, as previously reported...............      $266,877    $196,780
            Retroactive effect of pooling accounting............         6,844      19,079
            Reclassifications...................................        13,905      12,872
                                                                        ------      ------

            Total revenue, as amended...........................      $287,626    $228,731
                                                                      ========    ========
            Gross profit, as previously reported................      $112,555     $81,658
            Retroactive effect of pooling accounting............           896       1,929
            Reclassifications...................................           --          --
                                                                      --------    --------

            Gross profit, as amended............................      $113,451     $83,587
                                                                      ========     =======
            Operating income, as previously reported............      $ 38,884     $26,195
            Retroactive effect of pooling accounting............          (304)        501
                                                                          ----         ---

            Operating income, as amended........................      $ 38,580     $26,696
                                                                      ========     =======
            Net income, as previously reported..................      $ 16,123     $18,419
            Retroactive effect of pooling accounting............          (542)        245
                                                                          ----         ---

            Net income, as amended..............................      $ 15,581     $18,664
                                                                      ========     =======
            Earnings per diluted share as previously reported...       $  0.43      $ 0.57
            Retroactive effect of pooling accounting............         (0.02)      (0.02)
                                                                         -----       -----

            Earnings per diluted share, as amended..............       $  0.41      $ 0.55
                                                                       =======      ======
            Dilutive shares as previously reported..............        37,179      32,288
            Retroactive effect of pooling accounting............           528       1,510
                                                                           ---       -----

            Dilutive shares, as amended.........................        37,707      33,798
                                                                        ======      ======


</TABLE>


4.   BUSINESS COMBINATIONS

On July 31,  1997,  the Company  issued 3.2 million  shares of common  stock for
substantially   all  the  outstanding   common  stock  of  Resource   Management
International,  Inc.  (RMI).  In  connection  with the  acquisition  of RMI, the
Company  acquired  assets  and  assumed  liabilities  with book  values of $13.9
million and $11.1 million,  respectively. On August 15, 1997, the Company issued
0.8 million  shares of common  stock for  substantially  all of the  outstanding
common stock of Reed  Consulting  Group,  Inc.  (Reed).  In connection  with the
acquisition of Reed, the Company  acquired assets and assumed  liabilities  with
book values of $2.5 million and $2.5 million,  respectively.  Additionally,  the
Company  completed the  acquisition  of all of the common stock of L.E.  Burgess
Consultants, Inc. (Burgess) as of January 1, 1997 and Sterling Consulting Group,
Inc. (Sterling) and Reed-Stowe & Co., Inc. (RSC), as of December 1, 1997. In the
aggregate for the Burgess, Sterling and RSC transactions, the Company issued 0.7
million shares of common stock. In connection with the  acquisitions of Burgess,
Sterling and RSC, the Company acquired assets and assumed  liabilities with book
values  of  $0.6  million  and  $0.9  million,  respectively.  All of  the  1997
transactions  were  accounted  for as  poolings  of  interests.  There  were  no
pre-acquisition intercompany transactions or investments among the Company, RMI,
Reed,  Burgess,   Sterling,   and  RSC.  The  Company's  consolidated  financial
statements  have  been  restated  as if RMI,  Reed,  Sterling  and RSC had  been
combined for all periods  presented.  The  Company's  consolidated  statement of
operations for the year ended December 31, 1997 includes revenues and net income
from RMI,  Reed,  Sterling  and RSC  totaling  $35.3  million and $1.5  million,
respectively, through the dates of acquisition. The stockholders' equity and the
operations of Burgess were not  significant in relation to those of the Company.
As such, the Company recorded the Burgess transaction by restating stockholders'
equity  as of the  date  of  the  acquisition  without  restating  prior  period
financial statements.

<PAGE>
                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     On August 19, 1998,  the Company  issued 7.3 million shares of common stock
for substantially  all the outstanding  common stock of LECG. In connection with
the  acquisition of LECG, the Company  acquired  assets and assumed  liabilities
with book values of $49.8 million and $17.4 million, respectively. On August 31,
1998, the Company  issued 5.6 million  shares of common stock for  substantially
all of the  outstanding  common  stock  of  Peterson.  In  connection  with  the
acquisition of Peterson,  the Company  acquired  assets and assumed  liabilities
with book values of $34.8 million and $24.7 million, respectively. Additionally,
the  Company  completed  the  acquisitions  all of the common  stock of American
Corporate  Resources,  Inc. (ACR), AUC Management  Consultants,  Inc. (AUC), and
Hydrologic Consultants, Inc. of California (HCI) as of April 3, 1998; The Vision
Trust  Marketing  Group,  LLC (VTM) as of June 1, 1998;  and  Saraswati  Systems
Corporation  (SSC) and Applied  Health  Outcomes,  Inc. (AHO) as of September 1,
1998. In the  aggregate  for the ACR, AUC, HCI, VTM, SSC, and AHO  transactions,
the Company  issued 1.2 million shares of common stock.  In connection  with the
acquisitions  of ACR, AUC, HCI, VTM, SSC, and AHO, the Company  acquired  assets
and  assumed  liabilities  with book values of $1.9  million  and $1.4  million,
respectively.  All of the 1998  transactions  were  accounted for as poolings of
interests. The Company's consolidated financial statements have been restated as
if LECG,  Peterson,  AUC,  HCI,  SSC, and AHO had been  combined for all periods
presented. The Company's consolidated statement of operations for the year ended
December 31, 1998 and 1997 includes  revenues totaling $104.8 million and $125.7
million,  respectively,  and net income  totaling $5.5 million and $9.0 million,
respectively,  from LECG, Peterson, AUC, HCI, SSC, and AHO, through the dates of
acquisition. The stockholders' equity and the operations of ACR and VTM were not
significant in relation to those of the Company.  As such, the Company  recorded
the ACR and VTM transactions by restating stockholders' equity as of the date of
the acquisition without restating prior period financial statements.

     The Company  incurred  significant  costs and expenses in  connection  with
these acquisitions,  including legal and accounting, and other various expenses.
These  costs and  expenses  were  recorded  in the  consolidated  statements  of
operations during the third quarter in each of the years 1998 and 1997.

During 1999, the Company completed eleven acquisitions (collectively,  the "1999
Acquisitions")  in exchange for Company stock and cash having an aggregate value
of $235.7 million. On February 7, 1999, the Company issued 2.4 million shares of
common stock (valued at the time of closing at approximately $123.7 million) for
substantially all of the outstanding common stock of Strategic  Decisions Group,
Inc. and acquired the remaining  minority interest in exchange for $13.3 million
in cash. On March 31, 1999, the Company completed the acquisitions of all of the
outstanding stock of Triad  International,  Inc., GeoData  Solutions,  Inc., and
Dowling  Associates,  Inc. in exchange for 1.8 million  shares of the  Company's
common stock (valued at the time of closing at approximately $57.3 million).  On
September  30,  1999,  the Company  completed  its  acquisition  of the business
operations  and certain  assets of Penta  Advisory  Services LLC (Penta) and the
stock of Scope  International,  Inc.  (Scope) for a total cash purchase price of
$15.1  million.  The  purchase  agreements  for Penta and Scope also provide for
additional payments,  payable in cash or Company common stock, over the next two
to five years contingent on future revenue growth and gross margin targets.  The
additional payments,  if any, will be accounted for as additional  goodwill.  On
October 1, 1999,  the Company  completed the  acquisition of the stock of Brooks
International AB, Brooks  International  Consulting OY, and Brooks International
SPRL for an aggregate cash purchase price of $3.3 million.  On November 1, 1999,
the Company completed the acquisition of the stock of The Barrington  Consulting
Group,  Inc.  (Barrington) in exchange for $14.4 million in cash paid at closing
and total  deferred cash  payments of $7.8 million,  payable in two equal annual
installments.  The liability  related to the deferred cash payments is reflected
in the  consolidated  balance  sheet as of December  31, 1999 as $3.9 million of
other current liabilities and $3.9 million of other non-current liabilities. The
purchase  agreement for Barrington also provides for additional cash payments of
up to  $7.7  million  in  the  aggregate,  which  are  contingent  on  continued
employment by the Company of certain Barrington  shareholders and are payable in
cash in two annual  installments.  The  contingent  payments  will be charged to
expense ratably over the period of employment.  On December 1, 1999, the Company
completed the acquisition of all of the assets of Glaze Creek  Partners,  LLC in
exchange for $0.8 million in cash.  There were no  pre-acquisition  intercompany
transactions between the Company and the 1999 Acquisitions.


<PAGE>



                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     The 1999  Acquisitions  have been  accounted for by the purchase  method of
accounting and, accordingly, the results of operations have been included in the
accompanying  consolidated  financial  statements  from the date of acquisition.
Certain  assets  acquired  of $46.2  million  and  liabilities  assumed of $36.9
million have been recorded at their  estimated  fair values.  The excess of cost
over the net assets acquired of  approximately  $226.4 million has been recorded
as intangible assets, including goodwill. The allocation of the excess cost over
the net assets acquired to identifiable intangible assets and goodwill was based
upon independent  appraisals,  as were the estimated useful lives. The estimated
lives range from between one and 20 years, and  approximate,  on a straight-line
basis, an average life of 7 years.

     The  following  unaudited  pro forma  financial  information  presents  the
combined  results of operations as if the 1999  Acquisitions  had occurred as of
January 1, 1998,  after giving effect to certain  adjustments.  The  adjustments
include the  amortization  of goodwill  and other  intangibles,  a reduction  in
interest income and related income tax effects,  and an increase in the weighted
average   common  shares   outstanding.   The  pro  forma   information  is  for
informational  purposes only.  The  information  presented does not  necessarily
reflect the results of operations that would have occurred had the  acquisitions
been completed as of January 1, 1998, nor are they indicative of future results.

                                              1999        1998

            Revenue, in thousands........    $437,095    $402,664
            Net loss, in thousands.......     (23,600)    (17,995)
            Net loss per diluted share...     $ (0.52)    $ (0.44)


5.   STOCKHOLDERS' EQUITY

Initial Public Offering

     On December 18, 1997, LECG completed an initial public offering,  resulting
in net proceeds of approximately $24.4 million, net of issuance costs.


Secondary Public Offering

     On March 2, 1998, the Company completed a secondary  offering of its common
stock in which an  additional  1.5  million  shares  were  sold by the  Company,
resulting in net proceeds of  approximately  $36 million.  On November 19, 1998,
the  Company  completed a  secondary  offering  of its common  stock in which an
additional  1.5  million  shares  were  sold by the  Company,  resulting  in net
proceeds of approximately $51 million.


Employee Stock Purchase Plan

     During 1996,  the Company  implemented  a plan which  permits  employees to
purchase shares of the Company's  common stock each quarter at 85% of the market
value.  The market value for this purpose is  determined  to be the lower of the
closing market price on the first and last day of each calendar  quarter.  There
are 450,000  shares  authorized  for  issuance  under the plan.  The Company had
issued 159,000  shares under the plan through  December 31, 1999. As of December
31, 1999, the Company held $0.8 million of  withholdings  from  employees  which
were used to purchase  approximately  84,000 additional shares under the plan in
January 2000.


<PAGE>



                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Treasury Stock Repurchases

     On August 9, 1999,  the Company  announced  that the Board of Directors had
authorized the  repurchase of up to 3.0 million  shares of the Company's  common
stock in open  market or in  privately  negotiated  transactions.  In August and
September of 1999,  the Company  repurchased  a total of 0.5 million  shares for
$18.9  million in  privately  negotiated  transactions.  In November  1999,  the
Company  repurchased  1.0  million  shares  for  $20.8  million  in open  market
transactions.  Also in November  1999,  the Company  accepted 0.6 million shares
with a then market value of $12.9 million as payment for the principal amount of
certain notes plus accrued  interest  related to  borrowings  by Mr. Maher,  the
Company's  Chairman and Chief Executive  Officer at that time. See also Note 17,
"Related Party Transactions".


Shareholder Notes Receivable

     At December 31, 1999, the Company held notes  receivable  from three former
Company officers with an aggregate  principal balance of $7.9 million.  See also
Note  17,  "Related  Party  Transactions".   The  notes  receivable  arose  from
transactions  whereby  these  individuals  borrowed  money  from the  Company to
purchase  a total of 200,000  shares of the  Company's  common  stock from third
parties and 37,500 shares of common stock from the Company. The notes receivable
are shown on the balance sheet as a reduction in stockholders' equity. The notes
receivable  were  accompanied  by pledge  agreements  which pledge the shares as
collateral  security for repayment of the notes, which shares are currently held
by the Company.  At the closing  market price for the Company's  common stock on
December  31,  1999 of  $107/8  per  share,  the  value  of the  shares  held as
collateral for the notes receivable was approximately $2.6 million. Although the
notes  receivable are full  recourse,  are not due until the year 2002 and there
has been no event of default, the Company is not certain that it will be able to
collect the full amount due. In March 2000, the borrowers have either challenged
the  enforceability  or declined to confirm  their  intention to comply with the
terms of the notes and each have  refused to provide the Company  with  personal
financial  information  that would support their ability to pay the full amounts
due.  The  Company has accrued a loss  contingency  at December  31, 1999 in the
amount of $5.3 million, representing the difference between the principal amount
of the notes  receivable  and the value of the  shares  held by the  Company  as
collateral. The $5.3 million was included as a non-operating charge within other
expense in the consolidated statement of operations. The Company intends to take
all appropriate steps to enforce the notes in accordance with their terms.


Shareholder Rights Plan

     On  December  15,  1999,  the  Company's  Board  of  Directors   adopted  a
Shareholders   Rights  Plan  (the   "Rights   Plan")  and  declared  a  dividend
distribution  of one  Right (a  "Right")  for each  outstanding  share of common
stock,  to stockholders of record at the close of business on December 27, 1999.
Each Right will entitle its holder, under certain circumstances described in the
Rights Agreement,  to purchase from the Company one one-thousandth of a share of
its Series A Junior Participating  Preferred Stock, $.001 par value (the "Series
A  Preferred  Stock"),  at an  exercise  price  of $75  per  Right,  subject  to
adjustment.  The  description  and terms of the Rights are set forth in a Rights
Agreement  (the  "Rights  Agreement")  between the Company  and  American  Stock
Transfer & Trust Company, as Rights Agent.


<PAGE>



                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


     Until the Distribution Date under the Rights  Agreement,  the surrender for
transfer of any shares of common  stock  outstanding  will also  constitute  the
transfer  of the  Rights  associated  with  such  shares.  The  Rights  are  not
exercisable until the Distribution Date and will expire at the close of business
on December 15, 2009,  unless earlier redeemed or exchanged by the Company.  The
Company may redeem the Rights in whole,  but not in part, at a price of $.01 per
Right  (subject  to  adjustment  and  payable  in  cash,  common  stock or other
consideration  deemed  appropriate  by the Company's  Board of Directors) at any
time  until ten days  following  the Stock  Acquisition  Date  under the  Rights
Agreement.  Immediately  upon the  action of the  Company's  Board of  Directors
authorizing any redemption,  the Rights will terminate and the only right of the
holders of Rights  will be to receive  the  redemption  price.  Until a Right is
exercised,  its holder,  as such,  will have no rights as a  stockholder  of the
Company,  including,  without  limitation,  the  right  to  vote  or to  receive
dividends.


6.   ACCOUNTS RECEIVABLE

     The components of accounts receivable as of December 31 were as follows:

                                                          1999       1998
                                                         (in thousands)
            Billed amounts .........................      $86,849    $60,730
            Engagements in process..................       45,581     27,559
            Allowance for uncollectible accounts....      (16,330)    (8,126)
                                                          -------     ------
                                                         $116,100    $80,163
                                                         ========    =======

     Engagements  in  process  represent  balances  accrued by the  Company  for
services  that have been  performed  but have not been  billed to the  customer.
Billings are generally done on a monthly basis for the prior month's services.


7.   PROPERTY AND EQUIPMENT

     Property and equipment, at cost, as of December 31 consisted of:

<TABLE>
<CAPTION>
                                                                               1998
                                      1999
                                                                    (in thousands)
<S>                                                                  <C>        <C>
            Land and buildings..................................     $3,421     $2,878
            Furniture, fixtures and equipment...................     40,444     27,877
            Software............................................     10,241      5,338
            Leasehold improvements..............................      5,714      4,736
                                                                      -----      -----

                                                                     59,820     40,829
            Less: accumulated depreciation and amortization.....
                                                                    (26,057)   (18,632)
                                                                    -------    -------
                                                                   $ 33,763   $ 22,197
                                                                   ========   ========
</TABLE>

     In December  1999,  the Company made a decision to dispose of its corporate
headquarters  land and building and is actively  seeking a buyer.  At such time,
the Company  re-evaluated the carrying amount of the asset and estimated the net
realizable  value  through an  independent  appraisal.  The Company has recorded
additional  depreciation  expense of $1.1 million to reflect the  impairment  in
value.

     Based upon a comprehensive  review of the Company's  long-lived assets, the
Company  recorded a non-cash charge to  depreciation  expense of $3.8 million in
1999.  This charge  reflects the  write-down of a portion of the recorded  asset
values of certain  computer  equipment and software.  No additional  assets were
deemed to be impaired.


<PAGE>
                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


8.   INTANGIBLE ASSETS

     The  excess  of the  cost of the  1999  Acquisitions  over  the net  assets
acquired of approximately $226.4 million has been recorded as intangible assets,
including goodwill,  and is being amortized over the estimated useful lives. The
allocation  of  the  excess  of  the  cost  over  the  net  assets  acquired  to
identifiable   intangible   assets  and  goodwill  was  based  upon  independent
appraisals,  as were the related  estimated  useful  lives.  Goodwill  and other
intangible  assets  consisted of the  following  as of December  31,  1999:  (in
thousands)

            Goodwill...................................     $96,906
            Less--accumulated amortization..............    (10,401)
                                                           --------
                 Goodwill, net.........................      86,505
                                                            -------
            Customer lists.............................      49,565
            Employee workforce.........................      33,455
            Non-compete agreements.....................      25,570
            Other                                            20,900
                                                             ------
                 Intangible assets.....................     129,490
            Less: accumulated amortization.............     (13,899)
                                                           --------
                 Intangible assets, net................     115,591
                                                            -------
                 Goodwill and intangible assets, net...    $202,096
                                                           ========

     The Company  periodically  examines the carrying  value of its goodwill and
other intangible assets to determine whether there are any impairment losses. If
indicators of impairment  were present,  and future cash flows were not expected
to be  sufficient to recover the assets'  carrying  amount,  an impairment  loss
would be  charged  to  expense  in the  period  identified.  No  event  has been
identified  that would  indicate an  impairment of the value of the goodwill and
other intangible assets as of December 31, 1999.


9.   SHORT-TERM AND LONG-TERM DEBT

     The  Company  maintains a line of credit  agreement  in the amount of $50.0
million which expires May 31, 2001. Under the agreement,  the Company may borrow
a maximum  amount of up to 80% of eligible  accounts  receivable.  The agreement
contains certain covenants, the most restrictive of which require the Company to
maintain a minimum level of earnings before  interest,  taxes,  depreciation and
amortization.  The balance  outstanding under the line of credit was $10 million
at December 31, 1999. At December 31, 1999, the Company had letters of credit of
$2.2 million outstanding.  The letters of credit expire at various dates through
July 2003.

     At December 31, 1998, the Company had no outstanding  short-term  debt. The
Company had no long-term debt outstanding as of December 31, 1999 or 1998.


10.   MERGER-RELATED COSTS AND RESTRUCTURING CHARGES

The Company recognized $1.2 million of expense in 1999 for employee  separations
associated  with   consolidation  of  certain  accounting  and  human  resources
functions.  In July 1999, the Company  announced a restructuring  initiative and
offered  involuntary  severance packages to 73 employees in the  administrative,
accounting  and  human  resources  functions.  In  1998,  the  Company  incurred
restructuring  charges and merger-related  costs of $12.8 million related to the
acquisitions  of LECG and  Peterson,  which were  accounted  for as  poolings of
interests.  These costs included legal, accounting and other transaction related
fees and expenses,  as well as accruals to consolidate  certain  facilities.  At
December  31,  1999,  the  Company  reviewed  the  merger-related  accruals  and
determined  that certain  amounts  previously  accrued were no longer  necessary
given   subsequent   acquisition   activity   and   changes  in  the   Company's
organizational  structure.  The results of operations for 1999 reflect a benefit
of $1.4 million for the reversal of the previously accrued amounts. In 1997, the
Company  incurred  legal,  accounting  and other  transaction  related  fees and
expenses of $1.3 million related to the acquisitions of RMI and Reed, which were
accounted for as poolings of interests.  During 1999, the Company  increased the
accrual for  restructuring  charges  and  merger-related  costs by $3.0  million
related to the 1999  Acquisitions,  which were  accounted for under the purchase
method of accounting.  These costs were reflected as purchase price  adjustments
and, as such, increased the amount of goodwill.

<PAGE>
                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     The restructuring charges and merger-related costs were determined based on
formal plans  approved by the Company's  management  using the best  information
available at the time. The amounts the Company may  ultimately  incur may change
as the balance of the Company's  initiative to integrate  acquired  companies is
executed.  The  activity  affecting  the accrual for  restructuring  charges and
merger-related costs during 1999, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>

                                            Direct
                                          Transaction  Facilities   Workforce  Other
                                             Costs      Closings    Reductions Costs Total

                             (amounts in thousands)
<S>                                      <C>           <C>          <C>      <C>     <C>
     37,752Year ended December 31, 1997
          Charges to operations.........       $ 706     $ --        $ 330     $276   $1,312
          Utilized......................        (706)      --         (330)    (276)  (1,312)
     Year ended December 31, 1998              7,638     3,600         --     1,540   12,778
          Charges to operations.........
          Utilized......................                  (239)        --
                                              (4,434)                        (1,655)  (6,328)
     Year ended December 31, 1999                --        --        1,160      --     1,160
          Charges to operations.........
          Purchase price adjustments....       2,425       350         255      --     3,030
          Utilized......................      (4,803)     (232)       (879)     --    (5,914)
          Changes in estimates..........        (826)     (655)         --      115   (1,366)
                                              -------     -----       -----    ----   ------

     Balance at December 31, 1999.......      $  --    $ 2,824       $ 536     $--    $3,360
                                              ======-   =======       =====    ====   ======

</TABLE>

11.   LEASE COMMITMENTS

     The  Company  leases its office  facilities  and  certain  equipment  under
operating  lease  arrangements  which expire at various dates through 2012.  The
Company leases office  facilities  under  noncancelable  operating  leases which
include  fixed or minimum  payments  plus,  in some cases,  scheduled  base rent
increases over the term of the lease and additional  rents based on the Consumer
Price Index.  Certain leases provide for monthly  payments of real estate taxes,
insurance and other operating expenses applicable to the property.  In addition,
the Company leases equipment under noncancelable operating leases.

     Future minimum annual lease payments,  for the years subsequent to 1999 and
in the aggregate, are as follows:

                              Year Ending December 31,     Amount
                                                          (in thousands)
                              2000..................      $ 15,241
                              2001..................        16,312
                              2002..................        13,965
                              2003..................        11,539
                              2004..................         8,710
                              Thereafter............        39,439
                                                            ------
                                                          $105,206
                                                          ========


     Rent expense for operating  leases  entered into by the Company and charged
to operations  amounted to $15.8 million for 1999,  $10.0 million for 1998,  and
$9.8 million for 1997.
<PAGE>
                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

12.   INCOME TAX EXPENSE

     Income tax expense consists of the following:
<TABLE>
<CAPTION>

                                                                                     December 31,
                                                                        1999       1998     1997
                                                                             (in thousands)
            Federal:
<S>                                                                     <C>        <C>       <C>
                 Current                                                $14,186    $20,180   $5,264
                 Deferred..........................................      (7,391)     1,600    2,648
                                                                       --------    -------   ------
                      Total........................................       6,795     21,780    7,912
                                                                       --------    -------   ------
            State:
                 Current...........................................       3,272      3,461    1,392
                 Deferred..........................................      (1,716)       396      (67)
                                                                       ---------   -------   ------
                      Total........................................       1,556      3,857    1,325
                                                                       ---------   -------   ------
            Foreign                                                         476         --       --
                                                                       ---------   -------   ------

                      Total federal, state and foreign income tax
                        expense....................................      $8,827    $25,637   $9,237
                                                                         =======   =======   ======
</TABLE>

     Income tax expense  differs  from the  amounts  estimated  by applying  the
statutory income tax rates to income before income tax expense as follows:

<TABLE>
<CAPTION>

                                                                             December 31,
                                                                        1999      1998    1997
                                                                      ----------- ------  ----

<S>                                                                      <C>      <C>     <C>
            Federal tax at statutory rate...........................     35.0%    35.0%   35.0%
            State tax at statutory rate, net of federal tax benefits    (17.8)     7.3     4.6
            Foreign taxes...........................................     (8.2)     --      --
            Effect of nontaxable interest and dividends.............     12.5     (1.7)   (0.9)
            Effect of nontaxable entity status......................      --       --     (5.2)
            Effect of non-deductible merger-related costs...........     (1.0)     4.0     --
            Effect of non-deductible amortization...................   (139.2)     --      --
            Effect of non-deductible stock compensation expense.....    (23.3)     --      --
            Effect of conversion from cash to accrual method of
               accounting for acquired company......................      --      14.7     --
            Effect of other non-deductible expenses.................    (10.4)     2.9    (0.4)
                                                                        -----      ---    ----

                                                                       (152.4)%   62.2%   33.1%
                                                                        ======     ====    ====
</TABLE>

     The  tax  benefits   associated   with   nonqualified   stock  options  and
disqualifying  dispositions  of incentive stock options reduced taxes payable by
$4.9 million in 1999 and $3.3 million in 1998. Such benefits were recorded as an
increase to additional paid-in capital in each year.

     Deferred  income taxes result from temporary  differences  between years in
the recognition of certain expense items for income tax and financial  reporting
purposes. The source and income tax effect of these differences are as follows:


<PAGE>


                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
                                                                                          December 31,
                                                                                       1999       1998
                                                                                        (in thousands)
            Deferred tax assets:
<S>                                                                                      <C>        <C>
                 State income taxes.................................................     $(121)     $ 479
                 Allowance for uncollectible receivables............................     4,379        194
                 Merger-related costs...............................................       --       1,427
                 Stockholders' notes................................................     2,239        --
                 Insurance related costs............................................       865        --
                 Other..............................................................       202        315
                                                                                           ---        ---

                      Total deferred tax assets.....................................     7,564      2,415
            Deferred tax liabilities:
                 Adjustment resulting from changes in the method of accounting
                    used for tax purposes...........................................     6,435      9,136
                 Other                                                                    (531)       726
                                                                                          ----        ---

            Deferred tax liabilities................................................     5,904      9,862
                                                                                         -----      -----

            Net deferred tax assets (liabilities)...................................    $1,660    $(7,447)
                                                                                        ======     =======
</TABLE>

     The Company has not  recorded a  valuation  allowance  as it believes it is
more likely than not that the net deferred tax asset is recoverable.


13.   SUPPLEMENTAL CASH FLOW INFORMATION

     Total interest paid during the years ended December 31, 1999, 1998 and 1997
were $0.4 million,  $0.7 million, and $0.3 million,  respectively.  Total income
taxes paid during the years ended  December 31,  1999,  1998 and 1997 were $27.6
million, $17.7 million, and $3.5 million, respectively.

     During the first quarter of 1999,  the Company issued 4.2 million shares of
common  stock  (valued  at  the  time  at  approximately   $181.0  million)  for
substantially all of the outstanding  common stock of four companies acquired in
transactions accounted for by the purchase method of accounting.  In addition to
the $42.1 million of cash used to acquire  certain  businesses  during 1999, the
Company  entered into  commitments  for deferred  cash payments of $7.8 million,
payable  in  two  equal  annual   installments.   See  also  Note  4,  "Business
Combinations".

     In April 1999, certain of the Company's then officers borrowed $3.5 million
from the Company to exercise certain then-vested  options. In November 1999, the
Company  received  605,684  shares of the Company's  common  stock,  with a then
market  value of $12.9  million,  in lieu of cash as payment  for the  principal
amount of certain loans plus accrued interest.  See also Note 17, "Related Party
Transactions".


14.   LONG-TERM INCENTIVE PLAN

     On June 30,  1996,  the Company  adopted a Long-Term  Incentive  Plan which
provides for common stock, common stock-based,  and other performance incentives
to employees,  consultants,  directors, advisors, and independent contractors of
the Company. The Long-Term Incentive Plan, as amended, was re-approved by a vote
of the Company's shareholders in July 1999. As of December 31, 1999, the Company
had 8.2 million  options  outstanding  at a weighted  average  exercise price of
$29.15 per share. As of December 31, 1999, 0.7 million options were exercisable.


<PAGE>



                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     In general,  options  issued under the Long Term Incentive Plan were issued
at the fair market value at the dates of grant,  have a ten-year term and become
vested  and thus  exercisable  in annual  installments  over a four year  period
following  the  date of  grant.  However,  the  plan  permits  the  Compensation
Committee,  or the chief executive  officer as its delegate,  to vary such terms
and conditions,  including  granting  nonqualified  options at prices below fair
market value at the date of grant. The Company has determined,  based in part on
the absence of  contemporaneous  documentation,  that 0.3  million  nonqualified
options  issued to a total of sixteen  individuals  were issued at prices  below
fair market value.  Accordingly,  the Company has recorded an expense in 1999 of
$3.5 million for stock option compensation expense attributable to such options.
The amount charged to expense  represents  the aggregate  dollar amount by which
the grant  prices of the options  differ from the market  prices as of the dates
for which the Company has  independent  evidence to support the  issuance of the
options.  The amount  charged to expense has been  amortized  over the  relevant
vesting periods. See also Note 17, "Related Party Transactions."

     The  Company  applies  APB  Opinion  25,  Accounting  for  Stock  Issued to
employees,  and related Interpretations in accounting for its plan. Accordingly,
no  compensation  cost has been  recognized  for those  option  grants where the
exercise  price  is equal to the fair  market  value at the date of  grant.  Had
compensation  cost for the plan been  determined  based on the fair value at the
grant  dates for awards  under the plan  consistent  with the method of SFAS No.
123,  "Accounting  for  Stock-Based  Compensation,"  the Company's  compensation
expense for the years ended  December  31,  1999,  1998 and 1997 would have been
increased by $18.3 million, $4.6 million, and $1.1 million, respectively, net of
related  income  taxes.  As a result,  the  Company's  pro  forma  net  earnings
available to common  stockholders and earnings per common and common  equivalent
shares would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>

                                                                          1999       1998      1997
                                                                          ----       ----      ----

                                                                         (in thousands, except per
                                                                              share amounts)
<S>                                                                   <C>          <C>        <C>
            Earnings, as reported:
                 Net income (loss) .................................    $(14,622)    $15,581   $18,664
                 Net income (loss) per basic share..................     $ (0.35)     $ 0.43    $ 0.56
                 Net income (loss) per dilutive share...............     $ (0.35)     $ 0.41    $ 0.55
            Earnings, fair value method:
                 Net income (loss), with compensation expense
                    from fair value options.........................    $(32,941)    $10,990   $17,526
                 Fair value method net income (loss) per basic
                    share...........................................     $ (0.79)     $ 0.30    $ 0.53
                 Fair value method net income (loss) per dilutive
                    share...........................................     $ (0.79)     $ 0.29    $ 0.52
</TABLE>

     The weighted  average fair value of options  granted in 1999, 1998 and 1997
was  $12.04,  $5.68,  and  $4.46,  respectively.  For  purposes  of  calculating
compensation  cost under SFAS No. 123,  the fair value of each  option  grant is
estimated as of the date of grant using the Black-Scholes  option pricing model.
The following  weighted  average  assumptions  were used in the model for grants
made in 1999, 1998 and 1997:

                                                      1999    1998    1997
                                                      ------  ------  ----
            Expected volatility.....................      75%     45%     45%
            Risk free interest rate.................     5.5%    5.0%    5.7%
            Dividend yield..........................       0%      0%      0%
            Contractual or Expected lives (years)...     8.5     2.8     2.5


<PAGE>

                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     Additional information on the shares subject to options is as follows:

<TABLE>
<CAPTION>

                                                    1999               1998               1997
                                                    -------            ------             ----
                                               Number  Weighted   Number  Weighted   Number  Weighted
                                                 of     Average     of     Average     of     Average
                                               Shares   Exercise  Shares   Exercise  Shares   Exercise
                                              (000's)    Price   (000's)    Price   (000's)    Price
                                              -------    -----   -------    -----   -------    -----
<S>                                          <C>       <C>        <C>      <C>      <C>      <C>
     Options outstanding at beginning of
        year................................     5,510     $24.19   2,623     $16.53     689     $10.37
     Granted................................     4,481      32.68   3,849      28.47   2,173      18.35
     Exercised..............................      (696)     17.98    (361)     13.07     (3)       8.00
     Forfeited..............................    (1,082)     25.24    (601)     24.90    (236)     16.35
                                                ------      -----    ----      -----    ----      -----
     Options outstanding at end of year.....     8,213     $29.15   5,510     $24.19   2,623     $16.53
                                                 =====     ======   =====     ======   =====     ======

     Options exercisable at year end........       676     $19.31     138     $14.41      14     $18.45
                                                   ===     ======     ===     ======      ==     ======

</TABLE>

     The following table summarizes  information about stock options outstanding
at December 31, 1999 and 1998:

<TABLE>
<CAPTION>

                                    1999                       1998
                                    ------                     ----
                               Weighted-Average           Weighted-Average
                               -------------------------------------------
                              Shares Exercise Remaining   Shares Exercise Remaining
 Range of Exercise Price      (000's)  Price     Life     (000's)  Price     Life
 -----------------------      -------  -----     ----     -------  -----     ----

<S>                           <C>   <C>          <C>   <C>     <C>    <C>
     $ 0 to $15..........      790   $12.17       4.6   1,025   $12.46 0.7 years
     $16 to $25..........      737    21.23       6.0   1,277    20.99 2.5 years
     $26 to $35..........    5,656    29.03       8.8   3,174    29.06 3.6 years
     $36 to $45..........      307    43.71       9.5      34    39.30 3.8 years
     $46 to $55..........      723    50.53       9.1     --        --        --
                               ---                       ----
                             8,213   $29.15       8.2   5,510   $24.19 2.8 years
                             =====                     ======
</TABLE>



15.   EMPLOYEE BENEFIT PLANS

     The  Company  maintained  profit  sharing  and  savings  plans for  several
operating  subsidiaries  through  December  31,  1999.  Eligible  employees  may
contribute  a  portion  of  their  compensation  to their  respective  operating
subsidiary's  plan.  The Company  matches a  percentage  of  employees'  current
contributions on some operating  subsidiaries' plans and has discretion to match
contributions on other plans. The Company may also make an annual profit sharing
contribution  at its  discretion.  The  Company,  as sponsor of the plans,  uses
independent third parties to provide  administrative  services to the plans. The
Company  has  the  right  to  terminate  the  plans  at any  time.  The  Company
contributions  to the various plans which were charged to  operations  were $1.9
million,  $1.0 million,  and $1.0 million in the years ended  December 31, 1999,
1998, and 1997, respectively.

     Effective February 2000, the Company amended the profit sharing and savings
plans of all operating subsidiaries to provide an employer matching contribution
for all  participants  in an  amount  equal  to 100% of the  employees'  current
contributions,  up  to  a  maximum  of  3%  of  the  employees'  total  eligible
compensation.
<PAGE>

                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

16.   SEGMENT INFORMATION

     The Company has applied the provisions of SFAS No. 131,  Disclosures  about
Segments of an Enterprise and Related  Information.  This statement  establishes
standards for reporting information  regarding operating segments,  products and
services,  geographic  areas  and  major  customers.  The  Company's  operations
represent a single reportable  segment under the provisions of SFAS No. 131. The
Company's  operations  have a high degree of  similarity  in their  economic and
operational characteristics,  including the nature of the services provided, the
type or  class  of  customers  for  those  services,  and the  methods  used for
delivering  such  services.   While  the  Company  has  retained  certain  brand
identities   associated  with  its  principal  operating   subsidiaries,   these
distinctions  have not been a critical factor for management in making operating
decisions  or in  assessing  performance.  In  addition,  the  structure  of the
Company's  internal  organization  has changed  from time to time as a result of
acquisition  activity  and  in  response  to  customer,  project,  personnel  or
geographic  requirements  and, as such,  discrete  financial  information is not
available on a consistent basis at the operating subsidiary level.

     The Company  derives  substantially  all of its revenues from operations in
the United States. In each of the three years ended December 31, 1999, more than
95% of the Company's  consolidated  revenues and  operating  income were derived
from domestic operations. Substantially all of the Company's identifiable assets
are located in the United States.


17.   RELATED PARTY TRANSACTIONS

     In April 1999,  Mr.  Maher,  the  Company's  Chairman  and Chief  Executive
Officer at that time,  borrowed  $2.7  million from the Company so that he could
exercise  his  then-vested  options.  Mr.  Maher  exercised  all  112,500 of his
then-vested  options at an exercise  price of $24.00 per share.  In August 1999,
Mr. Maher  borrowed an additional  $10 million from the Company.  The applicable
interest rate for this loan was 5.75%,  payable annually.  In November 1999, the
Company  received  from Mr. Maher 605,684  shares of the Company's  common stock
with a then market value of $12.9 million as payment for the principal amount of
the loans plus accrued interest.

     Five non-employees related by blood or marriage to Mr. Maher received stock
option  grants.  Mr. Maher has  informed the Company that each of these  persons
provided  services  to the  Company  from  time to time  and  received  no other
compensation for those services. In addition,  one other individual not employed
by the  Company,  but who was an  employee  of an  unrelated  company  owned  or
controlled by Mr. Maher,  received stock option  grants.  Mr. Maher has informed
the Company that this individual  provided  certain services to the Company from
time to time.  These  persons  are  among  sixteen  as to whom the  Company  has
determined that their options were issued at prices below fair market value. See
also Note 14, "Long Term Incentive Plan". The Company has recorded an expense in
1999 of $3.5 million for stock option compensation  expense attributable to such
options  issued  to  the  sixteen   individuals.   Of  the  total  stock  option
compensation  expense of $3.5 million,  $0.6 million is  attributable to the six
persons described above.

     In April 1999, Mr. Cain and Mr. Demirjian, respectively the Company's Chief
Administrative  Officer and the  Company's  General  Counsel at that time,  each
borrowed  $425,063 from the Company to exercise all 18,750 of their  then-vested
options at an exercise price of $22.67 per share. The notes which evidence these
borrowings are full recourse,  are due on or before the third  anniversary  date
and bear  interest at a rate equal to 5.75%,  payable  annually.  The notes were
accompanied  by pledge  agreements  which pledge the exercised  option shares as
collateral  security for repayment of the notes, which shares are currently held
by the Company.

     In late August,  Mr. Cain, Mr.  Demirjian and Mr.  Kingsbury (the Company's
Chief Financial  Officer at that time) borrowed  $2.625 million,  $2.625 million
and $1.75 million, respectively, from the Company, related to their purchases of
75,000,  75,000 and 50,000 shares,  respectively,  of the Company's common stock
from third parties at $35 per share.  The notes which evidence these  borrowings
are full  recourse,  are due on or before  the third  anniversary  date and bear
interest  at  a  rate  equal  to  5.75%,  payable  annually.  These  notes  were
accompanied by pledge agreements which pledge the shares as collateral  security
for repayment of the notes, which shares are currently held by the Company.


<PAGE>
                   NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     As a  result  of  recent  developments,  the  Company  has  accrued  a loss
contingency  at December 31, 1999 in the amount of $5.3 million,  related to the
notes  receivable from Mssrs.  Cain,  Demirjian and Kingsbury.  See also Note 5,
"Stockholders  Equity".  The Company has discontinued the accrual of interest on
these notes.

     In November  1999,  the Company  entered into an agreement  with Mr. Maher,
pursuant to which,  among other  things,  Mr.  Maher  agreed to provide  certain
consulting  services to the Company over a two year period,  including providing
information  about  past  transactions  or other  matters  as to which he may be
familiar,  and the Company agreed to pay Mr. Maher twenty-four  monthly payments
of $25,000.


18.   LITIGATION

     Numerous  purported  class  action  lawsuits  have been filed  against  the
Company since November 1999 in the United States District Court for the Northern
District of Illinois.  These actions name as defendants  the Company and certain
former directors and former executive officers (one of whom, however, remains an
employee of the  Company) of the  Company and are  purported  to be on behalf of
persons who  purchased  shares of the  Company's  common  stock  during  various
periods  through  November  1999. The  complaints  allege various  violations of
federal securities law, including  violations of Section 10(b) of the Securities
Exchange  Act of 1934,  and  that  the  defendants  made  materially  misleading
statements and/or material omissions which artificially  inflated prices for the
Company's  common stock.  The plaintiffs seek a judgement  awarding  damages and
other relief.  The Company  believes it has meritorious  defenses and intends to
vigorously  defend  these  actions.  The  outcome  of these  lawsuits  cannot be
predicted with  certainty and a material  adverse  judgment  against the Company
could have a material adverse effect on the Company.

     Navigant  International,  Inc., a national travel agency  headquartered  in
Denver,  Colorado,  sued the Company in July 1999 in the United States  District
Court for the District of Colorado  claiming  that the use of  "Navigant" in our
name  infringes  on their use of and rights in such name.  The  complaint  seeks
declaratory relief and an injunction  against our use of "Navigant,"  attorneys'
fees and other related relief. The Company believes it has meritorious  defenses
and intends to vigorously defend this action.

     In addition,  from time to time, we are party to various other lawsuits and
claims in the ordinary  course of business.  While the outcome of those lawsuits
or claims  cannot be  predicted  with  certainty,  we do not believe that any of
those lawsuits or claims will have a material adverse effect on the Company.
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Navigant Consulting, Inc.:

Under date of March 28, 2000 we reported on the  consolidated  balance sheets of
Navigant Consulting, Inc. and subsidiaries as of December 31, 1999 and 1998, and
the related consolidated statements of earnings,  stockholders' equity, and cash
flows for each of the years in the  three-year  period ended  December 31, 1999,
which  report was based in part on reliance of other  auditors,  as contained in
the annual  report on Form 10-K for the year 1999.  The 1998 and 1997  financial
statements have been restated as discussed in notes 3 and 4 to the  consolidated
financial  statements.  In  connection  with our  audits  of the  aforementioned
consolidated  financial  statements,  we also  audited the related  consolidated
financial  statement  schedule  of  valuation  and  qualifying   accounts.   The
consolidated financial statement schedule is the responsibility of the Company's
management.  Our  responsibility  is to express  an opinion on the  consolidated
financial statement schedule based on our audits.

In our opinion, the consolidated  financial statement schedule,  when considered
in relation to the basic  consolidated  financial  statements  taken as a whole,
presents fairly, in all material respects, the information set forth therein.

                                                               /s/ KPMG LLP
Chicago, Illinois
March 28, 2000




                                       S-1

<PAGE>

<TABLE>
<CAPTION>

                                   Schedule II

                            Navigant Consulting, Inc.

                        VALUATION AND QUALIFYING ACCOUNTS
                  Years Ended December 31, 1999, 1998 and 1997
                             (amounts in thousands)
                                                         Balance at          Charged                                 Balance
                                                         Beginning             to                                     at End
Description                                               of Year           Expenses           Deductions (1)        of Year

<S>                                                            <C>                <C>                    <C>            <C>
Year Ended December 31, 1999                                     8,126              14,900                 (6,696)        16,330
    Allowance for doubtful accounts
Year Ended December 31, 1998                                     7,592               2,058                 (1,524)         8,126
    Allowance for doubtful accounts
Year Ended December 31, 1997                                    10,569               1,975                 (4,952)         7,592
    Allowance for doubtful accounts

(1) Represent write-offs of bad debt


</TABLE>





                                       S-2
<PAGE>

                                                             Exhibit 23.1

                               Consent of KPMG LLP

The Board of Directors Navigant Consulting, Inc.

We consent to  incorporation  by reference in the  registration  statement  (No.
333-30267) on Form S-8 of Navigant  Consulting,  Inc. of our reports dated March
20, 2000,  relating to the consolidated  balance sheets of Navigant  Consulting,
Inc.  and  subsidiaries  as of  December  31,  1999 and  1998,  and the  related
consolidated  statements of operations,  stockholders' equity and cash flows for
each of the years in the  three-year  period ended  December  31, 1999,  and the
related schedule, which reports appear in the December 31, 1999 annual report on
Form 10-K of Navigant Consulting, Inc.

                                                           /s/ KPMG LLP
Chicago, Illinois
March 28, 2000


<PAGE>




                                                               Exhibit 23.2

                                 ARTHUR ANDERSEN
                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K into the Company's  previously  filed Form S-8
Registration Statement No. 333-30267.

                                                  /s/ Arthur Andersen LLP
San Francisco, California
March 23, 2000


<PAGE>





                                                                Exhibit 23.3

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We consent to  incorporation  by reference  in the  registration  statement  No.
333-30267 on Form S-8 of Navigant Consulting, Inc. of our report dated March 17,
1998 relating to the consolidated statements of operations, members' equity, and
cash flows for the year ended  December 31, 1997 of Peterson  Consulting  L.L.C.
which  report  appears in the  December  31, 1999 annual  report on Form 10-K of
Navigant Consulting, Inc.

                                           /s/ Crowe, Chizek and Company LLP
Oak Brook, Illinois
March 27, 2000



<PAGE>




                                                                Exhibit 23.4

                       CONSENT OF INDEPENDENT ACCOUNTANTS

We  hereby  consent  to the  incorporation  by  reference  in  the  Registration
Statement on Form S-8 (No. 333-30267) of Navigant Consulting, Inc. of our report
dated February 11, 1998,  relating to the consolidated  financial  statements of
Resource  Management  International,  Inc. and  Subsidiaries  as of December 31,
1997, which appears in this December 31, 1999 Form 10-K.

                                             /s/ PricewaterhouseCoopers LLP
Sacramento, California
March 28, 2000