First Consulting Group (FCG) Reports First-Quarter 2007 Results

Share Name	Share Symbol	Market	Type
First Consulting Grp (MM)	NASDAQ:FCGI	NASDAQ	Common Stock

First Consulting (NASDAQ:FCGI)
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FCG (NASDAQ: FCGI), a leading provider of outsourcing, consulting and systems implementation and integration services and proprietary software to the health-related industries, today reported financial results for the first quarter ended March 30, 2007. For the first quarter of 2007, revenues before out-of-pocket reimbursements (�net revenues�) were $66.9 million, up slightly from $66.7 million in both the fourth quarter of 2006 and the first quarter of 2006. Net income was $3.7 million, or $0.13 per diluted share, for the first quarter of 2007, compared to net income of $5.1 million, or $0.19 per diluted share, for the fourth quarter of 2006, and net income of $4.5 million, or $0.18 per diluted share, for the first quarter of 2006. FCG indicated that it recorded a tax provision of 26% in the first quarter of 2007 compared to a tax provision of 7.5% in fiscal year 2006. The Company expects to exhaust its net operating loss carryforwards during the course of fiscal year 2007, which is causing the increase in the 2007 full year estimated tax rate to the 26% level. The Company also indicated that the weighted average number of shares used in computing earnings per diluted share has increased approximately 10% from 24.9�million shares in the first quarter of 2006 to 27.5 million shares in the first quarter of 2007, an increase that is primarily due to stock option exercises that have occurred during the last year. Total cash and investments increased to $69.7 million at the end of the first quarter of 2007 from $63.5 million at the end of 2006, an increase of $6.2 million during the quarter. FCG continues to have no debt. Larry Ferguson, FCG�s chief executive officer, said, �As we indicated in our fourth-quarter earnings release in mid-March, we continue to operate our business units profitably while investing responsibly in sales and building a growth culture, particularly in our healthcare businesses. During the first quarter, we continued to evaluate our business models and made good progress on initiatives that we believe will build sustained, long-term stockholder value. We are heavily focused on increasing our pipelines of new and follow-on business and driving operational efficiencies in each of our businesses. We continue to look for our investments and efforts to produce benefits starting in the second half of 2007.� Outlook FCG expects revenues for the second quarter of 2007 to be in the range of $66 million to $68�million with continued operating profitability and positive cash flow. The level of profitability in the second quarter of 2007 is currently expected to be similar to the first quarter of 2007. First-Quarter 2007 Conference Call FCG will hold a teleconference hosted by Larry Ferguson, chief executive officer, and Tom Watford, executive vice president, chief operating officer and chief financial officer, to discuss the financial results and future plans and prospects. Any investor or interested individual can listen to the teleconference, which is scheduled to begin at 1:45 p.m. PDT (4:45 p.m. EDT) today. To participate in the teleconference, approximately 10 minutes prior to the above start time, please call 877-574-8878 (toll-free) (or 706-634-6364 for international callers) and reference "FCG." You may also listen to the teleconference live via the Internet at www.fcg.com (click on the "Investor Relations" link) or www.earnings.com. These web sites will host an archive of the call. Additionally, a telephone playback will be available beginning at 4:45 p.m. PDT on May 3 through 9 p.m. PDT on May 10. The playback can be accessed by calling 800-642-1687 (or 706-645-9291 for international callers) and providing Conference ID 6286214. About FCG FCG is a leading provider of outsourcing, consulting, systems implementation and integration services and proprietary software products for healthcare, pharmaceutical, and other life sciences organizations throughout North America, Europe and Asia. Through combinations of onsite, offsite and offshore outsourced services, FCG provides low-cost, high-quality offerings to improve its clients' performance. The firm's consulting and integration services and proprietary software products increase clients' operations effectiveness with and through information technology, resulting in reduced costs, improved customer service, enhanced quality of patient care, and more rapid introduction of new pharmaceutical compounds. For more information about FCG, visit www.fcg.com or call 800-345-0957. Forward-Looking Statements This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, technological and/or regulatory factors, and other risks and uncertainties affecting the operation of the business of First Consulting Group, Inc. These risks and uncertainties include: (a) FCG�s ability to build its pipeline of potential business and close new business at a level sufficient for FCG to maintain or grow revenues; (b) clients canceling, modifying or delaying current or prospective engagements with FCG for any reason; (c) FCG�s ability to manage client expectations, service levels and profitability on its outsourcing accounts and projects; (d) the ability of FCG�s management team to manage a diverse group of business units, and the ability of new business unit leads in Health Delivery Services and Health Delivery Outsourcing to improve sales effectiveness and maintain and grow profitability; and (e) other risk factors referenced in the Company�s most recent Forms 10-K, 10-Q and other periodic reports filed with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking information included in this release, the inclusion of such information should not be regarded as a representation by FCG or any other person that FCG�s objectives or plans will be achieved. FCG is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise. First Consulting Group, Inc. and Subsidiaries Consolidated Statements of Operations (in thousands except per share data) � 3 Months Ended Mar 30, 2007 Mar 31, 2006 � Revenues before reimbursements (net revenues) $ 66,915� $ 66,686� Reimbursements 3,374� 3,779� Total revenues 70,289� 70,465� � Cost of services before reimbursable expenses 49,597� 48,593� Reimbursable expenses 3,374� 3,779� Total cost of services 52,971� 52,372� � � Gross profit 17,318� 18,093� � Selling expenses 4,022� 4,379� General and administrative expenses 9,179� 9,175� Operating income 4,117� 4,539� Interest income, net 848� 338� Other expense, net (26) (15) Income before income taxes 4,939� 4,862� Income tax provision 1,284� 340� Net income $ 3,655� $ 4,522� � Basic and Diluted EPS: Basic net income $ 0.14� $ 0.18� Diluted net income 0.13� 0.18� � Basic weighted avg. shares 26,557� 24,705� Diluted weighted avg. shares 27,501� 24,910� First Consulting Group, Inc. and Subsidiaries Consolidated Balance Sheet Data (in thousands except per share data) � Mar 30, Dec 29, 2007� 2006� � Cash, cash equivalents, and investments $ 69,658� $ 63,497� Accounts receivable, net 22,770� 20,559� Unbilled receivables 15,558� 12,252� Current assets 112,149� 100,279� Total assets 162,574� 151,493� Current liabilities 36,906� 29,958� Long-term debt -� -� Total stockholders' equity 116,612� 111,342� � Selected Business Metrics � Q1 2007 Q4 2006 Q3 2006 Q2 2006 Q1 2006 � Revenues before reimbursements (net revenues) ($ in millions) 66.9� 66.7� 65.2� 65.5� 66.7� Out-of-pocket reimbursements ($ in millions) 3.4� 3.1� 3.3� 3.5� 3.8� Total revenues ($ in millions) 70.3� 69.8� 68.5� 69.0� 70.5� Gross margin % 25.9� 27.5� 27.9� 28.1� 27.1� Selling expense % 6.0� 5.8� 6.2� 6.2� 6.6� General and admin expense % 13.7� 14.5� 13.7� 14.2� 13.8� Operating income % 6.2� 7.2� 8.0� 7.8� 6.8� Utilization % 74.3� 75.6� 78.7� 80.3� 80.3� Total associates 2,696� 2,716� 2,612� 2,391� 2,394� Billable associates 1,603� 1,625� 1,553� 1,345� 1,342� Outsourcing associates 738� 745� 733� 727� 746� Days sales outstanding 31� 28� 34� 39� 39� � Delivery Units Selected Financial Metrics � Health Delivery Services Q1 2007 Q4 2006 Q3 2006 Q2 2006 Q1 2006 Revenues before reimbursements (net revenues) ($ in millions) 14.6� 14.1� 14.2� 15.0� 16.5� Out-of-pocket reimbursable expenses ($ in millions) 2.2� 2.0� 2.0� 2.2� 2.5� Total revenues ($ in millions) 16.8� 16.1� 16.2� 17.2� 19.0� Gross margin % 34.8� 38.6� 41.4� 38.2� 38.6� Utilization % 75.4� 78.6� 78.9� 75.6� 80.2� Billable associates 200� 205� 196� 199� 205� Total associates 216� 219� 215� 219� 225� � � Health Delivery Outsourcing Q1 2007 Q4 2006 Q3 2006 Q2 2006 Q1 2006 Revenues before reimbursements (net revenues) ($ in millions) 28.3� 27.9� 26.9� 26.8� 27.4� Out-of-pocket reimbursable expenses ($ in millions) -� -� -� -� -� Total revenues ($ in millions) 28.3� 27.9� 26.9� 26.8� 27.4� Gross margin % 11.1� 12.7� 13.3� 14.0� 12.3� Total associates 641� 644� 634� 631� 646� � � Health Plan Q1 2007 Q4 2006 Q3 2006 Q2 2006 Q1 2006 Revenues before reimbursements (net revenues) ($ in millions) 8.3� 8.6� 8.1� 7.4� 6.8� Out-of-pocket reimbursable expenses ($ in millions) 0.8� 0.9� 0.9� 0.9� 0.9� Total revenues ($ in millions) 9.1� 9.5� 9.0� 8.3� 7.7� Gross margin % 28.0� 26.3� 24.6� 28.4� 33.3� Utilization % 81.8� 86.5� 91.2� 87.1� 91.3� Billable associates 69� 74� 76� 60� 61� Total associates 94� 99� 100� 85� 86� � � Life Sciences Q1 2007 Q4 2006 Q3 2006 Q2 2006 Q1 2006 Revenues before reimbursements (net revenues) ($ in millions) 8.7� 8.1� 8.2� 8.3� 7.7� Out-of-pocket reimbursable expenses ($ in millions) 0.1� 0.1� 0.1� 0.2� 0.2� Total revenues ($ in millions) 8.8� 8.2� 8.3� 8.5� 7.9� Gross margin % 56.8� 58.5� 49.4� 45.5� 38.8� Utilization % 71.8� 74.7� 69.2� 70.0� 68.2� Billable associates 103� 92� 95� 103� 109� Total associates 131� 116� 120� 123� 130� � � Software Services Q1 2007 Q4 2006 Q3 2006 Q2 2006 Q1 2006 Revenues before reimbursements (net revenues) ($ in millions) 6.5� 7.2� 7.2� 6.8� 6.6� Out-of-pocket reimbursable expenses ($ in millions) 0.1� 0.1� 0.1� 0.1� 0.1� Total revenues ($ in millions) 6.6� 7.3� 7.3� 6.9� 6.7� Gross margin % 27.5� 35.8� 36.1� 41.4� 38.0� Utilization % 83.3� 81.3� 86.2� 85.9� 86.1� Billable associates 46� 47� 47� 41� 37� Total associates 55� 56� 55� 50� 46� � � Shared Services Centers Q1 2007 Q4 2006 Q3 2006 Q2 2006 Q1 2006 Utilization % 73.6� 74.4� 78.6� 82.1� 81.0� Billable associates 1,179� 1,202� 1,131� 929� 913� Outsourcing associates 79� 83� 81� 78� 81� Total associates 1,409� 1,426� 1,332� 1,122� 1,099�

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FCGI First Consulting Grp (MM)