##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

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

For the quarterly period ended September 29, 2002

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 001-13956

PERSONNEL GROUP OF AMERICA, INC.
(Exact name of registrant as specified in its charter)

|                                         |  |                    
|---------------------------------------- |  | -------------------
|Delaware                                 |  | 56-1930691         
|                                        
|(State or other jurisdiction of          |  | (IRS Employer      
|incorporation or organization)           |  | Identification No.)
|                                         |  |                    
|Five LakePointe Plaza, 2nd Floor         |  |                    
|2709 Water Ridge Parkway                 |  |                    
|Charlotte, NC                            |  | 28217              
|                                        
|(Address of principal executive offices) |  | (Zip Code)         

(704) 442-5100
(Registrants telephone number including area code)

None
(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.

[X] Yes        
        
               
[ ] No

As of October 31, 2002, there were 26,776,135 shares of outstanding common
stock, par value $.01 per share.





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##### 



PERSONNEL GROUP OF AMERICA, INC.
TABLE OF CONTENTS

|                               |  |                                                                                       |    |                                                      |    |      |   | 
|------------------------------ |  | ------------------------------------------------------------------------------------- | -- | ---------------------------------------------------- | -- | ---- | - | 
|                               |  |                                                                                       |    |                                                      |    | Page
|                               |  |                                                                                       |    |                                                      |    |     
|PART I  FINANCIAL INFORMATION |  |                                                                                       |    |                                                     
|Item 1.                        |  | Financial Statements (unaudited)                                                      |    |                                                      |    |     
|                               |  |                                                                                       |    | Unaudited Consolidated Statements of Operations      |    |      | 3 | 
|                               |  |                                                                                       |    | Unaudited Consolidated Balance Sheets                |    |      | 4 | 
|                               |  |                                                                                       |    | Unaudited Consolidated Statements of Cash Flows      |    |      | 5 | 
|                               |  |                                                                                       |    | Notes to Unaudited Consolidated Financial Statements |    |      | 6 | 
|Item 2.                        |  | Managements Discussion and Analysis of
Financial Condition and Results of Operations |    |                                                      | 13 |     
|Item 3.                        |  | Quantitative and Qualitative Disclosures
About Market Risk                            |    |                                                      | 22 |     
|Item 4.                        |  | Controls and Procedures                                                               |    |                                                      | 22 |     
|PART II  OTHER INFORMATION    |  |                                                                                       |    |                                                     
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                      |    |                                                      | 24 |     
|Signatures                     |  |                                                                                       | 25 |                                                     
|Certifications                 |  |                                                                                       | 26 |                                                     
|Exhibit Index                  |  |                                                                                       | 28 |                                                     

2



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##### 



PERSONNEL GROUP OF AMERICA, INC.

Unaudited Consolidated Statements of Operations


For the periods ended September 29, 2002 and September 30, 2001
(in thousands, except per share data)


|                                                                                 |                                                                 |   |                    |        |                   |   |               |        |               |   |          |        |   |   |         |         |  
|-------------------------------------------------------------------------------- | --------------------------------------------------------------- | - | ------------------ | ------ | ----------------- | - | ------------- | ------ | ------------- | - | -------- | ------ | - | - | ------- | ------- | -
|                                                                                 |                                                                 |   | Three Months Ended |        | Nine Months Ended
|                                                                                 |                                                                 |   |                    |        |                  
|                                                                                 |                                                                 |   | September 29,      |        | September 30,     |   | September 29, |        | September 30,
|                                                                                 |                                                                 |   | 2002               |        | 2001              |   | 2002          |        | 2001         
|                                                                                 |                                                                 |   |                    |        |                   |   |               |        |              
|Revenues                                                                         |                                                                 | $ | 137,681            |        |                   | $ | 173,573       |        |               | $ | 421,466  |        |   | $ | 577,567 |        
|Direct costs of services                                                         |                                                                 |   | 105,965            |        |                   |   | 129,451       |        |               |   | 322,640  |        |   |   | 424,916 |        
|                                                                                 |                                                                 |   |                    |        |                   |   |               |        |               |   |          |        |   |   |         |        
|Gross profit                                                                     |                                                                 |   | 31,716             |        |                   |   | 44,122        |        |               |   | 98,826   |        |   |   | 152,651 |        
|Operating expenses:                                                              |                                                                 |   |                    |        |                   |   |               |        |               |   |          |        |   |   |         |        
|                                                                                 | Selling, general and administrative                             |   |                    | 27,199 |                   |   |               | 35,138 |               |   |          | 86,403 |   |   |         | 118,762 |  
|                                                                                 | Depreciation and amortization                                   |   |                    | 1,645  |                   |   |               | 5,942  |               |   |          | 5,204  |   |   |         | 18,081  |  
|                                                                                 | Restructuring and rationalization charges                       |   |                    | 1,290  |                   |   |               | 474    |               |   |          | 3,134  |   |   |         | 4,833   |  
|                                                                                 |                                                                 |   |                    |        |                   |   |               |        |               |   |          |        |   |   |         |        
|Operating income                                                                 |                                                                 |   | 1,582              |        |                   |   | 2,568         |        |               |   | 4,085    |        |   |   | 10,975  |        
|Interest expense                                                                 |                                                                 |   | 4,275              |        |                   |   | 4,638         |        |               |   | 12,972   |        |   |   | 14,467  |        
|                                                                                 |                                                                 |   |                    |        |                   |   |               |        |               |   |          |        |   |   |         |        
|Loss before income taxes and cumulative
effect of change in accounting principle |                                                                 |   | (2,693             | )      |                   |   | (2,070        | )      |               |   | (8,887   | )      |   |   | (3,492  | )      
|Provision (benefit) for income taxes                                             |                                                                 |   | (534               | )      |                   |   | (900          | )      |               |   | 3,127    |        |   |   | (2,193  | )      
|                                                                                 |                                                                 |   |                    |        |                   |   |               |        |               |   |          |        |   |   |         |        
|Loss before cumulative effect of change in
accounting principle                  |                                                                 |   | (2,159             | )      |                   |   | (1,170        | )      |               |   | (12,014  | )      |   |   | (1,299  | )      
|Cumulative effect of change in accounting
principle, net of taxes                |                                                                 |   |                   |        |                   |   |              |        |               |   | (242,497 | )      |   |   |        |        
|                                                                                 |                                                                 |   |                    |        |                   |   |               |        |               |   |          |        |   |   |         |        
|Net loss                                                                         |                                                                 | $ | (2,159             | )      |                   | $ | (1,170        | )      |               | $ | (254,511 | )      |   | $ | (1,299  | )      
|                                                                                 |                                                                 |   |                    |        |                   |   |               |        |               |   |          |        |   |   |         |        
|Basic and diluted earnings per common share:                                     |                                                                 |   |                    |        |                   |   |               |        |               |   |          |        |   |   |         |        
|                                                                                 | Loss before cumulative effect of change in accounting principle |   | $                  | (0.08  | )                 |   | $             | (0.04  | )             |   | $        | (0.45  | ) |   | $       | (0.05   | )
|                                                                                 | Loss from cumulative effect of change in accounting principle   |   |                    |       |                   |   |               |       |               |   |          | (9.07  | ) |   |         |        |  
|                                                                                 |                                                                 |   |                    |        |                   |   |               |        |               |   |          |        |   |   |         |        
|                                                                                 | Net loss                                                        |   | $                  | (0.08  | )                 |   | $             | (0.04  | )             |   | $        | (9.52  | ) |   | $       | (0.05   | )
|                                                                                 |                                                                 |   |                    |        |                   |   |               |        |               |   |          |        |   |   |         |        

The accompanying notes are an integral part of these statements.

3



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##### 



PERSONNEL GROUP OF AMERICA, INC.

Unaudited Consolidated Balance Sheets


September 29, 2002 and December 30, 2001
(in thousands, except per share data)


|                                     |                                                                                                                       |                                            |         |               |         |              |         |         |         | 
|------------------------------------ | --------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------------- | ------- | ------------ | ------- | ------- | ------- | 
|                                     |                                                                                                                       |                                            |         | September 29, |         | December 30,
|                                     |                                                                                                                       |                                            |         | 2002          |         | 2001        
|                                     |                                                                                                                       |                                            |         |               |         |             
|Assets                               |                                                                                                                       |                                            |         |               |         |              |         |        
|Current Assets:                      |                                                                                                                       |                                            |         |               |         |              |         |        
|                                     | Cash and cash equivalents                                                                                             |                                            | $       | 25,123        |         |              | $       | 17,557  |        
|                                     | Accounts receivable, net                                                                                              |                                            |         | 82,553        |         |              |         | 87,088  |        
|                                     | Prepaid expenses and other current assets                                                                             |                                            |         | 3,209         |         |              |         | 7,975   |        
|                                     | Recoverable income taxes                                                                                              |                                            |         | 10,189        |         |              |         | 6,470   |        
|                                     | Deferred income taxes                                                                                                 |                                            |         |              |         |              |         | 11,896  |        
|                                     |                                                                                                                       |                                            |         |               |         |              |         |        
|                                     |                                                                                                                       | Total current assets                       |         |               | 121,074 |              |         |         | 130,986 | 
|Property and equipment, net          |                                                                                                                       |                                            | 14,470  |               |         |              | 18,061  |        
|Intangible assets, net               |                                                                                                                       |                                            | 193,772 |               |         |              | 478,836 |        
|Other assets                         |                                                                                                                       |                                            | 2,852   |               |         |              | 2,705   |        
|                                     |                                                                                                                       |                                            |         |               |         |              |         |        
|                                     |                                                                                                                       | Total assets                               |         | $             | 332,168 |              |         | $       | 630,588 | 
|                                     |                                                                                                                       |                                            |         |               |         |              |         |        
|Liabilities and Shareholders Equity |                                                                                                                       |                                            |         |               |         |              |         |        
|Current liabilities:                 |                                                                                                                       |                                            |         |               |         |              |         |        
|                                     | Current portion of long-term debt                                                                                     |                                            | $       | 110           |         |              | $       | 882     |        
|                                     | Accounts payable                                                                                                      |                                            |         | 13,658        |         |              |         | 9,598   |        
|                                     | Accrued wages, benefits and other                                                                                     |                                            |         | 44,605        |         |              |         | 48,265  |        
|                                     | Deferred income taxes                                                                                                 |                                            |         | 959           |         |              |         |        |        
|                                     |                                                                                                                       |                                            |         |               |         |              |         |        
|                                     |                                                                                                                       | Total current liabilities                  |         |               | 59,332  |              |         |         | 58,745  | 
|                                     | Long-term debt                                                                                                        |                                            |         | 218,000       |         |              |         | 234,000 |        
|                                     | Other long-term liabilities                                                                                           |                                            |         | 11,182        |         |              |         | 39,750  |        
|                                     |                                                                                                                       |                                            |         |               |         |              |         |        
|                                     |                                                                                                                       | Total liabilities                          |         |               | 288,514 |              |         |         | 332,495 | 
|Commitments and contingencies        |                                                                                                                       |                                            |         |               |         |              |         |        
|Shareholders equity:                |                                                                                                                       |                                            |         |               |         |              |         |        
|                                     | Preferred stock, $.01 par value; shares authorized 5,000;
no shares issued and outstanding                            |                                            |         |              |         |              |         |        |        
|                                     | Common stock, $.01 par value; shares authorized 95,000;
33,065 shares issued and outstanding                          |                                            |         | 331           |         |              |         | 331     |        
|                                     | Additional paid-in capital                                                                                            |                                            |         | 316,162       |         |              |         | 316,694 |        
|                                     | Retained earnings (accumulated deficit)                                                                               |                                            |         | (228,528      | )       |              |         | 25,983  |        
|                                     |                                                                                                                       |                                            |         |               |         |              |         |        
|                                     |                                                                                                                       |                                            | 87,965  |               |         |              | 343,008 |        
|                                     | Less common stock held in treasury at cost -
6,289 shares at September 29, 2002 and 6,371 shares at December 30, 2001 |                                            |         | (44,311       | )       |              |         | (44,915 | )      
|                                     |                                                                                                                       |                                            |         |               |         |              |         |        
|                                     |                                                                                                                       | Total shareholders equity                 |         |               | 43,654  |              |         |         | 298,093 | 
|                                     |                                                                                                                       |                                            |         |               |         |              |         |        
|                                     |                                                                                                                       | Total liabilities and shareholders equity |         | $             | 332,168 |              |         | $       | 630,588 | 
|                                     |                                                                                                                       |                                            |         |               |         |              |         |        

The accompanying notes are an integral part of these statements.

4



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PERSONNEL GROUP OF AMERICA, INC.

Unaudited Consolidated Statements of Cash Flows


For the periods ended September 29, 2002 and September 30, 2001
(In thousands)


|                                                     |                                                                             |                                                                                                                                                            |                                                     |                                           |         |               |        |               |        |         |        | 
|---------------------------------------------------- | --------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------- | ----------------------------------------- | ------- | ------------- | ------ | ------------- | ------ | ------- | ------ | 
|                                                     |                                                                             |                                                                                                                                                            |                                                     |                                           |         | September 29, |        | September 30,
|                                                     |                                                                             |                                                                                                                                                            |                                                     |                                           |         | 2002          |        | 2001         
|                                                     |                                                                             |                                                                                                                                                            |                                                     |                                           |         |               |        |              
|Cash flows from operating activities:                |                                                                             |                                                                                                                                                            |                                                     |                                           |         |               |        |              
|                                                     | Net loss                                                                    |                                                                                                                                                            | $                                                   | (254,511                                  | )       |               | $      | (1,299        | )     
|                                                     | Adjustments to reconcile loss to net cash provided
by operating activities: |                                                                                                                                                            |                                                     |                                           |         |               |        |               |       
|                                                     |                                                                             | Depreciation and amortization                                                                                                                              |                                                     |                                           | 5,204   |               |        |               | 18,081 |        
|                                                     |                                                                             | Cumulative effect of change in accounting principle, net of deferred tax benefit of $42,198                                                                |                                                     |                                           | 242,497 |               |        |               |       |        
|                                                     |                                                                             | Loss on abandonment and disposals                                                                                                                          |                                                     |                                           |        |               |        |               | 950    |        
|                                                     |                                                                             | Deferred income taxes on income before cumulative effect of change in accounting principle, net
(including $19,217 of income tax refunds received in 2002) |                                                     |                                           | 22,504  |               |        |               | 4,253  |        
|                                                     |                                                                             | Changes in assets and liabilities:                                                                                                                         |                                                     |                                           |         |               |        |               |        |        
|                                                     |                                                                             |                                                                                                                                                            | Accounts receivable                                 |                                           |         | 4,535         |        |               |        | 24,844  |       
|                                                     |                                                                             |                                                                                                                                                            | Accounts payable and accrued liabilities            |                                           |         | 874           |        |               |        | (10,600 | )     
|                                                     |                                                                             |                                                                                                                                                            | Other, net                                          |                                           |         | 2,239         |        |               |        | 1,045   |       
|                                                     |                                                                             |                                                                                                                                                            |                                                     |                                           |         |               |        |              
|                                                     |                                                                             |                                                                                                                                                            |                                                     | Net cash provided by operating activities |         |               | 23,342 |               |        |         | 37,274 | 
|Cash flows from investing activities:                |                                                                             |                                                                                                                                                            |                                                     |                                           |         |               |        |              
|                                                     | Proceeds from sale of business                                              |                                                                                                                                                            |                                                     | 3,825                                     |         |               |        |              |       
|                                                     | Acquisition-related payments                                                |                                                                                                                                                            |                                                     |                                          |         |               |        | (8,620        | )     
|                                                     | Purchase of property and equipment, net                                     |                                                                                                                                                            |                                                     | (1,244                                    | )       |               |        | (2,004        | )     
|                                                     |                                                                             |                                                                                                                                                            |                                                     |                                           |         |               |        |              
|                                                     |                                                                             |                                                                                                                                                            | Net cash provided by (used in) investing activities |                                           |         | 2,581         |        |               |        | (10,624 | )     
|Cash flows from financing activities:                |                                                                             |                                                                                                                                                            |                                                     |                                           |         |               |        |              
|                                                     | Repayments under credit facility                                            |                                                                                                                                                            |                                                     | (22,000                                   | )       |               |        | (45,000       | )     
|                                                     | Borrowings under credit facility                                            |                                                                                                                                                            |                                                     | 6,000                                     |         |               |        | 15,000        |       
|                                                     | Credit facility amendment fees                                              |                                                                                                                                                            |                                                     | (1,657                                    | )       |               |        | (1,227        | )     
|                                                     | Repayments of other debt, net                                               |                                                                                                                                                            |                                                     | (772                                      | )       |               |        | (647          | )     
|                                                     | Proceeds from employee stock purchase plan                                  |                                                                                                                                                            |                                                     | 72                                        |         |               |        | 439           |       
|                                                     |                                                                             |                                                                                                                                                            |                                                     |                                           |         |               |        |              
|                                                     |                                                                             |                                                                                                                                                            | Net cash used in financing activities               |                                           |         | (18,357       | )      |               |        | (31,435 | )     
|                                                     |                                                                             |                                                                                                                                                            |                                                     |                                           |         |               |        |              
|Net increase (decrease) in cash and cash equivalents |                                                                             |                                                                                                                                                            | 7,566                                               |                                           |         |               | (4,785 | )            
|Cash and cash equivalents at beginning of period     |                                                                             |                                                                                                                                                            | 17,557                                              |                                           |         |               | 6,233  |              
|                                                     |                                                                             |                                                                                                                                                            |                                                     |                                           |         |               |        |              
|Cash and cash equivalents at end of period           |                                                                             | $                                                                                                                                                          | 25,123                                              |                                           |         | $             | 1,448  |              
|                                                     |                                                                             |                                                                                                                                                            |                                                     |                                           |         |               |        |              

The accompanying notes are an integral part of these statements.

5



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PERSONNEL GROUP OF AMERICA, INC.

Notes to Unaudited Consolidated Financial Statements


(Dollars in thousands, except per share data)


(1)  General

The unaudited consolidated financial statements included herein have been
prepared in accordance with the instructions to Form 10-Q and do not include
all the information and footnotes required by generally accepted accounting
principles; however, they do include all adjustments of a normal recurring
nature that, in the opinion of management, are necessary to present fairly the
results of operations of the Company for the interim periods presented. These
interim financial statements should be read in conjunction with the Companys
audited consolidated financial statements and related notes included in the
Companys Annual Report on Form 10-K for the year ended December 30, 2001. The
results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the entire year.

Debt Compliance

The Company experienced declines in operating results for the year ended
December 30, 2001 and year to date 2002 as compared in each case to prior year
due to the weak economic environment. In response to the deterioration in
operating performance, the Company undertook several initiatives beginning in
2001, including the following:



| |  |  | A number of restructuring actions, including a permanent workforce
reduction of approximately 36.4% and office space rationalization
efforts. Management expects further headcount and infrastructure
rationalization over the balance of 2002 and into 2003;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | The divesture of an under-performing business on December 31, 2001;                                                                                                                                                                                          
| |  |  | An amendment to its revolving credit facility extending the
facilitys maturity to January 2003, with additional extensions to
January 2004 assuming certain conditions are met;                                                                             
| |  |  | A concerted effort to reduce accounts receivable, which resulted in
substantial cash flow used to reduce debt; and                                                                                                                                           
| |  |  | An analysis, with the assistance of a financial advisor, of
alternatives to reduce its long-term obligations and improve its
financial position.                                                                                                             

The Companys ability to continue operating is largely dependent upon its
ability to maintain compliance with the financial covenants in the Companys
amended revolving credit facility (the Credit Facility). The Company was
able to maintain compliance with its Credit Facility as of December 30, 2001
after obtaining a waiver in December 2001 of an anticipated default under
certain financial ratios for the fourth quarter of 2001.

For further discussion of the Companys Credit Facility and other debt
compliance matters, see Note 3, Long-Term Debt, and Note 6, Subsequent Event
 Credit Facility Amendment and Financial Restructuring below and Managements Discussion and Analysis of
Financial Condition and Results of OperationsLiquidity and Capital
Resources, included elsewhere in this Report on Form 10-Q.

(2)  Intangible Assets and Change in Accounting Principle

Intangible assets are principally comprised of goodwill. The Companys
businesses have been acquired from unrelated third parties for cash and other
consideration and have been accounted for using the purchase method of
accounting. The assets and liabilities of the entities acquired were recorded
at their estimated fair values at the dates of the acquisitions. Excess of
cost over fair value of net assets acquired resulting from such acquisitions
has been recorded at historical cost. Other intangible assets consist mainly
of covenants not to compete.

6



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##### 



Effective at the beginning of 2002, the Company adopted SFAS 142. The
provisions of SFAS 142 prohibit the amortization of goodwill for
indefinite-lived intangible assets and require that goodwill and
indefinite-lived intangibles assets be tested annually for impairment. In
order to assess the fair value of its goodwill as of the adoption date, the
Company engaged an independent valuation firm to assist in determining the fair
value. The fair value of each of the Companys two reporting units was
calculated as of December 31, 2001, on an enterprise value basis using the
following approaches: (i) market multiple approach and (ii) discounted cash
flow approach. Under the market multiple approach, market ratios and
performance fundamentals relating to similar public companies stock prices or
enterprise values were applied to the reporting units to determine their
enterprise value. Under the discounted cash flow (DCF) approach, the
indicated enterprise value was determined using the present value of the
projected future cash flows to be generated considering appropriate discount
rates. The discount rates used in the calculation reflected all associated
risks of realizing the projected future cash flows. Certain of the valuation
assumptions are based on managements expectations for future performance of
the IT Services and Commercial Staffing reporting units. These assumptions
include expected time frame of technology spending and broader economic
recoveries as well as future growth rates in the IT Services and Commercial
Staffing businesses. A relatively high discount rate of 17% was utilized in
the discounted cash flow valuation approach due principally to the inherent
uncertainties associated with these assumptions. While current year to date
performance is generally consistent with the assumptions used in the valuation,
any significant adverse changes or change in the Companys outlook would likely
result in further impairment of the Companys intangible assets.
The Company will complete its annual test for impairment of goodwill
in the fourth quarter of fiscal 2002.

Based upon the results of the valuation, which was completed in the second
quarter, the Company recorded an intangibles impairment charge of $284,695
($242,497 net of an income tax benefit of $42,198) as a cumulative effect of
the change in accounting principle. A reconciliation of intangible assets from
December 30, 2001 to September 29, 2002 is as follows:

|                                                 |  |             |          |          |  |            |         |   |  |   |          |  
|------------------------------------------------ |  | ----------- | -------- | -------- |  | ---------- | ------- | - |  | - | -------- | -
|                                                 |  |             |          |          |  | Commercial |         |   |  |  
|                                                 |  | IT Services |          | Staffing |  |            |         |  
|                                                 |  | Division    |          | Division |  | Total     
|                                                 |  |             |          |          |  |           
|Balance, December 30, 2001                       |  | $           | 377,045  |          |  | $          | 101,791 |   |  | $ | 478,836  |  
|Impairment loss resulting from SFAS 142 adoption |  |             | (245,373 | )        |  |            | (39,322 | ) |  |   | (284,695 | )
|Amortization of finite-lived intangible assets   |  |             | (268     | )        |  |            | (101    | ) |  |   | (369     | )
|                                                 |  |             |          |          |  |            |         |   |  |   |          |  
|Balance, September 29, 2002                      |  | $           | 131,404  |          |  | $          | 62,368  |   |  | $ | 193,772  |  
|                                                 |  |             |          |          |  |            |         |   |  |   |          |  

The following table sets forth a reconciliation of net loss and earnings
per share information for the periods ended September 29, 2002 and September
30, 2001, adjusted for the non-amortization provisions of SFAS 142:

7



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##### 



|                                                                         |                                                                          |   |                    |       |                   |   |           |       |           |   |          |       |   |   |        |       |  
|------------------------------------------------------------------------ | ------------------------------------------------------------------------ | - | ------------------ | ----- | ----------------- | - | --------- | ----- | --------- | - | -------- | ----- | - | - | ------ | ----- | -
|                                                                         |                                                                          |   | Three Months Ended |       | Nine Months Ended
|                                                                         |                                                                          |   |                    |       |                  
|                                                                         |                                                                          |   | September          |       | September         |   | September |       | September
|                                                                         |                                                                          |   | 29, 2002           |       | 30, 2001          |   | 29, 2002  |       | 30, 2001 
|                                                                         |                                                                          |   |                    |       |                   |   |           |       |          
|Net loss before cumulative effect of
accounting change, as reported      |                                                                          | $ | (2,159             | )     |                   | $ | (1,170    | )     |           | $ | (12,014  | )     |   | $ | (1,299 | )    
|Add: Goodwill amortization, net of tax                                   |                                                                          |   |                   |       |                   |   | 2,828     |       |           |   |         |       |   |   | 8,509  |      
|                                                                         |                                                                          |   |                    |       |                   |   |           |       |           |   |          |       |   |   |        |      
|Adjusted net income (loss) before
cumulative effect of accounting change |                                                                          |   | (2,159             | )     |                   |   | 1,658     |       |           |   | (12,014  | )     |   |   | 7,210  |      
|Cumulative effect of accounting
change, net of tax                       |                                                                          |   |                   |       |                   |   |          |       |           |   | (242,497 | )     |   |   |       |      
|                                                                         |                                                                          |   |                    |       |                   |   |           |       |           |   |          |       |   |   |        |      
|Adjusted net income (loss)                                               |                                                                          | $ | (2,159             | )     |                   | $ | 1,658     |       |           | $ | (254,511 | )     |   | $ | 7,210  |      
|                                                                         |                                                                          |   |                    |       |                   |   |           |       |           |   |          |       |   |   |        |      
|Basic and diluted earnings per share:                                    |                                                                          |   |                    |       |                   |   |           |       |           |   |          |       |   |   |        |      
|                                                                         | Net loss before cumulative effect of
accounting change, as reported      |   | $                  | (0.08 | )                 |   | $         | (0.04 | )         |   | $        | (0.45 | ) |   | $      | (0.05 | )
|                                                                         | Add: Goodwill amortization, net of
tax                                   |   |                    |      |                   |   |           | 0.10  |           |   |          |      |   |   |        | 0.32  |  
|                                                                         |                                                                          |   |                    |       |                   |   |           |       |           |   |          |       |   |   |        |      
|                                                                         | Adjusted net income (loss) before
cumulative effect of accounting
change |   | $                  | (0.08 | )                 |   | $         | 0.06  |           |   | $        | (0.45 | ) |   | $      | 0.27  |  
|                                                                         | Cumulative effect of accounting
change, net of tax                       |   |                    |      |                   |   |           |      |           |   |          | (9.07 | ) |   |        |      |  
|                                                                         |                                                                          |   |                    |       |                   |   |           |       |           |   |          |       |   |   |        |      
|                                                                         | Adjusted net income (loss)                                               |   | $                  | (0.08 | )                 |   | $         | 0.06  |           |   | $        | (9.52 | ) |   | $      | 0.27  |  
|                                                                         |                                                                          |   |                    |       |                   |   |           |       |           |   |          |       |   |   |        |      

(3)  Long-term Debt

Long-term debt consisted of the following at September 29, 2002 and
December 30, 2001:

|                                                                  |                      |   |               |     |              |   |         |     | 
|----------------------------------------------------------------- | -------------------- | - | ------------- | --- | ------------ | - | ------- | --- | 
|                                                                  |                      |   | September 29, |     | December 30,
|                                                                  |                      |   | 2002          |     | 2001        
|                                                                  |                      |   |               |     |             
|5-3/4% Convertible Subordinated
Notes due July 2004 (the Notes) |                      | $ | 115,000       |     |              | $ | 115,000 |    
|Bank revolving credit facility                                    |                      |   | 103,000       |     |              |   | 119,000 |    
|Other                                                             |                      |   | 110           |     |              |   | 882     |    
|                                                                  |                      |   |               |     |              |   |         |    
|                                                                  |                      |   | 218,110       |     |              |   | 234,882 |    
|                                                                  | Less current portion |   |               | 110 |              |   |         | 882 | 
|                                                                  |                      |   |               |     |              |   |         |    
|                                                                  |                      | $ | 218,000       |     |              | $ | 234,000 |    
|                                                                  |                      |   |               |     |              |   |         |    

The Companys 5-3/4% Convertible Subordinated Notes (the Notes) are due
July 2004. Interest on the Notes is payable semi-annually. The Notes are
convertible into Common Stock of the Company at any time before maturity at an
initial conversion price of $17.81 per share. Beginning in July 2000, the
Company was permitted to redeem the Notes initially at 103.29% and at
decreasing prices thereafter to 100% at maturity, in each case together with
accrued interest. The Notes are subordinated to all present and future senior
indebtedness of the Company (as defined), including indebtedness under the
Companys Credit Facility.

The Credit Facility was amended in February and March 2002 to provide for
a $136,000 revolving line of credit due January 2003. Assuming the Company
remains in compliance with the financial covenants set forth in the Credit
Facility agreement, as amended, and pays applicable extension fees, the Company
at its option may further extend the maturity of the facility in six-month
increments up through January 2004. As a result of the March 2002 amendments
and extensions, the outstanding balance under the Credit Facility, which was
$103,000 at September 29, 2002, was classified as long-term in the consolidated
balance sheet. For the third quarter, applicable financial covenants in the
amended Credit Facility required quarterly maintenance of certain financial
ratios and minimum tangible net worth. The Company was in compliance with the
financial

8



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##### 



covenants of the amended Credit Facility agreement as of September
29, 2002. The amended Credit Facility also contains restrictions on the payment
of cash dividends on the Common Stock and places additional limitations on
share repurchases, acquisitions and capital expenditures. Finally, it includes
an Equity Appreciation Rights agreement (the EAR) whereby the Company must
pay a fee (the Rights Fee) to the lenders in the event of default under the
Credit Facility or if the Credit Facility has not been paid in full by January
1, 2004. The Rights Fee is the greater of 10% of the fair market value of the
Company (as defined in the EAR) as of the exercise date of the EAR or $3,000.
Interest rates payable under the amended Credit Facility are currently set at
prime plus 250 basis points through December 2002, with increases during each
six-month period thereafter through January 2004.

The principal financial covenants in the Credit Facility up through
September 29, 2002 were dependent upon the Companys EBITDA levels, as measured
at each quarter end on a rolling four-quarter basis, and included an interest
coverage ratio and a leverage ratio. The March 2002 amendments provided for
certain adjustments that permitted specified add backs to increase EBITDA,
including certain restructuring and rationalization charges and certain other
charges. The adjusted EBITDA for the trailing four quarters ended September
29, 2002 were $6,800, $3,709, $4,198 and $4,517, respectively. In addition to
the quarterly covenants, the March 2002 amendments included EBITDA and
liquidity requirements to be measured based on the six-month periods ending
November 2002 and May 2003. Under these covenants, the Company believed its
margin for compliance throughout 2002 was at its lowest level for the November
2002 EBITDA covenant. In order to have stayed in compliance with this
covenant, the Company would have needed to have generated adjusted EBITDA of at
least $7,207 for the six-month period ending November 2002.

In connection with the agreement in principle and related agreements that
the Company has executed for its proposed restructuring, the revolving credit
lenders have agreed to eliminate existing financial covenants in the amended
Credit Facility and to replace them with a new rolling, three-month minimum
EBITDA covenant for the period from November 12, 2002 through and including
June 30, 2003. See Note 6, Subsequent Event  Credit Facility Amendment and Financial Restructuring.

Based on the
Companys projections, which reflect the
declining demand for the Companys services, offset by reductions in costs
principally resulting from reduced revenues and the Companys restructuring and
rationalization activities, management believes that for the next 12
months the Company will be able to
maintain compliance with the substitute minimum EBITDA covenant for the period
through June 30, 2003 and the modified financial covenants set forth in the
March 2002 amendments for periods thereafter. The Company also believes that the operating results in
the first nine months of 2002 support the key assumptions in the
Companys projections. However, there can be no assurance that the economy or the Company will
perform as expected or that further economic declines will not adversely impact
the Companys ability to comply with its covenants. If actual results of
operations do not meet current forecasts, covenant violations could occur. If
the Company does violate covenants in the future, it would seek further waivers
and amendments from its lenders, but can give no assurance that any such
necessary waivers and amendments would be available at all or otherwise on
acceptable terms. If the Company were unable to obtain a waiver of future
covenant violations, the lenders would be entitled to require immediate
repayment of all amounts outstanding under the Credit Facility and, as
described above, payment of the Rights Fee. An acceleration of outstanding
amounts under the Credit Facility could also cause a default under, and permit
acceleration of, the Notes. In the event of one or more such defaults, the
Companys ongoing viability would be seriously threatened, and it would be
forced to evaluate a number of strategic alternatives, including a debt
restructuring or other reorganization (including bankruptcy protection), the
closure of certain locations or the sale of certain or all of its assets in
order to continue to fund its operations. In the current economic environment,
management believes that asset sales, if any, would be at depressed prices that
could be significantly lower than the net book value of assets sold and may not
be sufficient to satisfy the Companys liabilities. For a discussion of the
proposed financial restructuring announced on November 12, 2002, see Note 6,
Subsequent Event  Credit Facility Amendment and Financial Restructuring.

9



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##### 



(4)  Earnings Per Share

The following table reconciles net income (loss) and weighted average
common shares outstanding to the amounts used to calculate basic and diluted
earnings per share for each of the periods ended September 29, 2002 and
September 30, 2001:

|                            |                                                            |                                                    |                                                        |                                            |        |                    |   |                   |        |           |   |           |          |       |   |        |        |       |   | 
|--------------------------- | ---------------------------------------------------------- | -------------------------------------------------- | ------------------------------------------------------ | ------------------------------------------ | ------ | ------------------ | - | ----------------- | ------ | --------- | - | --------- | -------- | ----- | - | ------ | ------ | ----- | - | 
|                            |                                                            |                                                    |                                                        |                                            |        | Three Months Ended |   | Nine Months Ended
|                            |                                                            |                                                    |                                                        |                                            |        |                    |   |                  
|                            |                                                            |                                                    |                                                        |                                            |        | September          |   | September         |        | September |   | September
|                            |                                                            |                                                    |                                                        |                                            |        | 29, 2002           |   | 30, 2001          |        | 29, 2002  |   | 30, 2001 
|                            |                                                            |                                                    |                                                        |                                            |        |                    |   |                   |        |           |   |          
|Basic earnings per share:   |                                                            |                                                    |                                                        |                                            |        |                    |   |                   |        |           |   |           |          |       |   |       
|                            | Net loss before cumulative effect of accounting
change     |                                                    | $                                                      | (2,159                                     | )      |                    | $ | (1,170            | )      |           | $ | (12,014   | )        |       | $ | (1,299 | )     
|                            |                                                            | Cumulative effect of accounting change, net of tax |                                                        |                                            |       |                    |   |                   |       |           |   |           | (242,497 | )     |   |        |       |      
|                            |                                                            |                                                    |                                                        |                                            |        |                    |   |                   |        |           |   |           |          |       |   |       
|                            |                                                            | Net loss                                           |                                                        | $                                          | (2,159 | )                  |   | $                 | (1,170 | )         |   | $         | (254,511 | )     |   | $      | (1,299 | )    
|                            |                                                            |                                                    |                                                        |                                            |        |                    |   |                   |        |           |   |           |          |       |   |       
|                            |                                                            | Weighted average common shares outstanding         |                                                        |                                            | 26,753 |                    |   |                   | 26,624 |           |   |           | 26,728   |       |   |        | 26,449 |      
|                            |                                                            | Basic earnings per share:                          |                                                        |                                            |        |                    |   |                   |        |           |   |           |          |       |   |        |        |      
|                            |                                                            |                                                    | Net loss before cumulative effect of
accounting change |                                            | $      | (0.08              | ) |                   | $      | (0.04     | ) |           | $        | (0.45 | ) |        | $      | (0.05 | )
|                            |                                                            |                                                    | Cumulative effect of accounting change, net
of tax     |                                            |        |                   |   |                   |        |          |   |           |          | (9.07 | ) |        |        |      |  
|                            |                                                            |                                                    |                                                        |                                            |        |                    |   |                   |        |           |   |           |          |       |   |       
|                            |                                                            |                                                    | Basic earnings per share                               |                                            | $      | (0.08              | ) |                   | $      | (0.04     | ) |           | $        | (9.52 | ) |        | $      | (0.05 | )
|                            |                                                            |                                                    |                                                        |                                            |        |                    |   |                   |        |           |   |           |          |       |   |       
|Diluted earnings per share: |                                                            |                                                    |                                                        |                                            |        |                    |   |                   |        |           |   |           |          |       |   |       
|                            | Net loss before cumulative effect of accounting
change     |                                                    | $                                                      | (2,159                                     | )      |                    | $ | (1,170            | )      |           | $ | (12,014   | )        |       | $ | (1,299 | )     
|                            |                                                            |                                                    |                                                        | Add: Interest expense on Notes, net of tax |        |                    |  |                   |        |           |  |           |          |       |  |        |        |       |  | 
|                            |                                                            |                                                    |                                                        |                                            |        |                    |   |                   |        |           |   |           |          |       |   |       
|                            | Diluted loss before cumulative effect of
accounting change |                                                    | $                                                      | (2,159                                     | )      |                    | $ | (1,170            | )      |           | $ | (12,014   | )        |       | $ | (1,299 | )     
|                            | Cumulative effect of accounting change, net of tax         |                                                    |                                                        |                                           |        |                    |   |                  |        |           |   | (242,497  | )        |       |   |       |       
|                            |                                                            |                                                    |                                                        |                                            |        |                    |   |                   |        |           |   |           |          |       |   |       
|                            | Diluted net loss                                           |                                                    | $                                                      | (2,159                                     | )      |                    | $ | (1,170            | )      |           | $ | (254,511  | )        |       | $ | (1,299 | )     
|                            |                                                            |                                                    |                                                        |                                            |        |                    |   |                   |        |           |   |           |          |       |   |       
|                            | Weighted average common shares outstanding                 |                                                    |                                                        | 26,753                                     |        |                    |   | 26,624            |        |           |   | 26,728    |          |       |   | 26,449 |       
|                            |                                                            |                                                    | Add: Dilutive employee stock options                   |                                            |        |                   |   |                   |        |          |   |           |          |      |   |        |        |      |  
|                            |                                                            |                                                    | Add: Assumed conversion of Notes                       |                                            |        |                   |   |                   |        |          |   |           |          |      |   |        |        |      |  
|                            |                                                            |                                                    |                                                        |                                            |        |                    |   |                   |        |           |   |           |          |       |   |       
|                            | Diluted weighted average common shares
outstanding         |                                                    |                                                        | 26,753                                     |        |                    |   | 26,624            |        |           |   | 26,728    |          |       |   | 26,449 |       
|                            | Diluted earnings per share:                                |                                                    |                                                        |                                            |        |                    |   |                   |        |           |   |           |          |       |   |        |       
|                            | Net loss before cumulative effect of accounting
change     |                                                    | $                                                      | (0.08                                      | )      |                    | $ | (0.04             | )      |           | $ | (0.45     | )        |       | $ | (0.05  | )     
|                            | Cumulative effect of accounting change, net of tax         |                                                    |                                                        |                                           |        |                    |   |                  |        |           |   | (9.07     | )        |       |   |       |       
|                            |                                                            |                                                    |                                                        |                                            |        |                    |   |                   |        |           |   |           |          |       |   |       
|                            | Diluted earnings per share                                 |                                                    | $                                                      | (0.08                                      | )      |                    | $ | (0.04             | )      |           | $ | (9.52     | )        |       | $ | (0.05  | )     
|                            |                                                            |                                                    |                                                        |                                            |        |                    |   |                   |        |           |   |           |          |       |   |       

10



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##### 



Stock options to purchase 2,920,413 and 4,423,196 shares of Common Stock
were outstanding during the quarters ended September 29, 2002 and September 30,
2001, respectively, but were excluded from the computation of earnings per
diluted share because their effect was antidilutive. The conversion of the
Notes into 6,456,140 common shares was also excluded from the computation of
earnings per diluted share because their effect was antidilutive.

(5)  Segment Information

The Company is organized in two segments: Information Technology Services
(IT Services) and Commercial Staffing Services (Commercial Staffing). IT
Services provides technical staffing, training and information technology
consulting services and technology tools for human capital management.
Commercial Staffing provides temporary staffing services, placement of
full-time employees and on-site management of temporary employees. The
Company evaluates segment performance based on income from operations before
corporate expenses, restructuring, rationalization and intangibles impairment
charges, amortization of intangible assets, interest and income taxes. Because
of the Companys substantial intangible assets, management does not consider
total assets by segment an important management tool and, accordingly, the
Company does not report this information separately.

The table below presents segment information for the periods ended
September 29, 2002 and September 30, 2001:

|                                                                                 |                     |                                |        |                    |         |                   |        |           |         |           |        |         |         |   |        |         |         | 
|-------------------------------------------------------------------------------- | ------------------- | ------------------------------ | ------ | ------------------ | ------- | ----------------- | ------ | --------- | ------- | --------- | ------ | ------- | ------- | - | ------ | ------- | ------- | 
|                                                                                 |                     |                                |        | Three Months Ended |         | Nine Months Ended
|                                                                                 |                     |                                |        |                    |         |                  
|                                                                                 |                     |                                |        | September          |         | September         |        | September |         | September
|                                                                                 |                     |                                |        | 29, 2002           |         | 30, 2001          |        | 29, 2002  |         | 30, 2001 
|                                                                                 |                     |                                |        |                    |         |                   |        |           |         |          
|Revenues                                                                         |                     |                                |        |                    |         |                   |        |           |         |           |        |         |         |   |        |        
|                                                                                 | IT Services         |                                | $      | 70,041             |         |                   | $      | 103,939   |         |           | $      | 229,980 |         |   | $      | 356,976 |        
|                                                                                 | Commercial Staffing |                                |        | 67,640             |         |                   |        | 69,634    |         |           |        | 191,486 |         |   |        | 220,591 |        
|                                                                                 |                     |                                |        |                    |         |                   |        |           |         |           |        |         |         |   |        |        
|                                                                                 |                     | Total revenues                 |        |                    | 137,681 |                   |        |           | 173,573 |           |        |         | 421,466 |   |        |         | 577,567 | 
|                                                                                 |                     |                                |        |                    |         |                   |        |           |         |           |        |         |         |   |        |        
|Operating income                                                                 |                     |                                |        |                    |         |                   |        |           |         |           |        |         |         |   |        |        
|                                                                                 | IT Services         |                                |        | 3,210              |         |                   |        | 6,890     |         |           |        | 11,020  |         |   |        | 24,083  |        
|                                                                                 | Commercial Staffing |                                |        | 3,683              |         |                   |        | 4,140     |         |           |        | 8,215   |         |   |        | 15,142  |        
|                                                                                 |                     |                                |        |                    |         |                   |        |           |         |           |        |         |         |   |        |        
|                                                                                 |                     | Total segment operating
income |        |                    | 6,893   |                   |        |           | 11,030  |           |        |         | 19,235  |   |        |         | 39,225  | 
|Corporate expenses                                                               |                     |                                | 3,902  |                    |         |                   | 3,913  |           |         |           | 11,647 |         |         |   | 11,148 |        
|Amortization of intangible assets                                                |                     |                                | 119    |                    |         |                   | 4,075  |           |         |           | 369    |         |         |   | 12,269 |        
|Restructuring and rationalization charges                                        |                     |                                | 1,290  |                    |         |                   | 474    |           |         |           | 3,134  |         |         |   | 4,833  |        
|Interest expense                                                                 |                     |                                | 4,275  |                    |         |                   | 4,638  |           |         |           | 12,972 |         |         |   | 14,467 |        
|                                                                                 |                     |                                |        |                    |         |                   |        |           |         |           |        |         |         |   |        |        
|Loss before income taxes and cumulative
effect of change in accounting principle |                     | $                              | (2,693 | )                  |         | $                 | (2,070 | )         |         | $         | (8,887 | )       |         | $ | (3,492 | )      
|                                                                                 |                     |                                |        |                    |         |                   |        |           |         |           |        |         |         |   |        |        

The following table sets forth selected identifiable assets by segment at
September 29, 2002 and December 30, 2001:

|                         |                     |                                |   |           |          |          |   |        |        | 
|------------------------ | ------------------- | ------------------------------ | - | --------- | -------- | -------- | - | ------ | ------ | 
|                         |                     |                                |   | September | December
|                         |                     |                                |   | 29, 2002  |          | 30, 2001
|                         |                     |                                |   |           |          |         
|Accounts receivable, net |                     |                                |   |           |          |          |   |       
|                         | IT Services         |                                | $ | 51,234    |          |          | $ | 59,313 |       
|                         | Commercial Staffing |                                |   | 31,218    |          |          |   | 27,775 |       
|                         | Corporate           |                                |   | 101       |          |          |   |       |       
|                         |                     |                                |   |           |          |          |   |       
|                         |                     | Total accounts receivable, net |   | $         | 82,553   |          |   | $      | 87,088 | 
|                         |                     |                                |   |           |          |          |   |       

11



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(6)  Subsequent Event  Credit
Facility Amendment and Financial Restructuring

On November 12, 2002, the Company announced an
Amendment to the Credit Facility and an agreement-in-principle for a
financial restructuring. Under the Credit Facility amendment, the
Credit Facility lenders agreed to replace the existing financial
covenants in the Credit Facility with a minimum EBITDA requirement,
calculated monthly on a three-month trailing basis, for the period
from November 12, 2002 through June 30, 2003. Minimum EBITDA for each
month in that period is required to be as follows: $3,449; $2,851;
$2,029; $1,771; $2,737; $2,997; $3,713; and, $3,679. The Credit
Facility lenders also increased the permitted add backs to EBITDA
for restructuring charges to include (i) an additional $3,000 of
operational restructuring and rationalization charges, and (ii) additional
fees and expenses of up to $5,000 in the aggregate that are incurred
after September 29, 2002 in connection with the financial
restructuring transaction.

The financial restructuring agreement in principle
is between the Company and the holders of approximately 42% of its
Credit Facility debt and approximately 57% of its Notes, and
provides for a restructuring of the outstanding indebtedness of the
Company. The Company reported that it and the Credit Facility lenders who have
signed the agreement in principle have also secured options from the
non-participating Credit Facility lenders to acquire the non-participating
Credit Facility lenders interests in the Credit Facility. As a result,
parties to the agreement in principle can ensure participation in the
restructuring by the holders of 100% of the Companys outstanding Credit
Facility debt. Key elements of the proposed restructuring are:



| |  |  | A registered bond exchange offer and consent solicitation, in
which PGAs $115,000 of outstanding 5.75% Convertible
Subordinated Notes and accrued interest would be exchanged for cash
equal to six months of interest on these notes and newly issued PGA
common stock representing 83% of PGAs outstanding equity. PGA also
expects to pay the regularly scheduled January 2003 interest payment
due on these 5.75% notes in the ordinary course of business.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | Retention by current stockholders of their existing common
stock, which after the restructuring would represent 17% of the
Companys outstanding equity.                                                                                                                                                                                                                                                                                                         
| |  |  | Retirement of the outstanding Credit Facility debt (currently
estimated to be $103,000) at a discount in exchange for cash
and new subordinated notes and common stock purchase warrants.                                                                                                                                                                                                                                                                        
| |  |  | An immediate reduction in the maximum availability under the
Credit Facility from $136,000 to $114,000.                                                                                                                                                                                                                                                                                                                                                          
| |  |  | A reverse stock split to adjust the post-restructuring share
capitalization.                                                                                                                                                                                                                                                                                                                                                                                     
| |  |  | A securityholders agreement between the Company and certain
major stockholders to set the size of the Companys board of
directors at seven following the restructuring and provide for the
designation of two representatives of the new major stockholders
(and the nomination of four independent directors) to serve on the
board.                                                                                                                          

If the restructuring as outlined is not completed within 150 days after
the execution of definitive transaction agreements, the agreement-in-principle
contemplates that the Company will file a bankruptcy petition under Chapter 11
of the United States Bankruptcy Code and pursue a specified bankruptcy plan of
reorganization that would be supported by the parties to the agreement in
principle.

PGA expects to close the financial restructuring in the first half of
2003. Consummation of the restructuring is subject to completion of definitive
agreements, due diligence and a number of other conditions and, as a result,
there can be no assurance that the Company will be able to complete the
proposed restructuring as planned or at all. For a more complete description
of the restructuring, see the Companys Report on Form 8-K (and the related
exhibits) dated November 12, 2002.

12



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##### 



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

INTRODUCTION

The following discussion and analysis should be read in conjunction with
the Companys unaudited consolidated financial statements and related notes
appearing elsewhere in this report. The Companys fiscal year ends on the
Sunday nearest to December 31.

FORWARD-LOOKING INFORMATION

In addition to historical information, this report, including
Managements Discussion and Analysis of Financial Condition and Results of
Operations, contains certain information that may be deemed forward-looking
statements, within the meaning of Section 21E of the Securities Exchange Act of
1934, regarding events and financial trends, that may affect the Companys
future operating results or financial position and that are based on
managements belief and assumptions, as well as information currently available
to management. These statements may be identified by words such as estimate,
forecast, plan, intend, believe, should, expect, anticipate, or
variations or negatives thereof, or by similar or comparable words or phrases.
Forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed in such
statements. These risks and uncertainties include, but are not limited to, the
following: the risk that the Company may not be able to complete the proposed
financial restructuring as planned or at all; the risk of New York Stock
Exchange delisting due to current deviations from quantitative listing
standards; changes in levels of unemployment and other economic conditions in
the United States, or in particular regions or industries; adverse changes in
credit and capital markets conditions that may affect the Companys ability to
obtain financing or refinancing on favorable terms; economic declines that
affect the Companys liquidity or ability to comply with its loan covenants or
covenants to be included in the definitive agreements contemplated in the
agreement in principle; reductions in corporate information technology spending
levels; adverse changes to managements periodic estimates of future cash flows
that may affect managements assessment of its ability to fully recover its
intangible assets; reductions in the supply of qualified candidates for
temporary employment or the Companys ability to attract qualified candidates;
the entry of new competitors into the marketplace or expansion by existing
competitors; the ability of the Company to maintain existing client
relationships and attract new clients in the context of changing economic or
competitive conditions; the impact of competitive pressures, including any
change in the demand for its services, or the Companys ability to maintain its
profit margins; the possibility of the Company incurring liability for the
activities of its temporary employees or for events impacting its temporary
employees on clients premises; the Companys success in attracting, training
and retaining qualified management personnel and other staff employees; whether
governments will impose additional regulations or licensing requirements on
personnel services businesses in particular or on employer/employee
relationships in general, and other matters discussed in this report and the
Companys other filings with the Securities and Exchange Commission. Because
long-term contracts are not a significant part of the Companys business,
future results cannot be reliably predicted by considering past trends or
extrapolating past results. The Company undertakes no obligation to update
information contained in this report.

13



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OVERVIEW

The Company is organized into two Divisions: the Information Technology
Services Division (IT Services), which provides information technology
staffing and consulting services in a range of computer-related disciplines and
technology tools for human capital management, and the Commercial Staffing
Services Division (Commercial Staffing), which provides a variety of
temporary office, clerical, accounting and finance, light technical and light
industrial staffing services.
Approximately 51% of the Companys third quarter 2002 revenues came from IT
Services and 49% came from Commercial Staffing.

The Information Technology Services business is affected by the timing of
holidays and seasonal vacation patterns, generally resulting in lower IT
revenues and gross margins in the fourth quarter of each year. The Commercial
Staffing business is subject to the seasonal impact of summer and holiday
employment trends. Typically, the Commercial Staffing business is stronger in
the second half of each calendar year than in the first half, subject to
general economic conditions.

Effective at the beginning of 2002, the Company adopted Statement of
Financial Accounting Standards No. 142 (SFAS 142), Goodwill and Other
Intangible Assets. The provisions of SFAS 142 prohibit the amortization of
goodwill for indefinite-lived intangible assets, which impacts the
comparability of the Companys operating results between years. While the
Company has not recognized any goodwill amortization in 2002, the Company
recorded $3.9 million and $11.6 million of goodwill amortization for the three
and nine months ended September 29, 2002, respectively. See Note 2,
Intangible Assets and Change in Accounting Principle to the Unaudited
Consolidated Financial Statements.

RESULTS OF OPERATIONS

Quarter Ended September 29, 2002 Versus Quarter Ended September 30, 2001

Revenues.Total revenues decreased 20.7% to $137.7 million in the third
quarter of 2002 from $173.6 million in the third quarter of 2001. IT Services
revenues decreased 32.6% primarily as the result of the continuing
industry-wide slowdown in customer demand for IT staffing services. IT
Services billable consultants on assignment declined from approximately 2,200
at the end of the second quarter of 2002 to approximately 2,100 at the end of
the third quarter. Commercial Staffing revenues declined 2.9% to $67.6 million
in the third quarter of 2002 primarily due to a weaker economic climate, which
resulted in declines in permanent placement revenues and the retail component
of the Companys temporary staffing business. Permanent placement revenues
were 3.1% of Commercial Staffing revenues in the third quarter of 2002, down
from 5.2% in 2001, and the retail component of temporary staffing declined to
67.6% of Commercial Staffing temporary revenues in the third quarter of 2002,
down from 74.6% in 2001. The Company does not expect improvements in demand
for its IT services until 2003 due to expected ongoing uncertain economic
conditions, particularly in the technology sectors. In addition, there can be
no assurance that IT Services revenues will increase as the broader economy
improves.

14



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Direct Costs of Services and Gross Profit.Direct costs, consisting of
payroll and related expenses of consultants and temporary workers, decreased
18.1% to $106.0 million in the third quarter of 2002 on the lower revenues.
Gross profit decreased 28.1% to $31.7 million on the lower revenues. Gross
profit as a percentage of revenue decreased 240 basis points to 23.0% in the
third quarter of 2002 from 25.4% in the third quarter of 2001. This decrease
primarily was the result of the continued softening in the higher margin
sectors of the staffing and consulting businesses, the significant decline in
the retail component of temporary staffing and permanent placement services in
Commercial Staffing and downward bill rate pressure imposed by many of the
Companys larger customers, which are expected to negatively impact gross
profit for the foreseeable future.

Operating Expenses.Operating expenses, consisting of selling, general
and administrative expenses, before restructuring and rationalization charges
and depreciation and amortization expense, decreased 29.8% to $28.8 million in
the third quarter of 2002 from $41.1 million in 2001. The decrease was
primarily due to the Companys aggressive cost containment program, including
its workforce reduction and office consolidation initiatives. Approximately
36.4% of the Companys permanent workforce has been eliminated since the
beginning of 2001. Also, variable or incentive compensation declined due to
lower revenues and operating margins. As a percentage of revenues, selling,
general and administrative expenses decreased to 19.8% in the third quarter of
2002 from 20.2% in 2001. In addition, depreciation and amortization expense
decreased to 1.2% of revenues in the third quarter of 2002 from 3.4% in 2001
primarily due to the change in accounting principle eliminating goodwill
amortization in 2002. Goodwill amortization expense was $3.9 million in the
third quarter of 2001.

Restructuring and Rationalization Charges.Beginning in 2001, the Company
implemented a plan to restructure and rationalize certain operations. Pursuant
to this plan, the Company recorded charges totaling $1.3 million in the third
quarter of 2002. These charges were comprised of the following components:
employee severance of $0.4 million, property abandonment charges of $0.1
million, and other charges of $0.8 million.

Following is a summary of the accrued liability for cash restructuring and
rationalization charges for the quarter ended September 29, 2002:

|                                        |  |           |      |             |  |       |       |       |  |   |        |   |  |   |        |  
|--------------------------------------- |  | --------- | ---- | ----------- |  | ----- | ----- | ----- |  | - | ------ | - |  | - | ------ | -
|                                        |  | Employee  |      | Lease       |  |       |       |       |  |   |        |  
|                                        |  | Severance |      | Termination |  | Other |       | Total
|                                        |  |           |      |             |  |       |       |      
|Accrued liability
at June 30,
2002      |  | $         | 54   |             |  | $     | 2,705 |       |  | $ | 311    |   |  | $ | 3,070  |  
|Additions                               |  |           | 389  |             |  |       |      |       |  |   | 837    |   |  |   | 1,226  |  
|Cash payments                           |  |           | (408 | )           |  |       | (323  | )     |  |   | (1,096 | ) |  |   | (1,827 | )
|                                        |  |           |      |             |  |       |       |       |  |   |        |   |  |   |        |  
|Accrued liability
at September 29,
2002 |  | $         | 35   |             |  | $     | 2,382 |       |  | $ | 52     |   |  | $ | 2,469  |  
|                                        |  |           |      |             |  |       |       |       |  |   |        |   |  |   |        |  

Employee severance-related costs include the elimination of both
administrative and income-producing employees. Under the workforce reduction
plan, the Company terminated 10 employees in the third quarter of 2002,
increasing the total workforce reduction to approximately 36.4%, or 548
employees, since the beginning of 2001. Lease termination costs relate
primarily to office closures, branch consolidations and lease space reductions.
Other rationalization expenses of $0.8 million were recorded in the third
quarter of 2002 associated with professional services expenses, primarily
related to the financial restructuring and branding costs.

15



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Of the remaining accrued liability at September 29, 2002, the Company
expects to pay approximately $0.8 million over the next 12 months and the
balance, primarily lease termination payments, over the next eight years.

The Company expects to continue consolidating certain administrative
functions and operations in other geographic markets in which the Company
currently operates multiple branches and to downsize in selected other existing
locations, which will result in additional restructuring and rationalization
charges throughout 2003; however, the amount of such additional charges is not
currently determinable.

Interest Expense.Interest expense decreased 7.8% to $4.3 million in the
third quarter of 2002 from $4.6 million in 2001 due to lower borrowing levels
under the Companys bank revolving credit facility (the Credit Facility) and
decreases in interest rates. The average interest rate on borrowings was 7.3%
in the third quarter of 2002, down 50 basis points from 2001. See  
Liquidity and Capital Resources.

Provision (Benefit) for Income Taxes.The effective tax benefit rate of
20% in the third quarter of 2002 was lower than the U.S. federal statutory rate
of 35% primarily due to the impact of non-deductible expenses and the provision
of valuation allowances against deferred income tax assets. The Company
currently expects the effective tax benefit rate to continue at approximately
20% for the balance of 2002. Because the Company is providing a valuation
allowance against certain deferred tax assets, the effective tax benefit rate
could change if actual 2002 temporary differences vary from current estimates.
The income tax benefit recorded in the third quarter of 2001 was comprised of
the tax benefit related to the operating loss for the period.

RESULTS OF OPERATIONS

Nine Months Ended September 29, 2002 Versus Nine Months Ended September
30, 2001

Revenues.Total revenues decreased 27.0% to $421.5 million in the first
nine months of 2002 from $577.6 million in the first nine months of 2001. IT
Services revenues decreased 35.6% to $230.0 million in the first nine months of
2002 primarily as the result of the continuing industry-wide slowdown in
customer demand for IT staffing services. IT Services billable consultants on
assignment declined from approximately 2,500 at the end of 2001 to
approximately 2,100 at the end of the third quarter of 2002. Commercial
Staffing revenues declined 13.2% to $191.5 million in the first nine months of
2002 primarily due to the weak economic climate, which resulted in declines in
permanent placement revenues and the retail component of the Companys
temporary staffing business. Permanent placement revenues were 3.5% of
Commercial Staffing revenues in the first nine months of 2002, down from 7.0%
in 2001, and the retail component of temporary staffing declined to 68.2% of
Commercial Staffing temporary revenues in the first nine months of 2002, down
from 79.0% in 2001. The Company does not expect improvements in demand for its
IT services until 2003 due to expected ongoing uncertain economic conditions,
particularly in the technology sectors. In addition, there can be no assurance
that IT Services revenues will increase as the broader economy increases.

Direct Costs of Services and Gross Profit.Direct costs, consisting of
payroll and related expenses of consultants and temporary workers, decreased
24.1% to $322.6 million in the first nine months of 2002 on the lower revenues.
Gross profit decreased 35.3% to $98.8 million on the lower revenues. Gross
profit as a percentage of revenue decreased 290 basis points to 23.5% in the
first nine months of 2002 from 26.4% in the first nine months of 2001. This
decrease primarily was the result of the continued softening in the higher
margin sectors of the staffing and consulting businesses, the significant
decline in the retail component of temporary staffing and permanent placement
services in Commercial Staffing and downward bill rate pressure imposed by many
of the Companys larger customers, which are expected to negatively impact
gross profit for the foreseeable future.

16



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Operating Expenses.Operating expenses, consisting of selling, general
and administrative expenses, before restructuring and rationalization charges
and depreciation and amortization expense, decreased 33.1% to $91.6 million in
the first nine months of 2002 from $136.8 million in 2001. The decrease was
primarily due to the Companys aggressive cost containment program, including
its workforce reduction and office consolidation initiatives. Approximately
36.4% of the Companys permanent workforce has been eliminated since the
beginning of 2001. Also, variable or incentive compensation declined due to
lower revenues and operating margins. As a percentage of revenues, selling,
general and administrative expenses decreased to 20.5% in the first nine months
of 2002 from 20.6% in 2001. In addition, depreciation and amortization expense
decreased to 1.2% of revenues in the first nine months of 2002 from 3.1% in
2001 primarily due to the change in accounting principles eliminating goodwill
amortization in 2002. Goodwill amortization expense was $11.6 million in the
first nine months of 2001.

Restructuring and Rationalization Charges.Beginning in 2001 the Company
implemented a plan to restructure and rationalize certain operations. Pursuant
to this plan, the Company recorded charges totaling $3.1 million in the first
nine months of 2002. These charges were comprised of the following components:
employee severance of $1.2 million, lease termination charges of $0.2 million,
property abandonment charges of $0.1 and other charges of $1.6 million.

Following is a summary of the accrued liability for cash restructuring and
rationalization charges for the nine months ended September 29, 2002:

|                                        |  |           |        |             |  |       |       |       |  |   |        |   |  |   |        |  
|--------------------------------------- |  | --------- | ------ | ----------- |  | ----- | ----- | ----- |  | - | ------ | - |  | - | ------ | -
|                                        |  | Employee  |        | Lease       |  |       |       |       |  |   |        |  
|                                        |  | Severance |        | Termination |  | Other |       | Total
|                                        |  |           |        |             |  |       |       |      
|Accrued liability
at December 30,
2001  |  | $         | 42     |             |  | $     | 3,109 |       |  | $ | 583    |   |  | $ | 3,734  |  
|Additions                               |  |           | 1,240  |             |  |       | 201   |       |  |   | 1,646  |   |  |   | 3,087  |  
|Cash payments                           |  |           | (1,247 | )           |  |       | (928  | )     |  |   | (2,177 | ) |  |   | (4,352 | )
|                                        |  |           |        |             |  |       |       |       |  |   |        |   |  |   |        |  
|Accrued liability
at September 29,
2002 |  | $         | 35     |             |  | $     | 2,382 |       |  | $ | 52     |   |  | $ | 2,469  |  
|                                        |  |           |        |             |  |       |       |       |  |   |        |   |  |   |        |  

Employee severance-related costs include the elimination of both
administrative and income-producing employees. Under the workforce reduction
plan, the Company terminated 153 employees in the first nine months of 2002,
increasing the total workforce reduction to approximately 36.4%, or 548
employees, since the beginning of 2001. Lease termination costs relate
primarily to office closures, branch consolidations and lease space reductions.
Other rationalization expenses of $1.7 million were recorded in the first nine
months of 2002 associated with professional services expenses, primarily
related to the financial restructuring, and branding costs.

Of the remaining accrued liability at September 29, 2002, the Company
expects to pay approximately $0.8 million over the next 12 months and the
balance, primarily lease termination payments, over the next eight years.

The Company expects to continue consolidating certain administrative
functions and operations in other geographic markets in which the Company
currently operates multiple branches and to downsize in selected other existing
locations, which will result in additional restructuring and rationalization
charges throughout 2003; however, the amount of such additional charges is not
currently determinable.

17



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Interest Expense.Interest expense decreased 10.3% to $13.0 million in
the first nine months of 2002 from $14.5 million in 2001 due to lower borrowing
levels under the Companys bank revolving credit facility (the Credit
Facility) and decreases in interest rates. The average interest rate on
borrowings was 7.2% in the first nine months of 2002, down 40 basis points from
2001. See   Liquidity and Capital Resources.

Provision (Benefit) for Income Taxes.The income tax provision recorded
for the nine months ended September 29, 2002 reflects an income tax benefit of
$2.1 million related to its operating losses, computed at an effective rate of
approximately 23.6%. This benefit was offset by the charge of approximately
$5.2 million related to the adoption of SFAS 142, which has been recorded in
the restated first quarter results. The income tax benefit recorded for the
nine months ended September 30, 2001 included the tax benefit related to the
operating loss for the period and the $1.4 million tax benefit related to the
diminution in value in the Companys investment in CareerShop.com, which was
sold during the second quarter of 2001.

LIQUIDITY AND CAPITAL RESOURCES

With the reduction in the committed amount of the Companys Credit
Facility in connection with the proposed financial restructuring, the Companys
primary sources of cash are cash on hand, potential future tax refunds and cash
from operations. The Companys principal uses of cash are to repay debt and to
fund working capital and capital expenditures. The Company believes, subject to
the conditions and contingencies described below, that cash flow from
operations, cash on hand and potential future tax refunds will be adequate to
meet its diminished needs for working capital and its capital expenditures.

For the nine months ended September 29, 2002, cash provided by operating
activities was $23.3 million, primarily due to the receipt of $19.2 million in
recoverable income taxes in June 2002, compared with $37.3 million last year.
The Company had $25.1 million of cash on hand as of September 29, 2002. In the
aggregate, days sales outstanding decreased to 48 days at September 29, 2002
from 50 days at December 30, 2001. Cash provided by investing activities was
$2.6 million during the first nine months of 2002 due primarily to the cash
proceeds received from the sale of a business. Cash used for investing
activities of $10.6 million in the first nine months of 2001 related primarily
to the Companys contingent earn-out obligations and capital spending. The
Company completed its obligation to make additional earn-out payments in
October 2001. The Company has reduced its capital spending, and expects to
spend less than $2.0 million on management information systems and other
capital expenditures in 2002. Capital spending in the first nine months of
2002 was $1.2 million, down from $2.0 million in the first nine months of 2001.
Cash used for financing activities was $18.4 million in the first nine months
of 2002, down from $31.4 million last year, as the Company continued to focus
on debt reduction under the Credit Facility.

New tax legislation was passed by Congress in 2002 that allows the Company
to carry back federal net operating losses for five years, substantially
increasing the Companys ability to recover income taxes previously paid. As
of September 29, 2002, the Company had recorded $10.2 million of recoverable
income taxes. The Company is subject to periodic review by federal, state and
local taxing authorities in the ordinary course of business. Upon review,
certain tax positions taken by the Company could be challenged and adjustments
proposed that could result in additional taxes currently payable or a reduction
in the recoverable income taxes the Company expects to receive. Additionally,
there can be no assurance that proposed adjustments, if any, would not also
include assessments for penalties and interest.

18



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The Credit Facility
currently provides for
a $136.0 million revolving line of credit due January 2003. Assuming the Company
remains in compliance with the financial covenants set forth in the Credit
Facility agreement, as amended, and pays applicable extension fees, the Company
at its option may further extend the maturity of the facility in six-month
increments up through January 2004. As a result of the March 2002 amendments
and extensions, the outstanding balance under the Credit Facility, which was
$103.0 million at September 29, 2002, was classified as long-term in the consolidated
balance sheet. For the third quarter, applicable financial covenants in the
amended Credit Facility required quarterly maintenance of certain financial
ratios and minimum tangible net worth. The Company was in compliance with the
financial covenants of the amended Credit Facility agreement as of September
29, 2002. The amended Credit Facility also contains restrictions on the payment
of cash dividends on the Common Stock and places additional limitations on
share repurchases, acquisitions and capital expenditures. Finally, it includes
an Equity Appreciation Rights agreement (the EAR) whereby the Company must
pay a fee (the Rights Fee) to the lenders in the event of default under the
Credit Facility or if the Credit Facility has not been paid in full by January
1, 2004. The Rights Fee is the greater of 10% of the fair market value of the
Company (as defined in the EAR) as of the exercise date of the EAR or
$3.0 million.
Interest rates payable under the amended Credit Facility are currently set at
prime plus 250 basis points through December 2002, with increases during each
six-month period thereafter through January 2004. As of November 12, 2002, the
interest rate payable under the amended Credit Facility was 6.75%.

In connection with the agreement in principle and related agreements that
the Company has executed for its proposed financial restructuring, the Credit
Facility lenders have agreed to eliminate existing financial covenants in the
amended Credit Facility and to replace them with a new rolling, three-month
minimum EBITDA covenant for each month in the period from November 12, 2002
through and including June, 30, 2003. See Note 6, Subsequent
Event  Credit Facility Amendment and Financial Restructuring to the Unaudited Consolidated Financial Statements
included in this report.

The Companys business is highly dependent on trends in the US economy
overall, as well as other factors such as unemployment levels and trends in
corporate information technology spending. Several other factors that can
affect the Companys operating results and accordingly, its ability to generate
cash from operations, are discussed further under Forward Looking
Information. The already weak economic environment in the US was further
weakened by the events of September 11, 2001. As a result of these negative
economic conditions, the Company has experienced a substantial decline in
revenues in both the IT Services and Commercial Staffing businesses over the
past 21 months. Commercial Staffing has seen good quarter-over-quarter
growth recently; however, the reduced demand for IT services will continue to
affect the Companys business in 2002 and beyond, and the Company anticipates further
reductions in IT revenues. The Company expects the recent upward trends in
Commercial Staffing to continue and expects improvement in demand for its IT
services beginning later in 2003 based on expected improvements in the broader
economy. There can be no assurance as to the timing of any improvement in
demand for the Companys services or that such improvement will coincide with
improvements in the broader economy. While the Company has implemented
substantial cost reductions through its restructuring activities in 2001 and
2002, the reduced level of revenues is expected to have an adverse affect on
its operating income, EBITDA and net earnings for several quarters.

Based on the Companys projections, which reflect the
declining demand for the Companys services, offset by reductions in costs
principally resulting from reduced revenues the Companys restructuring and
rationalization activities, management believes that for the next 12
months the Company will be able to
maintain compliance with the substitute minimum EBITDA covenant for the period
through June 30, 2003 and the modified financial covenants set forth in the
March 2002

19



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amendments for periods after that. The Company also believes that the operating trends in
first nine months of 2002 support the key assumptions in its
projections. However, there can be no assurance that the economy or the Company will
perform as expected or that further economic declines will not adversely impact
the Companys ability to comply with its covenants. If actual results of
operations do not meet current forecasts, covenant violations could occur. If
the Company does violate covenants in the future, it would seek further waivers
and amendments from its lenders, but can give no assurance that any such
necessary waivers and amendments would be available at all or otherwise on
acceptable terms. If the Company were unable to obtain a waiver of future
covenant violations, the lenders would be entitled to require immediate
repayment of all amounts outstanding under the Credit Facility and, as
described above, payment of the Rights Fee. An acceleration of outstanding
amounts under the Credit Facility could also cause a default under, and permit
acceleration of, the Notes. In the event of one or more such defaults, the
Companys ongoing viability would be seriously threatened, and it would be
forced to evaluate a number of strategic alternatives, including a debt
restructuring or other reorganization (including bankruptcy protection), the
closure of certain locations or the sale of certain or all of its assets in
order to continue to fund its operations. In the current economic environment,
management believes that asset sales, if any, would be at depressed prices that
could be significantly lower than the net book value of assets sold and may not
be sufficient to satisfy the Companys liabilities.

The Company was advised in December 2001 by the New York Stock Exchange
(NYSE) that the Company had fallen below NYSE continued listing standards,
which require a minimum share price of not less than $1.00 and total market
capitalization of not less than $15.0 million. As required by the NYSE, the
Company submitted a plan to the Listings and Compliance Committee of the NYSE
demonstrating how the Company planned to comply with the listing standards by
the June 2002 deadline set by the NYSE. The NYSE accepted the plan and the
Company returned to compliance with the listing standards by the June deadline;
however, the goodwill impairment charge resulting from the Companys adoption
of SFAS 142 caused the Companys shareholders equity to fall below the
NYSE continued listing standard of $50.0 million and a decline in the trading
price of the Companys Common Stock resulted in a second and continuing
failure to comply with the NYSEs $1.00 per share minimum trading price
and minimum market capitalization requirements. Although NYSE rules and practices typically would provide the
Company certain grace periods within which to cure these violations, the NYSE
retains discretion to suspend the trading of a listed companys securities and
to seek delisting when the NYSE deems necessary for the protection of investors
or for failure to satisfy the terms of a compliance plan. The Company intends
to continue discussions with NYSE officials regarding its plans to restore
compliance with all listing standards and has advised the NYSE of its proposed
financial restructuring. Although the Company believes it can reach agreement
with the NYSE on a compliance plan, or alternatively obtain listing of its
shares on another national securities exchange or established over-the-counter
trading market following the restructuring, there can be no assurance that the
NYSE will continue to provide the necessary grace periods or otherwise agree
on the terms of a compliance plan or that the Company will be able to maintain
its listing on the NYSE or effect a new listing on another stock exchange. The
agreement in principle relating to the restructuring contemplates that the
Company will use best efforts to remain listed on the NYSE or to procure a new
stock exchange listing for the shares of common stock and warrants to be issued
in the restructuring.

Failure to maintain or effect such listings would constitute a repurchase
event under the Companys Notes and entitle each noteholder to demand repayment
of its Notes in full. In the event that the Company is unable to repay any
noteholder who makes such a demand following a repurchase event and also unable
to obtain waivers of such repurchase event from each affected noteholder,
events of default could occur under the Notes and the Credit Facility (although
the Credit Facility lenders have waived these defaults through and including
June 30, 2003) and the

20



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noteholders could demand repayment of their respective
debt obligations in full. Additionally, and notwithstanding the waivers
provided by the Credit Facility lenders as reference above, in the event that
the noteholders accelerated the payment of the debt obligations evidenced by
the convertible notes, the Credit Facility lenders could demand repayment of
the Credit Facility in full and demand immediate repayment of the Rights Fee.

Financial Restructuring

The Company announced an agreement-in-principle with certain of its Credit
Facility lenders and certain holders of its Notes to restructure the
outstanding indebtedness of the Company. See Note 6, Subsequent
Event 
Credit Facility Amendment and Financial Restructuring to the Unaudited Consolidated Financial Statements.
For a more complete description of the restructuring, see the Companys Report
on Form 8-K (and related exhibits) dated November 12, 2002 as filed with the
Securities and Exchange Commission.

Upon completion of definitive restructuring agreements related to the
restructuring, the Company intends to file a registration statement relating to
the note exchange offer and consent solicitation and the warrants to be issued
in connection with the new subordinated notes, and a preliminary proxy
statement and related proxy materials with respect to the necessary stockholder
approvals. These filings will contain important information about the Company,
the exchange offer and consent solicitation, the matters to be presented for
stockholder approval and related matters. Current noteholders, stockholders
and other interested parties are urged to read the Companys filings with the
SEC, including the registration statement and proxy materials once they are
filed, for information regarding the Company, the note exchange offer, the
consent solicitation and the matters to be presented for stockholder approval.
The prospectus and consent solicitation, the related letter of transmittal and
certain other documents related to the exchange offer will be made available to
all current noteholders and the proxy statement, proxy card and other materials
relating to the solicitation of stockholder approval for these transactions
will be made available to all holders of common stock as of the record date for
the special meeting of stockholders called to consider these matters, in each
case, at no expense to the noteholders or the stockholders. These documents
will also be available at no charge at the SECs website at http://www.sec.gov.
The shares of common stock to be offered in the note exchange offer may not be
sold prior to the time that the Companys registration statements become
effective. Nothing in this report shall constitute an offer to sell or the
solicitation of an offer to buy in any state where such offer, solicitation or
sale would be unlawful.

This description of PGAs financial restructuring contains certain
forward-looking statements, including statements regarding the completion of
the restructuring and the expected impact of the restructuring on the Companys
financial condition. Forward-looking statements involve known and unknown
risks and uncertainties, which may cause the Companys actual results in future
periods to differ materially from forecasted results. A number of factors,
including those identified below and those identified in the section labeled
Forward-looking Information above, could adversely affect the Companys
ability to complete the financial restructuring or obtain the results that the
Company expects: whether the participating Credit Facility lenders exercise their option
to purchase the non-participating Credit Facility lenders
interests in the Credit Facility, the ability of the Company to enter into definitive
transaction agreements with the parties to the agreement in principle to effect
the transactions described in the agreement in principle; the Companys ability
to satisfy timely the conditions to the restructuring and the exchange offer;
acceptance of the exchange offer by holders of no less than 98% of the
outstanding 5.75% convertible notes; and the Companys ability to obtain timely
approval of these transactions from its stockholders.

21



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##### 



RECENT ACCOUNTING PRONOUNCEMENTS

In April, 2002, the FASB issued Statement of Financial Accounting
Standards (SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections as of April
2002. This statement contains a number of changes under existing GAAP,
including the elimination of extraordinary item classification of debt
extinguishments that was previously required under SFAS 4. The provisions of
this Statement related to the rescission of Statement 4 shall be applied in
fiscal years beginning after May 15, 2002 with early adoption encouraged. The
Company will evaluate the impact of this new standard on its accounting and
reporting for the proposed debt restructuring (see Note 6, Subsequent Event 
Credit Facility Amendment and Financial Restructuring to the unaudited consolidated financial statements).

In June 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 146 (SFAS 146), Accounting for Costs
Associated with Exit or Disposal Activities which nullifies Emerging Issues
Task Force Issue No. 94-3 (Issue 94-3), Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring). SFAS 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred. Under Issue 94-3, a liability for an exit cost
as defined in Issue 94-3 was recognized at the date of an entitys commitment
to an exit plan. The provisions of SFAS 146 are effective for exit or disposal
activities that are initiated after December 31, 2002, with early application
encouraged. The Company does not expect that adoption of this statement to
have a material impact on the Companys results of operations, financial
position or cash flows.

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Companys outstanding debt under the Credit Facility at September 29,
2002, was $103.0 million. Interest on borrowings under the Credit Facility is
based on the prime rate plus a variable margin. Based on the outstanding
balance at September 29, 2002, a change of 1% in the interest rate would cause
a change in interest expense of approximately $1.0 million on an annual basis.

The Company also is subject to market risk associated with the EAR
agreement as discussed above.

ITEM 4.        CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this quarterly report on Form
10-Q, the Company evaluated the effectiveness of the design and operation of
its disclosure controls and procedures (disclosure controls), and its
internal controls and procedures for financial reporting (internal
controls). Disclosure controls mean those controls and other procedures that
are designed for the purpose of ensuring that information required to be
disclosed in the Companys reports filed under the Securities Exchange Act of
1934, such as this quarterly report, is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms.
Internal controls are procedures designed for the purpose of providing
reasonable assurance that the Companys transactions are properly authorized,
its assets are safeguarded against unauthorized or improper use and its
transactions are properly recorded and reported, all to permit the preparation
of the Companys financial statements in conformity with generally accepted
accounting principles. This evaluation was performed under the supervision and
with the participation of management, including the Companys Chief Executive
Officer and Chief Financial Officer.

22



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##### 



Immediately following the signature pages of this quarterly report are
certifications of the Companys Chief Executive Officer and Chief
Financial Officer, which are required to be furnished by SEC rules adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. The information
discussed in this section of this quarterly report relates to the evaluations
of disclosure controls and internal controls referenced in these certifications
and should be read in conjunction with these certifications.

The Companys management, including our Chief Executive Officer and Chief
Financial Officer, does not expect that the Companys disclosure controls or
our internal controls will prevent or detect all error and all fraud. A
control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the reality of
resource constraints; accordingly the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and possible misstatements due to fraud or error, if any, within
the Company have been detected. Among the inherent limitations in controls are
the potential for erroneous judgments and decisions or simple errors or
mistakes in the chain of recording, processing, summarizing or reporting
information. Additionally, controls can be circumvented by the intentional
acts of individuals or multiple persons acting in concert, or by management
override. The design of any system of controls also is based in part on
assumptions about the likelihood of future events, and there can be no
assurance that the Companys controls as designed will succeed in achieving
their stated goals under all potential future conditions; over time, controls
may become inadequate because of changes in conditions, or the degree of
compliance with the policies or procedures may deteriorate.

In the process of the evaluating the Companys disclosure controls and
internal controls, management sought, among other things, to determine whether there
were any significant deficiencies or material weaknesses in internal
controls, or whether the Company had identified any acts of fraud involving
personnel who have a significant role in the Companys internal controls. Part
of the certification of the Chief Executive Officer and Chief Financial Officer
included in the signature pages to this quarterly report requires these officers
to make disclosures to the Audit Committee of our Board of Directors and to our
independent auditors regarding these matters. In the professional auditing
literature, significant deficiencies are referred to as reportable
conditions; these are control issues that could have a significant adverse
effect on the ability to record, process, summarize and report financial data
in the financial statements. A material weakness is defined in the auditing
literature as a particularly serious reportable condition where the internal
control does not reduce to a relatively low level the risk that misstatements
caused by error or fraud may occur in amounts that would be material in
relation to the financial statements and not be detected within a timely period
by employees in the normal course of performing their assigned functions.

In accordance with SEC requirements, the Companys Chief Executive Officer
and Chief Financial Officer note that, since the date of the evaluation
discussed above, there have been no significant changes in the Companys
internal controls or in other factors that could significantly affect its
internal controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.

23



---



##### 



Based on the evaluation discussed above, the Chief Executive Officer and
Chief Financial Officer have concluded that, subject to the limitations noted
above, the Companys disclosure controls are effective to timely alert
management, including the Chief Executive Officer and Chief Financial Officer,
to material information relating to the Company and its consolidated
subsidiaries, required to be included in the Companys reports filed under the
Securities Exchange Act of 1934.

PART II  OTHER INFORMATION

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



|(a) |  | Exhibits  The exhibits filed with or incorporated by reference into
this Form
10-Q are set forth in the Exhibit Index, which immediately precedes the
exhibits to this report.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Reports on Form 8-K
 Report on Form 8-K dated November 12, 2002 describing the
Credit Facility Amendment and the Company's proposed Financial
Restructuring.                  

24



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##### 



SIGNATURES

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

|                        |  |                                               |  |                                                    
|----------------------- |  | --------------------------------------------- |  | ---------------------------------------------------
|                        |  | PERSONNEL GROUP OF AMERICA, INC.
(Registrant)
|                        |  |                                               |  |                                                    
|Date: November 13, 2002 |  | By:                                           |  | /s/ Larry L. Enterline                             
|                        |  |                                               |  |                                                    
|                        |  |                                               |  | Larry L. Enterline
Chief Executive Officer         
|                        |  |                                               |  |                                                    
|Date: November 13, 2002 |  | By:                                           |  | /s/ James C. Hunt                                  
|                        |  |                                               |  |                                                    
|                        |  |                                               |  | James C. Hunt
President and Chief Financial Officer

25



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##### 



CERTIFICATIONS

I, Larry L. Enterline, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Personnel Group
of America, Inc. (the registrant);

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                        |  |                        | 
|----------------------- |  | ---------------------- | 
|Date: November 13, 2002 |  | /s/ Larry L. Enterline
|                        |  |                       
|                        |  | Larry L. Enterline    

26



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##### 



CERTIFICATIONS

I, James C. Hunt, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Personnel Group
of America, Inc. (the registrant);

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                        |  |                   | 
|----------------------- |  | ----------------- | 
|Date: November 13, 2002 |  | /s/ James C. Hunt
|                        |  |                  
|                        |  | James C. Hunt    

27



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##### 



EXHIBIT INDEX

|        |  |                                                                                           |  |                  |      |                  |  |                             
|------- |  | ----------------------------------------------------------------------------------------- |  | ---------------- | ---- | ---------------- |  | ----------------------------
|        |  |                                                                                           |  | Filed            |      |                 
|        |  |                                                                                           |  | Herewith(*), or  |      |                 
|        |  |                                                                                           |  | Incorporated by  |      |                 
|        |  |                                                                                           |  | Reference from   |      |                 
|Exhibit |  |                                                                                           |  | Previous Exhibit |      | Company Reg. No.
|Number  |  | Description                                                                               |  | Number           |      | or Report       
|        |  |                                                                                           |  |                  |      |                 
|3.1     |  | Restated Certificate of
Incorporation of the Company, as
amended                          |  |                  | 3.1  |                  |  | 333-31863                   
|        |  |                                                                                           |  |                  |      |                  |  |                             
|3.2     |  | Amended and Restated Bylaws of the
Company                                                |  |                  | 3.2  |                  |  | 33-95228                    
|        |  |                                                                                           |  |                  |      |                  |  |                             
|4.0     |  | Specimen Stock Certificate                                                                |  |                  | 4.0  |                  |  | 33-95228                    
|        |  |                                                                                           |  |                  |      |                  |  |                             
|4.1     |  | Rights Agreement between the
Company and First Union National
Bank (as Successor Trustee) |  |                  | 1    |                  |  | 0-27792                     
|        |  |                                                                                           |  |                  |      |                  |  |                             
|4.2     |  | First Amendment to Rights Agreement                                                       |  |                  | 4.1  |                  |  | 8-K filed 12/31/01          
|        |  |                                                                                           |  |                  |      |                  |  |                             
|4.3     |  | Indenture between the Company and
HSBC Bank USA, as Successor
Trustee                     |  |                  | 4.2  |                  |  | 333-31863                   
|        |  |                                                                                           |  |                  |      |                  |  |                             
|4.4     |  | Form of Note Certificate for
5-3/4% Convertible Subordinated
Notes                        |  |                  | 4.3  |                  |  | 333-31863                   
|        |  |                                                                                           |  |                  |      |                  |  |                             
|10.1+   |  | 1995 Equity Participation Plan, as
amended                                                |  |                  | 10.1 |                  |  | 333-31863                   
|        |  |                                                                                           |  |                  |      |                  |  |                             
|10.2+   |  | Amended and Restated Management
Incentive Compensation Plan                               |  |                  | 10.2 |                  |  | 10-K for year
ended 1/3/99  
|        |  |                                                                                           |  |                  |      |                  |  |                             
|10.3+   |  | 2001 Non-Qualified Employee Stock
Purchase Plan                                           |  |                  | 4.1  |                  |  | 333-66334                   
|        |  |                                                                                           |  |                  |      |                  |  |                             
|10.4#+  |  | Director and Officer
Indemnification Agreement of James
V. Napier                         |  |                  | 10.3 |                  |  | 10-K for year
ended 12/31/95
|        |  |                                                                                           |  |                  |      |                  |  |                             
|10.5+   |  | Letter of Employment between the
Company and Larry L. Enterline                           |  |                  | 10.5 |                  |  | 10-K for year
ended 12/31/00
|        |  |                                                                                           |  |                  |      |                  |  |                             
|10.6+   |  | Supplemental Retirement Plan for
Edward P. Drudge, Jr.                                    |  |                  | 10.7 |                  |  | 10-K for year
ended 1/2/00  
|        |  |                                                                                           |  |                  |      |                  |  |                             
|10.7+   |  | Form of Retirement Agreement
between the Company and Edward P.
Drudge, Jr.                |  |                  | 10.8 |                  |  | 10-K for year
ended 1/2/00  

28



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##### 



|        |  |                                                                                                                                                          |  |                  |       |                  |  |                             
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ----- | ---------------- |  | ----------------------------
|        |  |                                                                                                                                                          |  | Filed            |       |                 
|        |  |                                                                                                                                                          |  | Herewith(*), or  |       |                 
|        |  |                                                                                                                                                          |  | Incorporated by  |       |                 
|        |  |                                                                                                                                                          |  | Reference from   |       |                 
|Exhibit |  |                                                                                                                                                          |  | Previous Exhibit |       | Company Reg. No.
|Number  |  | Description                                                                                                                                              |  | Number           |       | or Report       
|        |  |                                                                                                                                                          |  |                  |       |                 
|10.8+   |  | Employment Agreement between the
Company and James C. Hunt                                                                                               |  |                  | 10.10 |                  |  | 10-K for year
ended 12/29/96
|        |  |                                                                                                                                                          |  |                  |       |                  |  |                             
|10.9+   |  | Employment Agreement between the
Company and Ken R. Bramlett, Jr.                                                                                        |  |                  | 10.13 |                  |  | 10-K for year
ended 12/29/96
|        |  |                                                                                                                                                          |  |                  |       |                  |  |                             
|10.10+  |  | Employment Agreement between the
Company and Michael H. Barker                                                                                           |  |                  | 10.9  |                  |  | 10-K for year
ended 1/3/99  
|        |  |                                                                                                                                                          |  |                  |       |                  |  |                             
|10.11+  |  | Employment Agreement between the
Company and Thomas M.
Wittenschlaeger                                                                                   |  |                  | 10.11 |                  |  | 10-K for year ended
12/30/01
|        |  |                                                                                                                                                          |  |                  |       |                  |  |                             
|10.12   |  | Amended and Restated Non-Qualified
Profit-Sharing Plan                                                                                                   |  |                  | 10.16 |                  |  | 10-K for year
ended 12/29/96
|        |  |                                                                                                                                                          |  |                  |       |                  |  |                             
|10.13+  |  | Directors Non-Qualified Deferred
Fee Plan                                                                                                               |  |                  | 10.12 |                  |  | 10-K for year
ended 12/28/97
|        |  |                                                                                                                                                          |  |                  |       |                  |  |                             
|10.14   |  | Amendment No. 4 to Amended and
Restated Credit Agreement among the
Company and its subsidiaries, the
lenders party thereto and Bank of
America, as Agent |  |                  | 99.2  |                  |  | 8-K filed 2/12/02           
|        |  |                                                                                                                                                          |  |                  |       |                  |  |                             
|10.15   |  | Equity Appreciation Rights Agreement                                                                                                                     |  |                  | 10.15 |                  |  | 8-K filed 2/12/02           
|        | 
|10.16   |  | Registration Rights Agreement between the
Company and the Initial Purchasers                                                                             |  |                  | 10.17 |                  |  | 333-31863                   
|        | 
|10.17   |  | Agreement in Principle for the Companys
Proposed Financial Restructuring                                                                                |  |                  | 99.2  |                  |  | 8-K dated 11/12/02          
|        | 
|10.18   |  | Purchase Option Agreements between the
Company, the Creditors party to the
Agreement in Principle and the Bank
Creditors                                 |  |                  | 99.3  |                  |  | 8-K dated 11/12/02          
|        | 
|99.1    |  | Amendment to the Companys Amended and
Restated Credit Agreement                                                                                         |  |                  | 99.1  |                  |  | 10-K for year ended
12/30/01

29



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##### 



|        |  |                                                                                         |  |                  |   |                  |  | 
|------- |  | --------------------------------------------------------------------------------------- |  | ---------------- | - | ---------------- |  | 
|        |  |                                                                                         |  | Filed            |   |                 
|        |  |                                                                                         |  | Herewith(*), or  |   |                 
|        |  |                                                                                         |  | Incorporated by  |   |                 
|        |  |                                                                                         |  | Reference from   |   |                 
|Exhibit |  |                                                                                         |  | Previous Exhibit |   | Company Reg. No.
|Number  |  | Description                                                                             |  | Number           |   | or Report       
|        |  |                                                                                         |  |                  |   |                 
|99.2    |  | Section 906 Certification of Larry
L. Enterline, Chief Executive
Officer of the Company |  |                  | * |                  |  | 
|        |  |                                                                                         |  |                  |   |                  |  | 
|99.3    |  | Section 906 Certification of James
C. Hunt, Chief Financial Officer of
the Company      |  |                  | * |                  |  | 



|# |  | This Exhibit is substantially identical to Director and Officer Indemnification Agreements (i) of the same date between the
Company and the following individuals: Kevin P. Egan, J. Roger King and William Simione, Jr.; (ii) dated April 17, 1998
between the Company and each of James C. Hunt and Ken R. Bramlett, Jr.; and (iii) dated August 9, 1999 between the Company
and Janice L. Scites.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|+ |  | Management contract or compensatory plan required to be filed under Item 14(c) of this
report and Item 601 of Regulation S-K of the Securities and Exchange Commission.                                                                                                                                                                                                                             

30