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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

(Mark One)

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2001,

or

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

For the transition period from  to

Commission file number 0-23651

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First Consulting Group, Inc.(Exact name of registrant as specified in its charter)

Delaware

95-3539020(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)


111 W. Ocean Blvd. 4th Floor, Long Beach, CA 90802(Address of principal executive offices including zip code)

(562) 624-5200(Registrant's telephone number, including area code)

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(Former
name, former address and former fiscal year, if changed since last report)

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes /x/  No / /

Indicate
the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Common Stock, $.001 par value

23,460,847(Class)

(Outstanding at May 1, 2001)


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First Consulting Group, Inc.    Table of Contents

|                  |  |                       |  |                                                                                                                     |  | Page Number
|----------------- |  | --------------------- |  | ------------------------------------------------------------------------------------------------------------------- |  | -----------
|COVER PAGE        |  | 1                    
|TABLE OF CONTENTS |  | 2                    
|PART I.           |  | FINANCIAL INFORMATION |  | 3                                                                                                                  
|                  |  | ITEM 1.               |  | FINANCIAL STATEMENTS AND NOTES (UNAUDITED)                                                                          |  | 3          
|                  |  |                       |  | Consolidated Balance Sheets as of March 31, 2001 and December 31, 2000                                              |  | 3          
|                  |  |                       |  | Consolidated Statements of Operations for the three month periods ended March 31, 2001 and March 31, 2000           |  | 5          
|                  |  |                       |  | Condensed Consolidated Statements of Cash Flows for the three month periods ended March 31, 2001 and March 31, 2000 |  | 6          
|                  |  |                       |  | Notes to Consolidated Financial Statements                                                                          |  | 7          
|                  |  | ITEM 2.               |  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                               |  | 9          
|PART II.          |  | OTHER INFORMATION     |  | 12                                                                                                                 
|                  |  | ITEM 1.               |  | LEGAL PROCEEDINGS                                                                                                   |  | 12         
|                  |  | ITEM 2.               |  | CHANGES IN SECURITIES                                                                                               |  | 12         
|                  |  | ITEM 3.               |  | DEFAULTS UPON SENIOR SECURITIES                                                                                     |  | 12         
|                  |  | ITEM 4.               |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                 |  | 12         
|                  |  | ITEM 5.               |  | OTHER INFORMATION                                                                                                   |  | 12         
|                  |  | ITEM 6.               |  | EXHIBITS AND REPORTS ON FORM 8-K                                                                                    |  | 12         
|SIGNATURES        |  | 13                   
|EXHIBIT INDEX     |  | 14                   

2

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements and Notes (Unaudited).

First Consulting Group, Inc. and Subsidiaries

Consolidated Balance Sheets
(in thousands)

|                              |                                                                                                                                  | March 31,
2001                                 |        | December 31,
2000
|----------------------------- | -------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | ------ | -----------------
|
|ASSETS                       
|Current assets                |                                                                                                                                  |                                                |        |                  
|                              | Cash and cash equivalents                                                                                                        |                                                | $      | 21,454           
|                              | Short-term investments                                                                                                           |                                                |        | 8,829            
|                              | Accounts receivable, less allowance of $3,439 and $3,331 in the periods ended March 31, 2001 and December 31, 2000, respectively |                                                |        | 33,443           
|                              | Unbilled receivables                                                                                                             |                                                |        | 23,996           
|                              | Deferred income taxes, net                                                                                                       |                                                |        | 3,948            
|                              | Income tax receivable                                                                                                            |                                                |        | 1,757            
|                              | Prepaid expenses and other current assets                                                                                        |                                                |        | 1,206            
|                              |                                                                                                                                  |                                                |        |                  
|                              |                                                                                                                                  | Total current assets                           |        |                  
|Notes receivablestockholders |                                                                                                                                  |                                                | 1,724  |                  
|Long-term investments         |                                                                                                                                  |                                                | 4,558  |                  
|Property and equipment        |                                                                                                                                  |                                                |        |                  
|                              | Furniture, equipment, and leasehold improvements                                                                                 |                                                |        | 7,650            
|                              | Information systems equipment                                                                                                    |                                                |        | 26,342           
|                              |                                                                                                                                  |                                                |        |                  
|                              |                                                                                                                                  |                                                | 33,992 |                  
|                              |                                                                                                                                  | Less accumulated depreciation and amortization |        |                  
|                              |                                                                                                                                  |                                                |        |                  
|                              |                                                                                                                                  |                                                | 12,768 |                  
|Other assets                  |                                                                                                                                  |                                                |        |                  
|                              | Executive benefit trust                                                                                                          |                                                |        | 6,563            
|                              | Unbilled long term receivables                                                                                                   |                                                |        | 11,289           
|                              | Deferred income taxes                                                                                                            |                                                |        | 2,847            
|                              | Goodwill, net                                                                                                                    |                                                |        | 9,525            
|                              | Other                                                                                                                            |                                                |        | 537              
|                              |                                                                                                                                  |                                                |        |                  
|                              |                                                                                                                                  |                                                | 30,761 |                  
|                              |                                                                                                                                  |                                                |        |                  
|                              |                                                                                                                                  | Total assets                                   |        | $                
|                              |                                                                                                                                  |                                                |        |                  

See
accompanying notes.

3

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First Consulting Group, Inc. and Subsidiaries

Consolidated Balance Sheets (Continued)
(in thousands)

|                                     |                                                                                                                                                                                           | March 31,
2001                             |   | December 31,
2000 |        
|------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | - | ----------------- | -------
|
|LIABILITIES AND STOCKHOLDERS' EQUITY |                                                                                                                                                                                          
|Current liabilities                  |                                                                                                                                                                                           |                                            |   |                   |        
|                                     | Current portion of long-term debt                                                                                                                                                         |                                            | $ | 54                |        
|                                     | Accounts payable                                                                                                                                                                          |                                            |   | 2,500             |        
|                                     | Accrued liabilities                                                                                                                                                                       |                                            |   | 9,324             |        
|                                     | Accrued vacation                                                                                                                                                                          |                                            |   | 6,984             |        
|                                     | Accrued incentive compensation                                                                                                                                                            |                                            |   | 4,908             |        
|                                     | Deferred revenue                                                                                                                                                                          |                                            |   | 119               |        
|                                     | Customer advances                                                                                                                                                                         |                                            |   | 5,055             |        
|                                     |                                                                                                                                                                                           |                                            |   |                   |        
|                                     |                                                                                                                                                                                           | Total current liabilities                  |   |                   | 28,944 
|Non-current liabilities              |                                                                                                                                                                                           |                                            |   |                   |        
|                                     | Long-term debt, net of current portion                                                                                                                                                    |                                            |   | 78                |        
|                                     | Supplemental executive retirement plan                                                                                                                                                    |                                            |   | 6,705             |        
|                                     | Minority interest                                                                                                                                                                         |                                            |   | 2,165             |        
|                                     |                                                                                                                                                                                           |                                            |   |                   |        
|                                     |                                                                                                                                                                                           | Total non-current liabilities              |   |                   | 8,948  
|Commitments and contingencies        |                                                                                                                                                                                           |                                            |  |                   |        
|Stockholders' equity                 |                                                                                                                                                                                           |                                            |   |                   |        
|                                     | Preferred Stock, $.001 par value; 10,000,000 shares authorized, no shares issued and outstanding                                                                                          |                                            |   |                  |        
|                                     | Common Stock, $.001 par value; 50,000,000 shares authorized, 23,541,364 shares issued and outstanding at March 31, 2001 and 23,736,700 shares issued and outstanding at December 31, 2000 |                                            |   | 24                |        
|                                     | Additional paid-in capital                                                                                                                                                                |                                            |   | 89,894            |        
|                                     | Retained earnings                                                                                                                                                                         |                                            |   | 23,673            |        
|                                     | Deferred compensation-stock incentive agreements                                                                                                                                          |                                            |   | (2,137            | )      
|                                     | Notes receivablestockholders                                                                                                                                                             |                                            |   | (4,141            | )      
|                                     | Accumulated other comprehensive income (loss)                                                                                                                                             |                                            |   | (761              | )      
|                                     |                                                                                                                                                                                           |                                            |   |                   |        
|                                     |                                                                                                                                                                                           | Total stockholders' equity                 |   |                   | 106,552
|                                     |                                                                                                                                                                                           |                                            |   |                   |        
|                                     |                                                                                                                                                                                           | Total liabilities and stockholders' equity |   | $                 | 144,444
|                                     |                                                                                                                                                                                           |                                            |   |                   |        

See
accompanying notes.

4

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First Consulting Group, Inc. and Subsidiaries

Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)

|                                                    |                               | Three Months Ended                |       
|--------------------------------------------------- | ----------------------------- | --------------------------------- | ------
|
|Net revenue                                         |                               | $                                 | 70,300
|Cost of services                                    |                               |                                   | 43,853
|                                                    |                               |                                   |       
|                                                    | Gross profit                  |                                   |       
|Selling expenses                                    |                               |                                   | 7,859 
|General and administrative expenses                 |                               |                                   | 17,402
|                                                    |                               |                                   |       
|                                                    | Income (loss) from operations |                                   |       
|Other income                                        |                               |                                   |       
|                                                    | Interest income, net          |                                   |       
|                                                    | Other expense, net            |                                   |       
|                                                    |                               |                                   |       
|                                                    |                               | Income (loss) before income taxes |       
|Provision (benefit) for income taxes                |                               |                                   | 645   
|                                                    |                               |                                   |       
|                                                    |                               | Net income (loss)                 |       
|                                                    |                               |                                   |       
|Basic net income (loss) per share                   |                               | $                                 | 0.04  
|Diluted net income (loss) per share                 |                               | $                                 | 0.04  
|Shares used in computing basic net income per share |                               |                                   | 23,573
|Shares used in diluted net income per share         |                               |                                   | 24,402

See
accompanying notes.

5

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First Consulting Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

|                                                |                                                  | Three Months Ended                                   |       
|----------------------------------------------- | ------------------------------------------------ | ---------------------------------------------------- | ------
|
|Cash flows from operating activities:           |                                                  |                                                      |       
|                                                | Net income (loss)                                |                                                      | $     
|                                                | Adjustments to reconcile net income              |                                                      |       
|                                                | Change in assets and liabilities                 |                                                      |       
|                                                |                                                  |                                                      |       
|                                                |                                                  | Net cash provided by (used for) operating activities |       
|                                                |                                                  |                                                      |       
|Cash flows from investing activities:           |                                                  |                                                      |       
|                                                | Net sale (purchase) of investments               |                                                      |       
|                                                | Furniture, equipment, and leasehold improvements |                                                      |       
|                                                | Acquisition of business                          |                                                      |       
|                                                |                                                  |                                                      |       
|                                                |                                                  | Net cash provided by (used for) investing activities |       
|                                                |                                                  |                                                      |       
|Cash flows used in financing activities:        |                                                  |                                                      |       
|                                                | Principal payments of long-term debt             |                                                      |       
|                                                | Proceeds from issuance of stock                  |                                                      |       
|                                                |                                                  |                                                      |       
|                                                |                                                  | Net cash provided by financing activities            |       
|                                                |                                                  |                                                      |       
|Net increase (decrease) in cash and equivalents |                                                  |                                                      | 10,025
|Cash and equivalents at beginning of period     |                                                  |                                                      | 11,429
|                                                |                                                  |                                                      |       
|Cash and equivalents at end of period           |                                                  | $                                                    | 21,454
|                                                |                                                  |                                                      |       
|Cash paid during the period for:                |                                                  |                                                      |       
|                                                | Interest                                         |                                                      | $     
|                                                | Income taxes                                     |                                                      | $     

See
accompanying notes.

6

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Notes to Consolidated Financial Statements

1. Basis of Presentation

The consolidated balance sheets of First Consulting Group, Inc. (the "Company") at March 31, 2001 and consolidated statements of operations and
condensed consolidated statements of cash flows for the periods ended March 31, 2001 and 2000 are unaudited. These financial statements reflect all adjustments, consisting of only normal
recurring adjustments, which, in the opinion of management, are necessary to fairly present the financial position of the Company at March 31, 2001 and the results of operations for the three
month periods ended March 31, 2001 and March 31, 2000. The results of operations for the three months ended March 31, 2001 are not necessarily indicative of the results to be
expected for the year ending December 31, 2001. For more complete financial information, these financial statements should be read in conjunction with the audited financial statements for the
year ended December 31, 2000 included in the Company's Annual Report on Form 10-K.

2. Investments

For purposes of reporting cash flows, cash and cash equivalents include cash and interest-earning deposits or securities with original maturities of three
months or less. The Company has approximately $8.8 million in short term investments and $3.2 million in non-current investments classified as available for sale. Such
investments are currently held primarily in tax-exempt government securities. Net unrealized gains and losses on investments were not material at March 31, 2001.

3. Net Income (Loss) Per Share

The following represents a reconciliation of basic and diluted net income per share for the three month periods ended March 31, 2001 and 2000,
respectively (amounts rounded to thousands, except per share data):

|             |                                                                            | For the Three Months Ended
March 31, 2001 |   | For the Three Months Ended
March 31, 2000 | 
|------------ | -------------------------------------------------------------------------- | ----------------------------------------- | - | ----------------------------------------- | 
|
|Basic EPS:   |                                                                            |                                           |   |                                           | 
|             | Net Income (loss) available to common stockholders                         |                                           | $ | 891                                       | 
|             | Effect of dilutive options and warrants:                                   |                                           |   |                                           | 
|             |                                                                            |                                           |   |                                           | 
|Diluted EPS: |                                                                            |                                           |   |                                           | 
|             | Net Income (loss) available to common stockholders and assumed conversions |                                           | $ | 891                                       | 
|             |                                                                            |                                           |   |                                           | 

4. Disclosure of Segment Information

FCG has consolidated its business units as follows:



7

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The
Company provides segment reporting at a gross margin level. Selling and general and administrative expense (including corporate functions, occupancy related costs, depreciation,
professional development, recruiting, and marketing), and fixed assets (primarily computer equipment, furniture, and leasehold improvements) are managed at the corporate level. The Company's segments
are managed on an integrated basis in order to serve clients by assembling multi-disciplinary teams, which provide comprehensive services.

The
following is a summary of certain financial information by segment (in thousands):

For the quarter ended March 31, 2001:

|                                  |  | Healthcare |        | Life Sciences |   | DHTS   |  | Management
Services |        | Totals
|--------------------------------- |  | ---------- | ------ | ------------- | - | ------ |  | ------------------- | ------ | ------
|Net revenues                      |  | $          | 20,009 |               | $ | 19,815 |  | $                   | 18,630 |       
|Cost of services                  |  |            | 10,003 |               |   | 13,302 |  |                     | 11,376 |       
|                                  |  |            |        |               |   |        |  |                     |        |       
|Gross profit                      |  |            | 10,006 |               |   | 6,513  |  |                     | 7,254  |       
|Selling expenses                  |  |            |        |               |   |        |  |                     |        |       
|General & administrative expenses |  |            |        |               |   |        |  |                     |        |       
|Income from operations            |  |            |        |               |   |        |  |                     |        |       

For the quarter ended March 31, 2000:

|                                  |  | Healthcare |        | Life Sciences |   | DHTS   |  | Management
Services |        | Totals |  
|--------------------------------- |  | ---------- | ------ | ------------- | - | ------ |  | ------------------- | ------ | ------ | -
|Net revenues                      |  | $          | 22,885 |               | $ | 16,136 |  | $                   | 14,450 |        | $
|Cost of services                  |  |            | 13,226 |               |   | 10,280 |  |                     | 10,437 |        |  
|                                  |  |            |        |               |   |        |  |                     |        |        |  
|Gross profit                      |  |            | 9,659  |               |   | 5,856  |  |                     | 4,013  |        |  
|Selling expenses                  |  |            |        |               |   |        |  |                     |        |        |  
|General & administrative expenses |  |            |        |               |   |        |  |                     |        |        |  
|Loss from operations              |  |            |        |               |   |        |  |                     |        |        |  

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5. Comprehensive Income

Comprehensive income, net of taxes is as follows:

For
the quarter ended March 31, 2001:

Net Income

Currency Translation (loss)

Unrealized Gain on Investments

Comprehensive Income$891,000

$(142,000
)
$42,000

$791,000


For
the quarter ended March 31, 2000:

Net (loss)

Currency Translation Gain

Unrealized Gain on Investments

Comprehensive Income (loss)$(1,707,000
)
$165,000

$46,000

$(1,496,000
)


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

THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES, INCLUDING THOSE SET FORTH HEREIN AND UNDER THE CAPTION "RISKS RELATING TO THE
BUSINESS OF FCG" IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2000, AND SUBSEQUENT REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. FCG'S
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS.

Overview

FCG provides services to payors, providers, government agencies, pharmaceutical, biogenetic, and life science companies, and other healthcare organizations in
North America and Europe. FCG generates substantially all of its revenue from fees for professional services. FCG typically bills for its services on an hourly, fixed-fee or monthly
fixed-fee basis as specified by the agreement with a particular client. FCG establishes either standard or target hourly rates for each level of consultant based on several factors
including industry and assignment-related experience, technical expertise, skills and knowledge. For services billed on an hourly basis, fees are determined by multiplying the amount of time expended
on each assignment by the hourly rate for the consultant(s) assigned to the engagement. Fixed fees are established on a per-assignment or monthly basis and are based on several factors
such as the size, scope, complexity and duration of an assignment and the number of consultants required to complete the assignment. Actual hourly or fixed fees for an assignment may vary from the
standard, target, or historical rates charged by FCG. For services billed on an hourly basis, FCG recognizes revenue as services are performed. For services billed on a fixed fee basis, FCG recognizes
revenue using the percentage of completion method based either on 1) the amount of time completed on each assignment versus the projected number of hours required to complete such assignment,
or 2) the amount of cost incurred on the assignment versus the total projected cost to complete the assignment. Revenue is recorded as incurred at assignment rates net of unplanned adjustments
for specific engagements. Unplanned adjustments to revenue are booked at the time they are known. Out-of-pocket expenses are billed to and reimbursed by clients and offset
against expenses incurred and are not included in recognized revenues. Provisions are made for estimated uncollectible amounts based on the Company's experience. FCG may obtain payment in advance of
providing services. These advances are recorded as deferred revenue and reflected as a liability on FCG's balance sheet.

9

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Cost of services primarily consists of the salaries, bonuses and related benefits of client-serving consultants and subcontractor expenses. General and administrative expenses
primarily consist of the costs attributable to the development of the business and the support of the client-serving professionals, such as: non-billable travel; office space occupancy;
investments in FCG's information systems, research and practice support and quality initiatives; salaries and expenses for executive management, financial, accounting and administrative personnel;
expenses for firm and business unit governance meetings; recruiting fees and professional development and training; and marketing, legal and other professional services. As associate related costs are
relatively fixed, variations in FCG's revenues and operating results can occur as a result of variations in billing margins and utilization rates of its billable associates. The Company routinely
reviews its fees for services, professional compensation and overhead costs to ensure that its services and compensation are competitive within the industry. In addition, FCG routinely monitors the
progress of client projects with its clients' senior management. Quality of Service Questionnaires are sent to the client after each engagement with the results compiled and reported to FCG executive
management.

FCG's
most significant expenses are its human resource and related salary and benefit expenses. As of March 31, 2001, approximately 55% or 1,118 of FCG's 2,027 employees are
consultants. Another 527 employees form the firm's outsourcing business. The salaries and benefits of such billable consultants
and outsourcing related employees are recognized in FCG's cost of services. Non-billable employee salaries and benefits are recognized as a component of general and administrative
expenses. Approximately 19%, or 382 employees are classified a non-billable. FCG's cost of services as a percentage of revenue is directly related to its consultant utilization, which is
the ratio of total billable hours to available hours in a given period, and the amount of cost recognized under percentage of completion accounting. FCG manages consultant utilization by monitoring
assignment requirements and timetables, available and required skills, and available consultant hours per week and per month. Differences in personnel utilization rates can result from variations in
the amount of non-billed time, which has historically consisted of training time, vacation and holiday time, time lost to illness and inclement weather and unassigned time.
Non-billed time also includes time devoted to other necessary and productive activities such as sales support and interviewing prospective employees. Unassigned time results from
differences in the timing of the completion of an existing assignment and the beginning of a new assignment. In order to reduce and limit unassigned time, FCG actively manages personnel utilization by
monitoring and projecting estimated engagement start and completion dates and matching consultant availability with current and projected client requirements. The number of consultants staffed on an
assignment will vary according to the size, complexity, duration and demands of the assignment. Assignment terminations, completions, inclement weather and scheduling delays may result in periods in
which consultants are not optimally utilized. An unanticipated termination of a significant assignment or an overall lengthening of the sales cycle could result in a higher than expected number of
unassigned consultants and could cause FCG to experience lower margins. In addition, the opening of new offices, expansion into new markets, and the hiring of consultants in advance of client
assignments have resulted and may continue to result in periods of lower consultant utilization.

FCG's
effective tax rate has varied from period to period due to non-deductible losses from FCG's foreign operations and differences between book and tax deductions
associated with certain non-deductible operating expenses, including certain compensation expenses related to the ASOP, merger related activities and certain nontaxable insurance proceeds.

Results of Operations for the Three Months Ended March 31, 2001 and 2000

Net Revenue.The Company's net revenue increased to $70.3 million for the quarter ended March 31, 2001,
an increase of 10.7% from $63.5 million for the quarter ended March 31, 2000. This increase was primarily due to growth in the health plan, life sciences, and outsourcing markets,
partially offset by a decline in the health delivery market.

10

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Cost of Services.Cost of services increased to $43.9 million for the quarter ended March 31, 2001, an
increase of 4.4% from $42.0 million for the quarter ended March 31, 2000. The increase was primarily attributable to an increase in the number of consultants and outsourcing staff. Cost
of services as a
percentage of revenue decreased to 62.4% for the quarter ended March 31, 2001 from 66.2% for the quarter ended March 31, 2000. This decrease was due to higher consultant utilization.

Selling Expenses.Selling expenses increased to $7.9 million for the quarter ended March 31, 2001, an
increase of 5.8% from $7.4 million for the quarter ended March 31, 2000. Selling expenses as a percentage of revenue decreased slightly from 11.7% for the quarter ended March 31,
2000 to 11.2% for the quarter ended March 31, 2001.

General and Administrative Expenses.General and administrative expenses decreased to $17.4 million for the
quarter ended March 31, 2001, a decrease of 1.0% from $17.6 million for the quarter ended March 31, 2000. General and administrative expenses as a percentage of revenue decreased
from 27.7% for the quarter ended March 31, 2000 to 24.8% for the quarter ended March 31, 2001, due to the leveraging effect of the higher level of revenue.

Interest Income, Net.Interest income, net of interest expense, decreased to $411,000 for the quarter ended
March 31, 2001 from $718,000 for the quarter ended March 31, 2000, due to a lower level of cash and investments. Interest income net of interest expense as a percentage of revenue
decreased to 0.6% for the quarter ended March 31, 2001 from 1.1% for the quarter ended March 31, 2000.

Income Taxes.The benefit provision for income taxes of 42% in the quarter ended March 31, 2001 increased from
the 40% reported for the quarter ended March 31, 2000, due to an increase in certain nondeductible expenses.

Liquidity and Capital Resources

During the three months ended March 31, 2001, the Company generated cash flow from operations of $4.0 million. During the three months ended
March 31, 2001, the Company used cash flow of approximately $0.8 million to purchase property and equipment, including computer and related equipment and office furniture, while
depreciation and amortization expense was approximately $2.1 million. At March 31, 2001, the Company had cash and investments available for sale of $33.5 million compared to
$29.8 million at December 31, 2000.

The
Company has a revolving line of credit, under which it is allowed to borrow up to $10.0 million at an interest rate of the prevailing prime rate with an expiration date of
September 1, 2001. There was no outstanding balance under the line of credit at March 31, 2001.

Management
believes that existing cash and investments together with funds generated from operations will be sufficient to meet operating requirements for the next 12 months.
FCG's cash and investments
are available for strategic investments, mergers and acquisitions, and other potential large-scale cash needs that may arise.

11

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 2. Changes in Securities.

None.

Item 3. Defaults Upon Senior Securities.

None.

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

None.

Item 5. Other Information.

None.

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



|Item    |  | Description                                                                
|------- |  | ---------------------------------------------------------------------------
|3.1(1)  |  | Certificate of Incorporation of the Company.                               
|3.2(2)  |  | Certificate of Designation of Series A Junior Participating Preferred Stock
|3.3(3)  |  | Bylaws of the Company.                                                     
|4.1(4)  |  | Specimen Common Stock Certificate.                                         
|11.1(5) |  | Statement of computation of per share earnings.                            

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FGC filed a current report on Form 8-K dated January 23, 2001, announcing FCG's outsourcing agreement with the University of
Pennsylvania to manage the information technology functions for the University of Pennsylvania Health System.

12

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.

|                   |  | FIRST CONSULTING GROUP, INC.                                                                                                              
|------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------
|Date: May 14, 2001 |  | /s/LUTHER J. NUSSBAUMLuther J. Nussbaum Chairman and Chief Executive Officer                                                              
|Date: May 14, 2001 |  | /s/WALTER J. MCBRIDEWalter J. McBride Executive Vice President, Practice Support and Chief Financial Officer (Principal
Financial Officer)

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Exhibit Index

|Item    |  | Description                                                                
|------- |  | ---------------------------------------------------------------------------
|3.1(1)  |  | Certificate of Incorporation of the Company.                               
|3.2(2)  |  | Certificate of Designation of Series A Junior Participating Preferred Stock
|3.3(3)  |  | Bylaws of the Company.                                                     
|4.1(4)  |  | Specimen Common Stock Certificate.                                         
|11.1(5) |  | Statement of computation of per share earnings.                            

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