<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q
      FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

   (Mark One)

      [X]      Quarterly Report Pursuant to Section 13 or 15(d) of the
               Securities Exchange Act of 1934

               For the quarterly period ended June 30, 1999.

                                    or

      [ ]      Transition Report Pursuant to Section 13 or 15(d) of the
               Securities Exchange Act of 1934

      For the transition period from ________________ to __________________

                          Commission File No. 0-28148

                               STAFF LEASING, INC.
             (exact name of registrant as specified in its charter)

             Florida                                    65-0735612
  (State or other jurisdiction of                     (I.R.S. Employer
  incorporation or organization)                    Identification No.)

    600 301 Blvd West, Suite 202
           Bradenton, FL                                   34205
(Address of principal executive offices)                 (Zip Code)

(Registrant's Telephone Number, Including Area Code):  (941) 748-4540


         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 last practicable date.

      Class of common stock             Outstanding as of August 10, 1999
      ---------------------             ---------------------------------
      Par value $0.01 per share                    21,761,829


<PAGE>   2

                                TABLE OF CONTENTS



PART I.           FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                  Page
                                                                                  ----

<S>                                                                               <C>
      ITEM 1.   Financial Statements . . . . . . . . . . . . . . . . . . . . . . .  3

    Condensed Consolidated Income Statements for the
           Six Months Ended June 30, 1998 and 1999 (unaudited) . . . . . . . . . .  3

    Condensed Consolidated Balance Sheets as of December 31, 1998
           and June 30, 1999 (unaudited) . . . . . . . . . . . . . . . . . . . . .  4

    Condensed Consolidated Statement of Changes in Shareholders'
        Equity for the Six Months Ended June 30, 1999 (unaudited)  . . . . . . . .  5

    Condensed Consolidated Statements of Cash Flows for the
           Six Months Ended June 30, 1998 and 1999 (unaudited) . . . . . . . . . .  6

    Notes to Condensed Consolidated Financial Statements (unaudited) . . . . . . .  7


      ITEM 2.   Management's Discussion and Analysis of Financial
                   Condition and Results of Operations . . . . . . . . . . . . . . 10

      ITEM 3.   Quantitative and Qualitative Disclosures about Market Risk . . . . 14


PART II. OTHER INFORMATION

      ITEM 1.   Legal Proceedings  . . . . . . . . . . . . . . . . . . . . . . . . 14

      ITEM 5.   Other Information  . . . . . . . . . . . . . . . . . . . . . . . . 14

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


SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>



                                       2
<PAGE>   3

PART I.  FINANCIAL INFORMATION

Item 1.   Financial Statements

                      STAFF LEASING, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED INCOME STATEMENTS
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                                For the three months                 For the six months
                                                                   ended June 30,                      ended June 30,
                                                             --------------------------        ------------------------------
                                                               1998             1999              1998               1999
                                                             ---------        ---------        -----------        -----------
                                                                      (in $000's, except share and per share data)

<S>                                                          <C>              <C>              <C>                <C>
Revenues                                                     $ 582,211        $ 664,264        $ 1,121,827        $ 1,311,605
                                                             ---------        ---------        -----------        -----------

Cost of services:

   Salaries, wages and payroll taxes                           528,490          604,159          1,016,785          1,191,374

   Benefits, workers' compensation, state unemployment
       taxes and other costs                                    25,525           29,405             50,613             58,898
                                                             ---------        ---------        -----------        -----------

             Total cost of services                            554,015          633,564          1,067,398          1,250,272
                                                             ---------        ---------        -----------        -----------

Gross profit                                                    28,196           30,700             54,429             61,333
                                                             ---------        ---------        -----------        -----------

Operating expenses:

   Salaries, wages and commissions                              12,448           14,265             24,207             28,448

   Other general and administrative                              5,334            6,590             10,616             12,770

   Depreciation and amortization                                 1,377            1,790              2,682              3,568
                                                             ---------        ---------        -----------        -----------

             Total operating expenses                           19,159           22,645             37,505             44,786
                                                             ---------        ---------        -----------        -----------

Operating income                                                 9,037            8,055             16,924             16,547

Interest income                                                    826              826              1,532              1,371

Interest expense                                                   (17)             (10)               (48)               (21)

Other non operating expense                                         --             (850)                --               (850)
                                                             ---------        ---------        -----------        -----------

Income before income tax provision                               9,846            8,021             18,408             17,047

Income tax provision                                             3,692            3,032              6,903              6,444
                                                             ---------        ---------        -----------        -----------

Net income                                                   $   6,154        $   4,989        $    11,505        $    10,603
                                                             =========        =========        ===========        ===========

Net income per share
   - Basic                                                   $     .26        $     .23        $       .49        $       .49
   - Diluted                                                 $     .25        $     .22        $       .47        $       .47
                                                             =========        =========        ===========        ===========
Weighted average shares outstanding
   - Basic                                                      23,638           21,765             23,574             21,842
   - Diluted                                                    24,744           22,296             24,634             22,353
                                                             =========        =========        ===========        ===========
</TABLE>


            See notes to condensed consolidated financial statements.



                                       3
<PAGE>   4

                      STAFF LEASING, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                         December 31, 1998    June 30, 1999
                                                         -----------------    -------------
                                                     (in $000's, except share and per share data)

<S>                                                      <C>                  <C>
                          ASSETS
Current assets:
  Cash and cash equivalents                                 $  15,412           $  25,035
  Certificates of deposit - restricted                          8,379               7,781
  Marketable securities                                        32,022              35,123
  Accounts receivable, net of allowance for
     doubtful accounts of $802 and $856,
     respectively                                              38,637              67,668
  Other current assets                                          6,182               2,834
                                                            ---------           ---------
         Total current assets                                 100,632             138,441

Property and equipment, net                                    25,071              24,208
Goodwill, net of accumulated amortization
  of $3,779 and $4,416, respectively                           10,892              10,525
Deferred income tax asset                                       2,898               2,588
Other assets, net of accumulated amortization
  of $245 and $0, respectively                                    285                 165
                                                            ---------           ---------

                                                            $ 139,778           $ 175,927
                                                            =========           =========

             LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accrued insurance premiums and health
     reserves                                               $  22,757           $  23,281
  Accrued payroll and payroll taxes                            38,748              68,787
  Accounts payable and other accrued liabilities                5,515               4,061
  Income taxes payable                                             --                 966
  Deferred income tax liabilities                               5,729               5,190
  Customer deposits and prepayments                             2,741               2,704
                                                            ---------           ---------
         Total current liabilities                             75,490             104,989

Long-term liabilities                                           1,499               1,270

Commitments and contingencies (See notes)

Shareholders' equity:
  Common stock, $.01 par value                                    221                 218
         Shares authorized: 100,000,000
         Shares issued and outstanding:
               December 31, 1998 - 22,121,267
               June 30, 1999 - 21,761,829
  Additional paid in capital                                   46,804              43,087
  Retained earnings                                            16,051              26,654
  Other                                                          (287)               (291)
                                                            ---------           ---------
         Total shareholders' equity                            62,789              69,668
                                                            ---------           ---------

                                                            $ 139,778           $ 175,927
                                                            =========           =========
</TABLE>


            See notes to condensed consolidated financial statements.



                                        4
<PAGE>   5

                      STAFF LEASING, INC. AND SUBSIDIARIES
       CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                                                             Accumulated
                                 Common               Additional      Deferred      Share-     Other
                                 Stock        Common    Paid In        Compen-      holder  Comprehensive   Retained
                                (shares)       Stock    Capital        sation        Notes     Income       Earnings        Total
                                --------      ------- ----------      ---------     ------- -------------   ---------       -----

                                                                 (in $000's except share data)
<S>                            <C>            <C>     <C>             <C>           <C>     <C>             <C>           <C>
Balance, January 1, 1999       22,121,267      $ 221   $ 46,804        $ (282)      $ (61)     $  56        $ 16,051      $ 62,789

Repurchase of common stock       (359,438)        (3)    (4,157)                                                            (4,160)

Tax benefit of restricted
  stock plan vesting                                        440                                                                440

Other                                                                      86           6                                       92

Unrealized loss on
  marketable securities,                                                                         (96)
  net of tax
Net income                                                                                                    10,603

Total comprehensive income                                                                                                  10,507
                               ----------      -----   --------        ------       -----      -----        --------      --------

Balance, June 30, 1999         21,761,829      $ 218   $ 43,087        $ (196)      $ (55)     $ (40)       $ 26,654      $ 69,668
                               ==========      =====   ========        ======       =====      =====        ========      ========
</TABLE>


            See notes to condensed consolidated financial statements.



                                        5
<PAGE>   6

                      STAFF LEASING, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                                      For the six months ended
                                                                              June 30,
                                                                      ------------------------
                                                                        1998            1999
                                                                      --------        --------
                                                                             (in $000's)

<S>                                                                   <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                        $ 11,505        $ 10,603
    Adjustments to reconcile net income to net cash
       provided by operating activities:
          Depreciation and amortization                                  2,682           3,568
          Deferred taxes, net                                            5,206             211
          Provision for bad debts                                          340             350
          Other                                                             73              59
          Changes in operating working capital:
             (Increase) decrease in certificates of deposit
               - restricted                                               (143)            598
             Increase in accounts receivable                           (23,109)        (29,381)
             (Increase) decrease in other current assets                (1,445)          3,348
             Increase (decrease) in accounts payable and other
               accrued liabilities                                      (1,035)         (1,454)
             Increase in accrued payroll and payroll taxes              19,283          30,039
             Increase in accrued insurance premiums and health
                reserves                                                 1,813             524
             Increase (decrease) in income taxes payable                  (476)            966
             Increase (decrease) in customer deposits and
                prepayments                                                103             (37)
          Increase in other long-term assets                               (11)            120
          Increase (decrease) in long term liabilities                      65            (229)
                                                                      --------        --------
       Net cash provided by operating activities                        14,851          19,285
                                                                      --------        --------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of marketable securities, net                             (30,583)         (3,200)
    Capital expenditures                                                (3,147)         (2,335)
                                                                      --------        --------
       Net cash used in investing activities                           (33,730)         (5,535)
                                                                      --------        --------


CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from sales of common shares                                 1,094              --
    Repayment of shareholders' notes receivable                            134               7
    Repurchase and retirement of common stock                              (25)         (4,134)
                                                                      --------        --------
       Net cash provided by (used in) financing activities               1,203          (4,127)
                                                                      --------        --------
    Net increase (decrease) in cash                                    (17,676)          9,623
Cash and cash equivalents - beginning of period                         21,051          15,412
                                                                      --------        --------
Cash and cash equivalents - end of period                             $  3,375        $ 25,035
                                                                      ========        ========

Supplemental disclosure of cash flow information:
    Income taxes paid                                                 $  2,181        $  3,305
                                                                      ========        ========

    Interest paid                                                     $     10        $     21
                                                                      ========        ========
</TABLE>


            See notes to condensed consolidated financial statements.



                                       6
<PAGE>   7

                      STAFF LEASING, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    UNAUDITED
                  (in $000's, except share and per share data)


1.  GENERAL

         The accompanying unaudited condensed consolidated financial statements
of Staff Leasing, Inc. ("the Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q. These financial statements should be read in
conjunction with the audited condensed consolidated financial statements and
notes thereto for the year ended December 31, 1998, included in the Company's
Form 10-K. The financial information furnished reflects all adjustments,
consisting only of normal recurring accruals, which are, in the opinion of
management, necessary for a fair presentation of the financial position, results
of operations and cash flows for the interim periods presented.

         The Company's operations are currently conducted through a number of
subsidiary limited partnerships (the "OLPs"). The consolidated operations of the
Company exclude intercompany accounts and transactions. Certain
reclassifications have been made to the consolidated financial statements of
prior periods to conform to the current period presentation.

2.  ACCOUNTS RECEIVABLE

         Accounts receivable consisted of the following:

<TABLE>
<CAPTION>
                                                     December 31,      June 30,
                                                         1998            1999
                                                       --------        --------

<S>                                                  <C>               <C>
Billed to clients ..............................       $ 15,391        $  6,833
Unbilled revenues ..............................         24,048          61,691
                                                       --------        --------
                                                         39,439          68,524
      Less:  Allowance for doubtful accounts....           (802)           (856)
                                                       --------        --------
                                                       $ 38,637        $ 67,668
                                                       ========        ========
</TABLE>


3.  PROPERTY AND EQUIPMENT

         Property and equipment (at cost) was comprised of the following:

<TABLE>
<CAPTION>

                                                     December 31,      June 30,
                                                         1998            1999
                                                       --------        --------

<S>                                                    <C>             <C>
Leasehold improvements ...........................     $  1,484        $  1,714
Furniture and fixtures ...........................        2,508           2,726
Vehicles .........................................          103             103
Equipment ........................................        1,799           1,869
Computer hardware and software ...................       29,490          31,306
                                                       --------        --------
Total property and equipment .....................       35,384          37,718
      Less accumulated depreciation ..............      (10,313)        (13,510)
                                                       --------        --------
                                                       $ 25,071        $ 24,208
                                                       ========        ========
</TABLE>

   For the six months ended June 30, 1999 depreciation expense was $3,197.



                                       7
<PAGE>   8

                      STAFF LEASING, INC. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (in $000's, except share and per share data)


4.  COMMITMENTS AND CONTINGENCIES

         The Company is a party to certain pending claims which have arisen in
the normal course of business, none of which, in the opinion of management, is
expected to have a material adverse effect on the consolidated financial
position or results of operations if adversely resolved.

         On April 30, 1999, a shareholder of the Company brought a class action
alleging that the directors and senior officers of the Company breached their
fiduciary duty to shareholders in order to entrench themselves in the management
of the Company by failing to pursue a proposal from Paribas Principal Partners
to acquire the Company. Plaintiff seeks injunctive relief and unspecified
damages including attorneys' and experts' fees. The Company believes the lawsuit
is wholly without merit.

         The Company's employer and health care operations are subject to
numerous Federal, state and local laws related to employment, taxes and benefit
plan matters. Generally, these regulations affect all companies in the U.S.
However, the regulatory environment for professional employer organizations
("PEOs") is an evolving area due to uncertainties resulting from the
non-traditional employment relationships. Many Federal and state laws relating
to tax and employment matters were enacted prior to the development of PEOs and
do not specifically address the obligations and responsibilities of these PEO
relationships. If the IRS concludes that PEOs are not "employers" of certain
worksite employees for purposes of the Internal Revenue Code of 1986, as amended
(the "Code"), the tax qualified status of the Company's 401(k) retirement plan
as in effect prior to April 1, 1998 could be revoked, its cafeteria plan may
lose its favorable tax status and the Company may no longer be able to assume
the client's Federal employment tax withholding obligations. Any adverse
developments in the above noted areas could have a material effect on the
Company's financial condition and future results of operations.

5.  EQUITY

         In August 1998, the Company's Board of Directors approved a program to
repurchase up to two million shares of the Company's common stock. Purchases may
be made from time to time depending upon the Company's stock price, and will be
made primarily in the open market, but may also be made through privately
negotiated transactions. In 1998, the Company repurchased 1.6 million shares of
its common stock for a total cost of $21.0 million. In January 1999, the
Company's board of Directors increased this share repurchase plan to three
million shares. In the six months ending June 30, 1999, the Company repurchased
359,438 shares at a cost of $4.1 million.

6.  INCOME TAXES

         The Company records income tax expense using the asset and liability
method of accounting for deferred income taxes. Under such method, deferred tax
assets and liabilities are recognized for the expected future tax consequences
of temporary differences between the financial statements and the income tax
bases of the Company's assets and liabilities. The Company's effective tax rate
provides for Federal and state income taxes. The effective tax rate for the
three and six months ended June 30, 1999 was 37.8%.

7.  EARNINGS PER SHARE (EPS)

         The number of common stock equivalents included in the diluted weighted
average shares outstanding for the three and six months ended June 30, 1998 and
1999, related to warrants issued in connection with the Company's reorganization
and initial public offering. The warrants calculated as common stock equivalents
totaled 876,945 and 856,793 for the three and six months ended June 30, 1998,
respectively, and totaled 493,731 and 482,939 for the three and six months ended
June 30, 1999, respectively. Also included as potential common stock equivalents
for diluted weighted average shares outstanding were options granted in
connection with the Company's stock option plan, which totaled 228,989 and
204,008 for the three and six months ended June 30, 1998, respectively, and
37,082 and 28,764 for the three and six months ended June 30, 1999,
respectively.



                                       8
<PAGE>   9

                      STAFF LEASING, INC. AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

         The reconciliation of net income attributable to common stock and
shares outstanding for the purposes of calculating basic and diluted earnings
per share for the six months ended June 30, 1998 and 1999 is as follows:

<TABLE>
<CAPTION>
                                                       Income         Shares         Per Share
                                                     (Numerator)   (Denominator)       Amount
                                                     -----------   -------------     ---------
                                                     (in $000's)     (in 000's)

<S>                                                  <C>           <C>               <C>
FOR THE THREE MONTHS ENDED JUNE 30, 1998:
Basic EPS:
Net income                                             $ 6,154         23,638         $   .26
Diluted EPS:
Effect of dilutive securities:
   Warrants                                                               877
   Options                                                                229
                                                                       ------
Net income                                             $ 6,154         24,744         $   .25
                                                       =======         ======         =======

FOR THE SIX MONTHS ENDED JUNE 30, 1998:
Basic EPS:
Net income                                             $11,505         23,574         $   .49
Diluted EPS:
Effect of dilutive securities:
   Warrants                                                               856
   Options                                                                204
                                                                       ------
Net income                                             $11,505         24,634         $   .47
                                                       =======         ======         =======

FOR THE THREE MONTHS ENDED JUNE 30, 1999:
Basic EPS:
Net income                                             $ 4,989         21,765         $   .23
Diluted EPS:
Effect of dilutive securities:
   Warrants                                                               494
   Options                                                                 37
                                                                       ------
Net income                                             $ 4,989         22,296         $   .22
                                                       =======         ======         =======

FOR THE SIX MONTHS ENDED JUNE 30, 1999:
Basic EPS:
Net income                                             $10,603         21,842         $   .49
Diluted EPS:
Effect of dilutive securities:
   Warrants                                                               483
   Options                                                                 29
                                                                       ------
Net income                                             $10,603         22,353         $   .47
                                                       =======         ======         =======
</TABLE>



                                        9
<PAGE>   10

ITEM 2.

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

         The following table presents the Company's results of operations for
the three and six months ended June 30, 1998 and 1999, expressed as a percentage
of revenues:

<TABLE>
<CAPTION>
                                                  FOR THE THREE            FOR THE SIX
                                                   MONTHS ENDED            MONTHS ENDED
                                                     JUNE 30,                JUNE 30,
                                                 ---------------         ---------------
                                                  1998      1999          1998      1999
                                                  ----      ----          ----      ----

<S>                                              <C>       <C>           <C>       <C>
Revenues ...................................     100.0%    100.0%        100.0%    100.0%
Cost of services:
  Salaries, wages and payroll taxes ........      90.8      91.0          90.6      90.8
  Benefits, workers' compensation, state
     unemployment taxes and other costs.....       4.4       4.4           4.5       4.5
                                                 -----     -----         -----     -----


          Total cost of services ...........      95.2      95.4          95.1      95.3
                                                 -----     -----         -----     -----

Gross profit ...............................       4.8       4.6           4.9       4.7
                                                 -----     -----         -----     -----

Operating expenses:
  Salaries, wages and commissions ..........       2.1       2.1           2.2       2.2
  Other general and administrative .........        .9       1.0           1.0       1.0
  Depreciation and amortization ............        .3        .3            .2        .2
                                                 -----     -----         -----     -----

Total operating costs ......................       3.3       3.4           3.4       3.4
                                                 -----     -----         -----     -----

Operating income ...........................       1.6       1.2           1.5       1.3
Interest income ............................        .1        .1            .1        .1
Other expense ..............................        --       (.1)           --       (.1)
                                                 -----     -----         -----     -----

Income before income taxes .................       1.7       1.2           1.6       1.3
Income tax provision .......................        .6        .5            .6        .5
                                                 -----     -----         -----     -----

Net income .................................       1.1        .7           1.0        .8
                                                 =====     =====         =====     =====
</TABLE>

Three Months Ended June 30, 1999 Compared to Three Months Ended June 30, 1998

         Revenues were $664.3 million for the three months ended June 30, 1999,
compared to $582.2 million for the three months ended June 30, 1998,
representing an increase of $82.1 million, or 14.1%. This increase was due
primarily to an increased number of clients and worksite employees. From June
30, 1998 to June 30, 1999, the number of clients increased 4.7% from 9,972 to
10,437. The number of worksite employees increased 7.6%, from 119,895 to
128,965. Revenue growth exceeded headcount growth by 6.5% due primarily to wage
inflation and expansion in higher wage markets. The increase in the number of
clients and worksite employees was the result of continuing sales and marketing
efforts in existing markets, as well as the development of new markets. The
Company opened one new sales office in the second quarter of 1999. Two new sales
offices were opened in the second quarter of 1998.

         Cost of services was $633.6 million for the three months ended June 30,
1999, compared to $554.0 million for the three months ended June 30, 1998,
representing an increase of $79.6 million, or 14.4%. Cost of services was 95.4%
and 95.2% of revenues for the three months ended June 30, 1999 and 1998,
respectively.

         Salaries, wages and payroll taxes of worksite employees were $604.2
million for the three months ended June 30, 1999, compared to $528.5 million for
the three months ended June 30, 1998, representing an increase of $75.7 million,
or 14.3%.

         Benefits, workers' compensation, state unemployment taxes and other
costs were $29.4 million for the three months ended June 30, 1999, compared to
$25.5 million for the three months ended June 30, 1998, representing an increase
of $3.9 million, or 15.3%. Benefits, workers' compensation, state unemployment
taxes and other costs were 4.4% of revenues for the three months ended June 30,
1999, compared to 4.4% for the three months ended June 30, 1998.



                                       10
<PAGE>   11

         Gross profit was $30.7 million for the three months ended June 30,
1999, compared to $28.2 million for the three months ended June 30, 1998,
representing an increase of $2.5 million, or 8.9%. This increase is less than
the increase in revenues due to the Company's continued expansion into states
with lower gross profit margins than Florida, as well as competitive pricing in
its current markets. Gross profit was 4.6% and 4.8% of revenues for the three
months ended June 30, 1999 and 1998, respectively. In 1998, gross profit
included $750 thousand of income from a change in estimate of a 1997 health care
reserve.

         Operating expenses were $22.6 million for the three months ended June
30, 1999, compared to $19.2 million for the three months ended June 30, 1998,
representing an increase of $3.4 million, or 17.7%. Operating expenses were 3.4%
of revenues for the three months ended June 30, 1999, compared to 3.3 % for the
three months ended June 30, 1998.

         Salaries, wages and commissions were $14.3 million for the three months
ended June 30, 1999, compared to $12.4 million for the three months ended June
30, 1998, representing an increase of $1.9 million, or 15.3%. This increase was
due primarily to an increase in corporate personnel that support the Company's
expanded operations and additional sales staff located in its branch offices.
Salaries, wages and commissions were 2.1% of revenues for the three months ended
June 30, 1999, compared to 2.1% for the three months ended June 30, 1998.

         Other general and administrative expenses were $6.6 million for the
three months ended June 30, 1999, compared to $5.3 million for the three months
ended June 30, 1998, representing a increase of $1.3 million, or 24.5%. Other
general and administrative expenses were 1.0% of revenues for the three months
ended June 30, 1999, compared to .9% for the three months ended June 30, 1998.

         Depreciation and amortization expenses increased by $.4 million for the
three months ended June 30, 1999 compared to the three months ended June 30,
1998, representing an increase of 28.6%. This increase was primarily the result
of the Company's investment in management information systems.

         Interest income was $.8 million for the three months ended June 30,
1999 and $.8 million for the three months ended June 30, 1998.

         Other expense was $.9 million for the three months ended June 30, 1999
compared to $0 million for the three months ended June 30, 1998. Other expense
in the second quarter of 1999 was related to an acquisition proposal received
from Paribas Principal Partners in April 1999 and reserves for a shareholder
lawsuit filed in the second quarter of 1999.

         Income tax expense of $3.0 million for the three months ended June 30,
1999 represented a provision at an effective tax rate of 37.8% compared to $3.7
million for the three months ended June 30, 1998 at an effective tax rate of
37.5%. The Company's effective tax rate for financial reporting purposes differs
from the statutory federal rate of 35% primarily because of state income taxes
and tax credits.

         Net income was $5.0 million for the three months ended June 30, 1999,
compared to net income of $6.2 million for the three months ended June 30, 1998,
representing a decrease of $1.2 million or (19.4%).


Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998

         Revenues were $1,311.6 million for the six months ended June 30, 1999,
compared to $1,121.8 million for the six months ended June 30, 1998,
representing an increase of $189.8 million, or 16.9%. This increase was due
primarily to an increased number of clients and worksite employees. From June
30, 1998 to June 30, 1999, the number of clients increased 4.7% from 9,972 to
10,437. The number of worksite employees increased 7.6%, from 119,895 to
128,965. Revenue growth exceeded headcount growth by 9.3%, due in part, to the
effects of wage inflation and higher average wages in the Company's expansion
states.

         Cost of services was $1,250.3 million for the six months ended June 30,
1999, compared to $1,067.4 million for the six months ended June 30, 1998,
representing an increase of $182.9 million, or 17.1%. Cost of services was 95.3%
and 95.1% of revenues for the six months ended June 30, 1999 and 1998,
respectively.

         Salaries, wages and payroll taxes of worksite employees were $1,191.4
million for the six months ended June 30, 1999, compared to $1,016.8 million for
the six months ended June 30, 1998, representing an increase of $174.6 million,
or 17.2%.

         Benefits, workers' compensation, state unemployment taxes and other
costs were $58.9 million for the six months ended June 30, 1999, compared to
$50.6 million for the six months ended June 30, 1998, representing an increase
of $8.3 million, or 16.4%. Benefits, workers' compensation, state unemployment
taxes and other costs were 4.5% of revenues for the six months ended June 30,
1999 and 4.5% for the six months ended June 30, 1998.

         Gross profit was $61.3 million for the six months ended June 30, 1999,
compared to $54.4 million for the six months ended June 30, 1998, representing
an increase of $6.9 million, or



                                       11
<PAGE>   12

12.7%. This increase is less than the increase in revenues due to the Company's
continued expansion into states with lower margins than Florida, as well as
competitive pricing in its current markets. Gross profit was 4.7% of revenues
for the six months ended June 30, 1999 and 4.9% of revenues for the six months
ended June 30, 1998. In 1998, gross profit included $750 thousand of income from
a change in estimate of a 1997 health care reserve.

         Operating expenses were $44.8 million for the six months ended June 30,
1999, compared to $37.5 million for the six months ended June 30, 1998,
representing an increase of $7.3 million, or 19.5%. Operating expenses were 3.4%
of revenues for the six months ended June 30, 1999, compared to 3.4% for the six
months ended June 30, 1998.

         Salaries, wages and commissions were $28.4 million for the six months
ended June 30, 1999, compared to $24.2 million for the six months ended June 30,
1998, representing an increase of $4.2 million, or 17.4%. This increase was due
primarily to an increase in corporate personnel that support the Company's
expanded operations and additional sales staff located in its branch offices.
Salaries, wages and commissions were 2.2% of revenues for the six months ended
June 30, 1999 and 2.2% for the six months ended June 30, 1998.

         Other general and administrative expenses were $12.8 million for the
six months ended June 30, 1999, compared to $10.6 million for the six months
ended June 30, 1998, representing an increase of $2.2 million, or 20.8%. Other
general and administrative expenses were 1.0% of revenues for the six months
ended June 30, 1999, compared to 1.0% for the six months ended June 30, 1998.

         Depreciation and amortization expenses increased by $.9 million for the
six months ended June 30, 1999 compared to the six months ended June 30, 1998,
representing an increase of 33.0%. This increase was primarily the result of the
Company's investment in management information systems.

         Interest income was $1.4 million for the six months ended June 30,
1999, compared to $1.5 million of interest income for the first half of 1998, a
decrease of $.1 million.

         Other expense was $.9 million for the six months ended June 30, 1999
compared to $0 million for the six months ended June 30, 1998. Other expense in
the second quarter of 1999 was related to an acquisition proposal received from
Paribas Principal Partners in April 1999 and reserves for a shareholder lawsuit
filed in the second quarter of 1999.

         Income tax expense of $6.4 million for the six months ended June 30,
1999 represented a provision at an effective tax rate of 37.8% compared to $6.9
million for the six months ended June 30, 1998 at an effective tax rate of
37.5%.

         Net income was $10.6 million for the six months ended June 30, 1999,
compared to net income of $11.5 million for the six months ended June 30, 1998,
representing a decrease of $.9 million or (7.8%).

Liquidity and Capital Resources

         The Company had approximately $67.9 million in cash, cash equivalents,
restricted cash and marketable securities at June 30, 1999.

         The Company had no long-term debt as of June 30, 1999. At June 30,
1999, the Company had net working capital of $33.5 million, versus $25.1 million
as of December 31, 1998, representing an improvement of $8.4 million, or 33.5%.
In July 1999, the Company entered into an agreement with NationsBank for a $10
million revolving line of credit to provide for intraday working capital needs.
Borrowings under the credit facility bear interest at variable rates based on
the lenders' base rate or LIBOR. No borrowings have been made against the credit
line.

         The Company's primary short-term capital requirements relate to the
payment of accrued payroll and payroll taxes of its internal and worksite
employees, accounts payable for capital expenditures and the payment of accrued
workers' compensation expense and health benefit plan premiums. As of June 30,
1999, the Company had $7.8 million of restricted certificates of deposit, with
original maturities of less than one year, as collateral for certain standby
letters of credit issued in connection with the Company's health benefit plans.

         Net cash provided by operating activities was $19.3 million for the six
months ended June 30, 1999 compared to net cash provided by operating activities
of $14.9 million for the six months ended June 30, 1998, representing an
increase of $4.4 million, or 29.5%.


Year 2000 Compliance

         The Year 2000 issue is the result of potential problems with computer
systems or any equipment with computer chips that use dates where the date is
stored as just two digits (e.g. 98 for 1998). On January 1, 2000, any clock or
date recording mechanism, including



                                       12
<PAGE>   13

date sensitive software which uses only two digits to represent the year, may
recognize a date using 00 as the year 1900 rather than the year 2000. In
addition, the Year 2000 is a leap year, which also may not be addressed by such
systems. Either issue could result in a system failure or miscalculations
causing disruption of operations, including among other things, a temporary
inability to process transactions, send invoices, or engage in similar
activities.

         Current State of Readiness - The Company's primary internal computer
applications were purchased from Microsoft and Oracle. These companies have
issued public documents affirming Year 2000 compliance for certain versions of
their applications. Staff Leasing is in the process of upgrading or migrating to
those specific versions of Oracle applications. As a result, the Company's Year
2000 compliance initiative is directed towards testing versus remediation. The
Company is in the process of testing custom modifications to its Oracle
software, to ensure that changes made are also Year 2000 compliant.
Certification of the Company's mission critical systems and applications
(packaged and custom) began in early 1999 and is expected to be completed in the
third quarter 1999.

         The Company has completed a Year 2000 inventory of its computer
hardware, supporting software, and non-IT systems; assessed non-compliance
issues; and has identified upgrades or replacements necessary to ensure Year
2000 compliance. These upgrades and replacements are expected to be
substantially complete by September 1999.

         In addition, the Company has initiated formal communications with its
significant vendors to determine the extent to which the Company is vulnerable
to those third parties' failure to remediate their own Year 2000 issues. This
includes service vendors with IT interfaces to the Company's applications and
non-IT systems suppliers. Approximately 65% of the Company's significant vendors
have responded that they are compliant. The remaining 35% of significant vendors
have indicated they will be compliant by third quarter 1999. The Company plans
to test the impact of any modifications made by these vendors on the Company's
internal systems in the third quarter of 1999.

         Costs - At present, these Year 2000 remediation costs are estimated to
be $.5 million, and will be expensed as incurred in 1999. These costs are not
expected to have a material effect on the Company's financial position or
results of operations.

         Risks - It is the Company's belief that the most reasonably likely
worst case scenario from the Year 2000 issue is that a third party vendor will
not remediate its own Year 2000 issues in time, resulting in a disruption of
additional client services, such as the processing of insurance claims or the
direct deposit of payroll to a financial institution. The Company is focusing
the majority of its Year 2000 efforts to address these issues.

         The Company can give no guarantee that current Year 2000 remediation
cost estimates will be achieved and actual results could differ materially from
existing plans. Factors that might cause material differences include the
availability and cost of personnel trained in this area, the ability to locate
and correct errors or defects in the technology used in internal IT and non-IT
systems, and the ability of the Company's significant suppliers, customers and
others with which it conducts business, including Federal and state government
agencies, to identify and resolve their own Year 2000 issues and similar
uncertainties. Further, the impact of a Year 2000 failure on the Company's
future results of operations, liquidity or financial condition cannot be
determined at this time, but is a risk which should be considered in evaluating
future growth of the Company.

         Contingency Plans - A contingency plan for a possible Year 2000 failure
of any key internal hardware, software or non-IT systems is in development so
that the Company's critical business processes can be expected to continue to
function on January 1, 2000 and beyond.


Cautionary Note Regarding Forward-looking Statements

         In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"), Staff Leasing, Inc. (the
"Company") is hereby providing cautionary statements identifying important
factors that could cause the Company's actual results to differ materially from
those projected in forward-looking statements (as such term is defined in the
Reform Act) made by or on behalf of the Company herein or orally, whether in
presentations, in response to questions or otherwise. Any statements that
express, or involve discussions as to, expectations, beliefs, plans, objectives,
assumptions or future events or performance (often, but not always, through the
use of words or phrases such as "will result," "are expected to," "will
continue," "estimated," and "projection") are not historical facts and may be
forward-looking and, accordingly, such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause the actual
results or performance of the Company to be materially different from any future
results or performance expressed or implied by such forward-looking statements.
Such known and unknown risks, uncertainties and other factors include, but are
not limited to, the following: (i) the potential for additional subsidies for
health benefit plans; (ii) volatility in workers' compensation rates and
unemployment taxes; (iii) possible adverse application of certain



                                       13
<PAGE>   14

Federal and state laws and the possible enactment of unfavorable laws or
regulation; (iv) impact of competition from existing and new professional
employer organizations; (v) risks associated with expansion into additional
states where the Company does not have a presence or significant market
penetration; (vi) risks associated with the Company's dependence on key vendors;
(vii) the possibility for client attrition; (viii) risks associated with
geographic market concentration and concentration of clients in the construction
industry; (ix) the financial condition of clients; (x) the failure to properly
manage growth and successfully integrate acquired companies and operations; and
(xi) other factors which are described in further detail in the Company's
filings with the Securities and Exchange Commission.

         The Company cautions that the factors described above could cause
actual results or outcomes to differ materially from those expressed in any
forward-looking statements made by or on behalf of the Company. Any
forward-looking statement speaks only as of the date on which such statement is
made, and the Company undertakes no obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not possible for
management to predict all of such factors. Further, management cannot assess the
impact of each such factor on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.


ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk

         The Company is subject to market risk from exposure to changes in
interest rates based on its investing and cash management activities. The
Company utilizes U.S. government agency and other corporate debt with fixed
rates and maturities of less than one year to manage its exposures to interest
rates. The Company does not expect changes in interest rates to have a material
effect on income or cash flows in fiscal 1999, although there can be no
assurances that interest rates will not change.



PART II. OTHER INFORMATION


ITEM 1.  Legal Proceedings

         Lawrence E. Egle v. Staff Leasing, Inc., et al. On April 30, 1999, the
plaintiff, a shareholder of the Company, brought this class action alleging that
the directors and senior officers of the Company breached their fiduciary duty
to shareholders by failing to pursue a proposal from Paribas Principal Partners
to acquire the company in order to entrench themselves in the management of the
Company. Plaintiff seeks injunctive relief and unspecified damages including
attorneys' and experts' fees. The Company believes the lawsuit is wholly without
merit.

         The Company is not a party to any other material pending legal
proceedings other than routine legal matters incidental to its business. The
Company believes that the ultimate resolution of these matters would not have a
material adverse effect on its financial condition or results of operations.

ITEM 5.  Other Information

         In May 1999, Joyce Lillis McGill, Senior Vice President of Sales since
March 1997, resigned. Richard A. Goldman, President of Staff Leasing, has
assumed responsibility for sales.


ITEM 6.  Exhibits and Reports on Form 8-K

<TABLE>
<CAPTION>
EXHIBIT
  NO.                DESCRIPTION
--------   -------------------------------

<S>        <C>
27.3 (b)   Financial Data Schedule for the six months ended June 30, 1999
</TABLE>



                                       14
<PAGE>   15

                                   SIGNATURES


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


                                                STAFF LEASING, INC.



Dated:  August 13, 1999                    BY /s/ Richard A. Goldman
--------------------------------------------------------------------------------
                                                    Richard A. Goldman
                                                    President



Dated:  August 13, 1999                    BY /s/ John E. Panning
--------------------------------------------------------------------------------
                                                    John E. Panning
                                                    Chief Financial Officer
                                                    (the Principal Financial and
                                                    Accounting Officer)



                                       15