SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K

[X]   Annual report  pursuant to Section 13 or 15(d) of the Securities  Exchange
      Act of 1934 for the fiscal year ended December 31, 1998

                        COMMISSION FILE NUMBER: 0-24484

                        MODIS PROFESSIONAL SERVICES, INC.
             (Exact name of registrant as specified in its charter)

                Florida                                     59-3116655
--------------------------------------               -------------------------
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                          Identification No.)

 1 Independent Drive, Jacksonville, FL                       32202
----------------------------------------                 --------------
(Address of principal executive offices)                   (Zip Code)

      (Registrant's telephone number including area code): (904) 360-2000

Securities registered pursuant to Section 12(b) of the Act:

    Common Stock, Par Value $0.01 Per Share             New York Stock Exchange
           (Title of each class)                      (Name of each exchange on
                                                           which registered)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

Yes  X  No
    ---    ---

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

     The aggregate  market value of the voting stock held by  non-affiliates  of
the  Registrant  (assuming  for  these  purposes,  but not  conceding,  that all
executive officers and directors are "affiliates" of the Registrant), based upon
the closing  sale price of common stock on March 19, 1999 as reported by the New
York Stock Exchange, was approximately $915,729,141.

     As of March 19, 1999, the number of shares  outstanding of the Registrant's
common stock was 95,787,567.

     DOCUMENTS  INCORPORATED BY REFERENCE.  Portions of the  Registrant's  Proxy
Statement  for its 1999  Annual  Meeting of  shareholders  are  incorporated  by
reference in Part III.

    

<PAGE>


FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K  contains  forward-looking  statements  that are
subject to certain risks,  uncertainties  or assumptions  and may be affected by
certain  other  factors,  including  but not  limited  to the  specific  factors
discussed in Part II, Item 5 under  'Market for  Registrant's  Common Equity and
Related  Shareholder  Matters' and in Part II, Item 7 under'Fiscal 1998 compared
to Fiscal 1997 - Results from continuing  operations - revenue';  'Factors Which
May Impact Future  Results and Financial  Condition'  and under 'Other Matters -
Year 2000 Compliance.' In addition, except for historical facts, all information
provided in Part II item 7a. under  'Quantitative  and  qualitative  disclosures
about market risk' should be considered forward looking  statements.  Should one
or more of these risks,  uncertainties or other factors  materialize,  or should
underlying   assumptions  prove  incorrect,   actual  results,   performance  or
achievements  of the  Company  may  vary  materially  from any  future  results,
performance  or  achievements  expressed  or  implied  by  such  forward-looking
statements.

Forward-looking statements are based on beliefs and assumptions of the Company's
manangement  and  on  information   currently   available  to  such  management.
Forward-looking  statements  speak  only as of the date they are  made,  and the
Company  undertakes no obligation to update  publically  any of them in light of
new  information or future events.  Undue reliance  should not be placed on such
forward-looking   statements,   which   are  based  on   current   expectations.
Forward-looking statements are not guarantees of performance.
<PAGE>


                                     PART I
ITEM 1.   BUSINESS

GENERAL

Modis  Professional  Services,  Inc.  ('Modis'  or the  'Company')  is a  global
provider of professional business services,  including consulting,  outsourcing,
training  and  strategic  human  resource  solutions,  to Fortune 1000 and other
leading businesses. The Company's services are provided through its two business
divisions:  (i) Information  Technology,  which provides technology  consulting,
outsourcing  and  solutions  services,  and (ii)  Professional  Services,  which
provides personnel who perform specialized  services such as accounting,  legal,
technical  /  engineering,  scientific  and career  management  and  consulting.
Headquartered  in  Jacksonville,  Florida,  the  Company has  approximately  264
offices throughout the United States,  Canada, United Kingdom, and certain parts
of  continental  Europe.  Modis'  objective  is to  concentrate  its efforts and
resources on profitable, high-growth, high-end information technology ('IT') and
professional  services  that have the ability to  consistently  generate  strong
earnings. The Company has experienced substantial growth in revenue and earnings
driven  primarily  by (i)  acquisitions  of  other  information  technology  and
professional  services  companies;  (ii)  increased  business with the Company's
existing clients;  (iii) increased  penetration of existing and new markets; and
(iv) trends toward the increased outsourcing of non-core competency professional
business services.

The following table sets forth the respective  business  divisions' share of the
Company's consolidated revenue and gross profit for the fiscal years ending 1998
and 1997:

<TABLE>
<CAPTION>


            Division                         % of Consolidated Revenues            % of Consolidated Gross Profit
---------------------------------------      ---------------------------          -------------------------------
<S>                                          <C>                                  <C>
1998:
Information Technology                                  68.4%                                  64.5%
Professional Services                                   31.6%                                  35.5%

1997:
Information Technology                                  67.1%                                  63.7%
Professional Services                                   32.9%                                  36.3%
</TABLE>

Business Strategy
     
Modis  seeks  to  expand  its  revenues  and   profitability  by  expanding  its
Information  Technology and Professional  Services divisions through offering an
extensive range of specialized human resource and consulting  services through a
global network of branch offices.  The Company markets and delivers its services
with an  emphasis on local  entrepreneurial  spirit and  decision-making  at the
branch  level  combined  with strong  corporate,  technological  and  managerial
support.  The Company seeks to provide  innovative and  customized  solutions to
human resource needs and to expand the Company's  relationships with its Fortune
1000  clients.  Modis'  mission  is to set the  standard  for  the  professional
business  services  industry by  empowering  its  employees  to provide  quality
services.

Management  believes the Company's  concentration on the Information  Technology
and  Professional  Services  divisions  allows  faster  growth and higher profit
margins versus the more traditional  commercial  staffing  businesses due to the
specialized expertise of the professional personnel. Management's strategy is to
strengthen  its  position  as one  of the  few  companies  offering  information
technology  and  professional  services  on a  global  scale.  Modis'  principal
competitors  in the  information  technology  and  professional  services  areas
generally  consist of specialty  firms in each of those fields,  and to a lesser
extent,  diversified  business  services  firms.  The  Company's  strategy is to
continue to increase the overall  revenue and gross profits from the Information
Technology and Professional  Services divisions by expanding current specialties
into new geographic  markets,  identifying  and adding new practice  areas,  and
leveraging  wherever possible on existing specialty  strengths.  The Company has
significantly  expanded  its  information  technology  operations  since 1997 by
acquiring  approximately  twenty firms with information  technology  operations.
These acquisitions allow the Information  Technology division to provide clients
with services in the 48  contiguous  states,  Canada,  the United  Kingdom,  the
Middle  East  and  certain  parts  of  continental  Europe.  See  Note 14 to the
Company's audited  consolidated  financial  statements for further discussion of
the Company's foreign operations.


GROWTH STRATEGY

The Company pursues a focused growth strategy designed to achieve both increased
revenues and earnings. The key elements of this growth strategy are as follows:

Internal Growth

The Company's  internal  growth  strategy  includes:  (i)  positioning in market
locations,  customer segments and skill areas that value high levels of service;
(ii) increasing  penetration of existing  markets;  (iii) expanding into new and
contiguous  markets;  and (iv)  migrating to higher  margin  specialty  practice
areas.

Acquisitions

The Company's  growth strategy  includes the acquisition of existing  businesses
with complementary  service offerings,  strong management,  profitable operating
results and  recognized  local and regional  presence.  The Company has acquired
approximately thirty information  technology and professional services companies
since 1997. Acquisition criteria considered by management includes,  among other
things, financial performance,  a desirable market location,  significant market
share, new or expanded  specialties that can be added to the Company's  existing
lines of business, efficient operating systems and existing management that will
operate  effectively within the Company's  existing  managerial  structure.  The
Company believes that there is an opportunity, as a part of the consolidation in
the global  business  services  industry,  to focus on acquisitions of companies
that offer specialized  information  technology and other professional services.
The Company's management has had success in identifying  acquisition  candidates
that complement existing  businesses,  integrating them into existing operations
and utilizing them to enhance the Company's growth performance.



INFORMATION TECHNOLOGY DIVISION

Market Overview

The need for information  technology  services  continues to expand as companies
and governmental  agencies continue to require increased  performance from their
information  management systems.  The reliance on information systems to provide
companies with a competitive  advantage in the operation of their businesses has
prompted an exponential demand for information  technology services.  The demand
is  driven  by rapid  technology  shifts,  a move to  internet  and web  enabled
applications,  increased cost pressures,  skill shortages,  and certain benefits
from outsourcing the information services which allows a company to focus on its
core  competencies.  These market influences are expected to remain long term in
nature  and to  increase  the  reliance  upon  information  technology  services
companies to recruit,  train, and provide personnel and technology solutions and
outsourcing   services  as  companies  increase  their  demand  for  information
technology needs.

The supply of qualified information  technology  professionals  continues to lag
behind  the  global  demand  for  information  technology  services  and  it  is
increasingly  difficult  for corporate MIS  departments  to keep internal  staff
current with the latest  technologies  and skills.  This results in an increased
dependence on outside consulting,  outsourcing and contract technology services.
This  shortfall  of  professionals  has resulted in skill  shortages  and higher
costs, primarily in the newest technologies and high-end solutions sector of the
market.  This has  contributed  to an  increased  trend by  companies  to obtain
outside consulting services,  outsourcing and human resource solutions on a cost
efficient basis.

Division Operations

The Information  Technology  division,  which operates primarily under the modis
brand name,  accounted for 68.4% of the Company's  fiscal 1998  revenues.  Other
specialty  brand names in this division  include:  IT Link,  Hunterskil  Howard,
Software Knowledge, Cope, Computer Action, Actium, Executive's Monitor, Inc. and
Berger & Co. A full  range  of  information  technology  services  are  provided
through  the  Information   Technology  division's  two  business  units,  modis
Solutions and modis Consulting (collectively 'modis'), targeting a wide range of
industries,  including  banking and finance,  manufacturing,  public  utilities,
retail,   state  and  local  government,   technology,   telecommunication   and
transportation.  As of December 31, 1998, the  Information  Technology  division
operated 112 offices.

modis  Solutions'  wide range of services  includes IT planning and  strategies,
Enterprise  Resource Planning ('ERP') software  implementation,  object oriented
methodology,  web-enabled  services,  life cycle development,  data warehousing,
process  reengineering,  mainframe to  client-server  transition,  client-server
application  development,  custom software  application  development,  Year 2000
remediation and consulting,  management  consulting,  systems  integration,  and
other high-end IT practices.  

modis  Consulting  provides  staff  augmentation  for  application   development
services and brings in needed technical and project management processes to help
businesses achieve more predictable project execution and develop higher quality
systems more efficiently and effectively.  Application development teams include
software application developers,  system analysts,  database analysts,  software
specialists,    documentation    specialists,    project    managers,    systems
administrators,   and  software   engineers.   Outsourcing  of  programming  and
maintainence  of software  applications  and certain MIS  functions are provided
through both the Solutions and Consulting units.

Division Strategy

The  Information  Technology  division  pursues the  following  strategies in an
attempt to grow market share and further improve operating results:

Leverage  Recruiting  Power:  With a base of over 100 offices  worldwide,  modis
employs over 1,000 professional  technical  recruiters.  The resumes of nearly 1
million IT professionals are housed in the division's corporate databases.  This
recruiting  power gives modis the ability to compete  effectively for relatively
scarce IT  talent.  To support  the  recruiting  effort,  modis  offers  benefit
programs  which  include  medical,  dental and 401(k)  plans.  The division also
recruits  internationally and provides sponsorships for H-1B visas for qualified
candidates.

Emphasis on Specialty Solutions:  The Information Technology division focuses on
specialized  solutions  such  as ERP  implementation,  application  development,
process  reengineering  and data warehousing which generally offer greater gross
margins than other IT  services. 

Cross-Selling  Between Offices:  The Information  Technology division intends to
generate greater volumes of high-end  specialty  solution  services by utilizing
its 100+ branches as a distribution  channel for cross-selling.  This positively
affects  the  revenue  growth and  operating  margins of  branches  through  the
marketing of high hourly bill rates, and high value services.

Upgrade  Consultant  Skills:  The Information  Technology  division  attempts to
continually  upgrade the skills and market value of its consultants by providing
advanced specialty training through its IBT (internet based training) program in
such areas as ERP software  implementation,  object  oriented  technologies  and
internet/intranet  application development. This aids in consultant retention as
well as increasing hourly bill rates.


The Company completed the following  acquisitions in the Information  Technology
division for the year ended 1998:

<TABLE>
<CAPTION>
                                                                                          (UNAUDITED)
                                                                                          FISCAL 1997 
                                                                    ACQUISITION            REVENUES
                                                                        DATE             (IN MILLIONS)
                                                                    ----------------------------------
<S>                                                                 <C>                  <C>
Technology Services Corporation                                         1/98                $  9.2
Actium, Inc. and affiliates                                             3/98                $ 63.7
Avalon, Ltd.                                                            5/98                $  2.3
Consulting Partners, Inc.                                               8/98                $  9.5
Cope Consulting, Ltd. and affiliates                                    9/98                $ 16.1
Software Knowledge, Ltd., and affiliates                               11/98                $ 31.8

</TABLE>



<PAGE>

 
PROFESSIONAL SERVICES DIVISION

Market Overview

The need for  professional  services,  specifically  legal,  accounting,  career
management and consulting,  scientific,  and engineering / technical  solutions,
has  increased  rapidly in response to the  continuing  shift in the  respective
industries in which these professionals operate. The focus of large corporations
has migrated to a more flexible  professional  workforce which employs personnel
on a  skill-specific  or  project-specific  basis.  This shift has increased the
reliance  upon  business  service  partners  to be able to recruit  and  provide
solutions to these companies on a skill-specific or  project-specific  basis, or
an economic basis. The trend toward outsourcing these services is expected to be
long term in nature.

Division Operations

The Professional  Services division,  which accounted for 31.6% of the Company's
fiscal  1998  revenues,  provides  consulting,  outsourcing  and human  resource
solutions  for  accounting,  legal,  engineering  /  technical,  scientific  and
career management and consulting functions.


Accounting Unit

The Accounting  unit, which operates  primarily under the Accounting  Principals
brand name in the  United  States and under the  Badenoch  and Clark  brand name
throughout the United Kingdom,  provides professionals and project solutions and
support in finance/banking,  data processing and accounting, including auditors,
controllers/CFOs,   CPAs,   financial  analysts,   mortgage   processors,   loan
processors,  A/R and  A/P  clerks,  and  tax  accountants.  By  providing  these
accounting and financial  services,  the Company offers customers a reliable and
economic  resource for financial  professionals  to address  uncertain or uneven
work loads caused by special  projects or  unforeseen  emergencies.  The Company
entered the accounting  services  industry in 1995 through the  acquisition of a
small,  regional  accounting  firm  and has  since  increased  the  division  to
encompass  43 branches in the U.S.  and the United  Kingdom,  as of December 31,
1998.

Legal Unit

The Legal unit,  which operates  primarily under the Special Counsel brand name,
provides  litigation  support and consulting as well as human resource  services
and  solutions to corporate  legal  departments  and law firms.  These  services
include the provision of project  teams/individuals  consisting  of:  attorneys,
paralegals, legal secretaries, and law librarians to corporate legal departments
and private law firms for  litigation  support,  as well as project and document
management,  document imaging and coding, and trial presentation  services.  The
Company  primarily  competes with a few large  companies and many local firms as
this market is highly fragmented. The Company entered the legal industry in 1995
through the  acquisitions  of Attorneys  Per Diem, a Baltimore  operation,  (now
Special Counsel) in 1995, and Special Counsel,  Inc., a New York City operation.
As of December 31, 1998, the legal unit has 30 branches  operating  primarily in
the United States,  with  capability in the United Kingdom  through its Badenoch
and Clark brand.

Technical and Engineering Unit

The  Technical and  Engineering  unit,  collectively  called  ENTEGEE,  provides
drafters,  designers and engineers in the mechanical and electrical  engineering
fields as well as personnel  to the  chemical,  plastics  and other  industries.
ENTEGEE also provides high level  engineering and drafting  services,  including
the outsourcing of specialized design services such as architectural  design and
drafting,  tool designs and  computer-aided  design ('CAD') services.  ENTEGEE's
clients range from  transportation,  and aerospace to engineering  firms,  print
circuit board manufacturers, and other domestic and international businesses. As
of December 31, 1998,  the technical and  engineering  unit operates 22 branches
throughout the United States. 

Scientific Unit

The Scientific unit, Scientific Staffing,  provides trained and advanced-degreed
scientists,  laboratory  technicians  and support  peronnel to  companies in the
pharmaceutical, chemical, biotechnical,  environmental, health care and consumer
products  industries.  As of December 31, 1998, the Scientific  unit operates 24
branch offices throughout the United States.

Career Management and Consulting Unit

The Career  Management and Consulting  unit,  Manchester,  Inc. and  Diversified
Search,   Inc.  offers  corporate   outplacement   services,   including  career
counseling,  resume  development,  skills assessment,  interview and negotiating
techniques,  and  employee  guidance  counseling.  It also  provides  leadership
development,  career management consulting,  retained executive search and other
human  resource  services  to  the  banking,  financial  services,   healthcare,
pharmaceutical,  chemical and manufacturing  industries.  This unit started with
the acquisition of Manchester  Partners  International,  Inc.  ('Manchester') in
January  1997 and as of December  31,  1998 it operates  through a network of 33
branch offices throughout the United States.

Division Strategy

The Professional  Services Division pursues many strategies to grow market share
and  further  improve  operating  results.  Several  of the more  distinguishing
strategies are as follows:

Staff  Augmentation.  The business units of the Professional  Services  Division
each provide variable workforce solutions by providing  intellectual  capital to
meet the  changing  needs of the clients.  By  establishing  new  relationships,
forming  strategic  alliances  and  continually  improving  current  client  and
consultant  relationships management believes the traditional staff augmentation
will continually be an integral component to its service mix.

Specialized  Staffing  and  Specialty  Solution   Opportunities.   Many  of  the
Professional  Service Divisions offices provide specialty solutions and staffing
to its corporate clients beyond the traditional professional staff augmentation.
Management  believes  it can  leverage  these  practice  specialties  and client
relationships  within each  business unit by offering  specialized  services and
solutions to other existing and prospective  clients.  Examples include document
and trial management services,  leadership  development,  executive coaching and
specialized computer aided design services.

Professional  Development  Opportunities.  Enhancing the knowledge and skills of
the consultants and employees of the Professional Services Division based on the
needs of our clients will  strengthen  our overall  relationship  with  clients,
consultants,  and employees.  Generally, these strategies are intended to better
serve our clients and strengthen our  professionalism  throughout  each business
unit  which  management   believes  will  improve  overall   relationships   and
profitability by client and improve retention of consultants and employees.


The Company completed the following  acquisitions in  the  Professional Services
division for the year ended 1998:

<TABLE>
<CAPTION>
                                                                                          (UNAUDITED)
                                                                                          FISCAL 1997 
                                                                    ACQUISITION            REVENUES
                                                                        DATE             (IN MILLIONS)
                                                                    ----------------------------------
<S>                                                                 <C>                  <C>
Millard Consulting, Inc.                                                5/98                $  4.2
Diversified Search, Inc.                                                6/98                $  5.6
Colvin Resources Group - Fort Worth, Inc.                               7/98                $  1.9
Accountants Express of San Diego, Inc.                                  8/98                $  1.5


</TABLE>



BRANCH OFFICES

The Company delivers its services through a branch office network of 264 offices
primarily throughout the United States, and to a lesser extent,  Canada,  United
Kingdom,  and certain parts of continental Europe. The following table shows the
Company's  branch  offices as of the dates  indicated  (including  offices of an
acquired company only after such acquisition):

------------------------ ------------- ------------- ------------- -------------
Branch Offices:               1995          1996         1997          1998
------------------------ ------------- ------------- ------------- -------------
Information Technology           8            72          110           112
Professional Services           21            73          144           152
                               ---           ---          ---           ---
       Total                    29           145          254           264
------------------------ ------------- ------------- ------------- -------------



COMPETITION
     
The business  services  industry has grown  rapidly in recent years as companies
have utilized  business  service firms to provide value added solutions  ranging
from the  outsourcing of non-core  competencies to the recruitment of a flexible
workforce  able to provide a company  with the  unique  skills it does not house
internally.  Modis  believes that the  increasing  pressure  that  companies are
experiencing  to remain  competitive and efficient will cause companies to focus
their permanent  internal staff around their core  competencies  while expanding
their use of business service partners to provide strategic solutions to fulfill
their other  business  needs.  Modis also  believes  that the business  services
industry is highly  fragmented,  but is  experiencing  increasing  consolidation
largely in response to increased demand for companies to provide a wide range of
comprehensive  human  resource  solutions to regional and national  accounts.  A
large percentage of business services firms are local operations with fewer than
five  offices.  Within  local  markets,  these firms  actively  compete with the
Company  for  business,  and in most of these  markets no single  company  has a
dominant share of the market. The Company also competes with larger full-service
and specialized competitors in national, regional and local markets.

The  principal  national  competitors  of the Company's  Information  Technology
division include Keane Inc., Computer Horizons  Corporation,  Metamor Worldwide,
Inc., CIBER, Inc.,  Cambridge  Technology  Partners,  Inc.,  Technology Services
Corporation,  Whittman-Hart,  Inc., CAP Gemini, Inc., Sapient Corporation,  Data
Processing Resources  Corporation and, to an extent, the consulting divisions of
IBM and the 'Big Five' accounting firms. The principal  national  competitors of
the Company's  Professional  Services  division  include  Alternative  Resources
Corporation,  On Assignment,  Inc., the legal division of Kelly Services,  Inc.,
The Olsten Corporation, CDI Corporation, Romac International,  Inc., Acsys, Inc.
and Robert  Half  International,  Inc.  The  Company  believes  that the primary
competitive  factors in obtaining and retaining  clients are an understanding of
clients'  specific  job  requirements,   the  ability  to  provide  professional
personnel in a timely manner, the monitoring of quality of job performance,  and
the price of services.  The primary  competitive  factors in obtaining qualified
candidates for professional employment assignments are wages,  responsiveness to
work schedules,  continuing professional education opportunities,  and number of
hours of work available. Management believes that Modis is highly competitive in
all of these areas.


FULL-TIME EMPLOYEES

At March 19, 1999, the Company employed approximately 16,500 professional and IT
consultants,   and  approximately  3,000  corporate  employees  on  a  full-time
equivalent  basis.   Approximately  200  of  the  employees  work  at  corporate
headquarters.  Full-time employees are covered by life and disability  insurance
and receive health and other benefits.


GOVERNMENT REGULATIONS

Outside of the United States and Canada the personnel outsourcing segment of the
Company's  business  is  closely  regulated.   These  regulations  differ  among
countries but generally may regulate:  (i) the relationship  between the Company
and its temporary  employees;  (ii)  licensing and reporting  requirements;  and
(iii) types of operations  permitted.  Regulation  within the United States does
not materially impact the Company's operations.

SERVICE MARKS

The  Company or its  subsidiaries  maintain a number of service  marks and other
intangible rights,  including federally  registered service marks for MODIS (and
logo),  ACCOUNTING  PRINCIPALS (and logo),  MANCHESTER,  SCIENTIFIC STAFFING and
SPECIAL COUNSEL for its services generally. The Company or its subsidiaries have
applications  pending  before  the  Patent  and  Trademark  Office  for  federal
registration  of the service marks for MODIS  PROFESSIONAL  SERVICES (and logo),
MODIS SOLUTIONS (and logo), ENTEGEE,  MANAGEMENT PRINCIPALS and THE EXPERTS (and
logo).  The Company  plans to file  affidavits  of use and timely  renewals,  as
appropriate,  for these and other  intangible  rights it maintains.  The Company
also has  applications  with the  appropriate  authorities for the MODIS service
mark in Canada, the United Kingdom and the European Union.

SALE OF COMMERCIAL AND HEALTH CARE DIVISIONS

On  June  8,  1998,  the  Company's   subsidiary,   Strategix  Solutions,   Inc.
('Strategix')  filed a  registration  statement with the Securities and Exchange
Commission for its initial public  offering and subsequent  spin off (subject to
certain conditions) of the Company's Commercial  operations and its Teleservices
division.  Before the initial public offering was consummated,  the Company sold
its Commercial  operations and its Teleservices division to Randstad U.S., L.P.,
a subsidiary of Randstad Holding nv, for  approximately  $850 million,  prior to
any purchase price adjustment,  in cash. The sale was completed on September 27,
1998.

Effective  March 30, 1998, the Company sold the operations and certain assets of
its Health Care division for  consideration of $8.0 million,  consisting of $3.0
million in cash and $5.0 million in a note receivable due March 30, 2000 bearing
interest at 2% in excess of the prime rate.  In addition,  the Company  retained
the  accounts  receivable  of the Health Care  division of  approximately  $28.2
million.  

SEASONALITY

The Company's  quarterly  operating results are affected primarily by the number
of billing days in the quarter and the seasonality of its customers' businesses.
Demand  for the  Company's  services  has  historically  been  lower  during the
year-end  holidays  through  February of the  following  year,  showing  gradual
improvement  over the  remainder  of the year. 

ITEM 2.  PROPERTIES

The Company owns no material real property. It leases its corporate headquarters
as well as all but one of its branch offices. The branch office leases generally
run for three to five-year  terms.  The Company believes that its facilities are
generally  adequate for its needs and does not anticipate  difficulty  replacing
such facilities or locating additional facilities, if needed.

ITEM 3.  LEGAL PROCEEDINGS

The  Company,  in the  ordinary  course  of its  business,  is from time to time
threatened  with or  named as a  defendant  in  various  lawsuits.  The  Company
maintains  insurance in such amounts and with such coverage and  deductables  as
management  believes are  reasonable and prudent.  

There is no pending  litigation  that the  Company  believes is likely to have a
material adverse effect on the Company, its financial position or results of its
operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of the twelve months ended December 31, 1998.




                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

                          PRICE RANGE OF COMMON STOCK

The  following  table sets forth the  reported  high and low sales prices of the
Company's  Common Stock for the  quarters  indicated as reported on the New York
Stock  Exchange  under the symbol "ASI" through  September  30, 1998.  Effective
October 1, 1998,  subsequent to the Company's sale of its  commercial  division,
the Company  changed its trading  symbol and began trading on the New York Stock
Exchange under "MPS".

<TABLE>
<CAPTION>
<S>                                                                                    <C>                  <C>   

FISCAL YEAR 1997                                                                          High                 Low

         First Quarter........................................................           $25.25              $16.13

         Second Quarter.......................................................            26.63               15.75

         Third Quarter........................................................            31.50               23.31

         Fourth Quarter.......................................................            31.88               21.75

FISCAL YEAR 1998

         First Quarter........................................................           $35.00              $22.00

         Second Quarter.......................................................            38.86               29.38

         Third Quarter........................................................            33.25               10.50

         Fourth Quarter.......................................................            18.63                9.94
</TABLE>

In addition to the factors set forth below in 'FACTORS  WHICH MAY IMPACT  FUTURE
RESULTS OF THE COMPANY' under 'MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS', the price of the Company's Common Stock is
affected by  fluctuations  and  volatility in the  financial and equity  markets
generally and in the Company's industry sector in particular.

As of March 19,  1999,  there were  approximately  959  holders of record of the
Company's Common Stock.

No cash dividend or other cash distribution with respect to the Company's Common
Stock has ever been paid by the Company. The Company currently intends to retain
any earnings to provide for the operation and expansion of its business and does
not  anticipate  paying  any  cash  dividends  in the  foreseeable  future.  The
Company's  revolving  credit  facility  prohibits the payment of cash  dividends
without the lender's consent.

In March 1998, the Company issued 4,598,698 shares of Common Stock to the former
shareholders of Actium,  Inc. in exchange for 100% of the outstanding  shares of
Actium,  Inc. In addition,  in August 1998, the Company issued 874,815 shares of
Common Stock to the former shareholders of Consulting Partners, Inc. in exchange
for 100% of the outstanding shares of Consulting Partners,  Inc. These issuances
of securities were made in reliance on the exemption from registration  provided
under Section 4(2) of the  Securities  Act of 1933 as a transaction by an issuer
not  involving a public  offering.  All of the  securities  were acquired by the
recipients  for  investment  and  with no  view  toward  the  public  resale  or
distribution of the securities  without  registration.  There was not any public
solicitation and the issued stock certificates bore restrictive  legends. All of
such shares were  subsequently  registered  for sale by  effective  Registration
Statements on Form S-3 in accordance with the terms governing the acquisition of
Actium, Inc. and Consulting Partners, Inc.

On October 31, 1998, the Company's Board of Directors  authorized the repurchase
of up to $200.0  million  of the  Company's  Common  Stock  pursuant  to a share
buyback program. On December 4, 1998, the Company's Board of Directors increased
the authorized share buyback program by an additional  $110.0 million,  bringing
the total  authorized  repurchase  amount to $310.0 million.  As of December 31,
1998,  the Company had  repurchased  approximately  21,751,000  shares under the
share buyback  program.  Subsequent to December 31, 1998, the Company  completed
the program during February 1999, with the repurchase of  approximately  597,000
shares, bringing the total shares repurchased under the program to approximately
22,348,000  shares.  All of these  shares  were  retired  upon  purchase.  See '
LIQUIDITY AND CAPITAL RESOURCES' for additional information.




<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
                                                                   Fiscal Years Ended
                                       ------------------------------------------------------------------------------------
                                                   DEC. 31,        DEC. 31,        Dec. 31,       Dec. 31,       Jan. 1,
(in thousands, except per share amounts)             1998          1997 (1)        1996 (1)       1995 (1)       1995 (1)      
- -------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>            <C>             <C>            <C>            <C>
Statement of Income Data:
Revenue                                        $  1,702,113    $  1,164,124      $  580,016   $     90,489    $    36,312  
Cost of Revenue                                   1,234,537         835,609         426,814         62,382         25,448     
                                       ------------------------------------------------------------------------------------
Gross Profit                                        467,576         328,515         153,202         28,107         10,864      
Operating expenses                                  301,656         211,727         107,512         15,121          7,298       
Restructuring and impairment charges                 34,759               -               -              -              -   
Merger related costs                                      -               -          14,446              -              -   
                                       ------------------------------------------------------------------------------------
Operating income from continuing
   operations                                       131,161         116,788          31,244         12,986          3,566        
Other income, (expense), net                        (13,975)        (14,615)         (2,974)        (1,465)           (42)         
                                        ------------------------------------------------------------------------------------
Income from continuing operations
   before income taxes                              117,186         102,173          28,270         11,521          3,524       
Provision for income taxes                           48,326          38,803          19,693          1,333            874         
                                       ------------------------------------------------------------------------------------
Income from continuing operations                    68,860          63,370           8,577         10,188          2,650       
Discontinued operations:
Income from discontinued operations,
   net of income taxes                               30,020          38,663          22,633         18,384         12,472        
Gain on sale of discontinued operations,
   net of income taxes                              230,561               -               -              -              -      
                                       ------------------------------------------------------------------------------------
Income before extraordinary loss                    329,441         102,033          31,210         28,572         15,122       
Extraordinary loss on early
   extinguishment of debt, net of 
   income tax benefit                                (5,610)              -               -              -         (1,403)         
                                       ------------------------------------------------------------------------------------
Net income                                     $    323,831    $    102,033      $   31,210   $     28,572     $   13,719      
                                       ====================================================================================
Pro forma provision for income taxes                      -               -          (3,642)         3,144          1,592       
                                       ------------------------------------------------------------------------------------
Pro forma net income (2)                       $    323,831    $    102,033      $   34,852   $     25,428     $   12,127      
                                       ====================================================================================
Basic income (loss) per common share:
   From continuing operations                  $       0.63    $       0.62      $     0.09   $       0.16     $     0.05   
                                       ====================================================================================
   From discontinued operations                $       0.28    $       0.38      $     0.25   $       0.30     $     0.26  
                                       ====================================================================================
   From gain on sale (4)                       $       2.12    $       0.00      $     0.00   $       0.00     $     0.00
                                       ====================================================================================
   From extraordinary item                     $      (0.05)   $       0.00      $     0.00   $       0.00     $    (0.03)
                                       ====================================================================================
   Basic net income per common share           $       2.98    $       1.00      $     0.34   $       0.46     $     0.28   
                                       ====================================================================================
Diluted income (loss) per common share:
   From continuing operations                  $       0.61    $       0.59      $     0.09   $       0.16     $     0.05  
                                       ====================================================================================
   From discontinued operations                $       0.26    $       0.34      $     0.24   $       0.27     $     0.24  
                                       ====================================================================================
   From gain on sale (4)                       $       1.97    $       0.00      $     0.00   $       0.00     $     0.00
                                       ====================================================================================
   From extraordinary item                     $      (0.05)   $       0.00      $     0.00   $       0.00     $    (0.03)
                                       ====================================================================================
   Diluted net income per common share         $       2.79    $       0.93      $     0.33   $       0.43     $     0.26    
                                       ====================================================================================
Pro forma basic income (loss) per 
   common share:   
   From continuing operations                  $       0.63    $       0.62      $     0.13   $       0.11     $     0.02  
                                       ====================================================================================
   From discontinued operations                $       0.28    $       0.38      $     0.25   $       0.30     $     0.26    
                                       ====================================================================================
   From gain on sale (4)                       $       2.12    $       0.00      $     0.00   $       0.00     $     0.00
                                       ====================================================================================
   From extraordinary item                     $      (0.05)   $       0.00      $     0.00   $       0.00     $    (0.03)
                                       ====================================================================================  
   Pro forma basic net income per
     common share                              $       2.98    $       1.00      $     0.38   $       0.41     $     0.25   
                                       ====================================================================================
Pro forma diluted income (loss) per 
     common share:
   From continuing operations                  $       0.61    $       0.59      $     0.13   $       0.11     $     0.02  
                                       ====================================================================================
   From discontinued operations                $       0.26    $       0.34      $     0.24   $       0.27     $     0.24    
                                       ====================================================================================
   From gain on sale (4)                       $       1.97    $       0.00      $     0.00   $       0.00     $     0.00
                                       ====================================================================================
   From extraordinary item                     $      (0.05)   $       0.00      $     0.00   $       0.00     $    (0.03)
                                       ====================================================================================
   Pro forma diluted net income per
     common share                              $       2.79    $       0.93      $     0.37   $       0.38     $     0.23   
                                       ====================================================================================





                                                                   Fiscal Years Ended
                                       ------------------------------------------------------------------------------------
                                                    DEC. 31,         DEC. 31,       Dec. 31,       Dec. 31,        Jan. 1,         
(in thousands, except per share amounts)            1998             1997 (1)       1996 (1)       1995 (1)       1995 (1)      
- -------------------------------------------------------------------------------------------------------------------------
Basic average common shares
   outstanding                                      108,518          101,914         90,582         62,415         48,132      
Diluted average common                 ====================================================================================
   shares outstanding (3)                           116,882          113,109         95,317         69,328         51,919       
                                       ====================================================================================
Division Revenue Data:
Information Technology                        $   1,164,140     $    780,634     $  400,408     $   61,424      $  17,600      
Professional Services                               537,973          383,490        179,608         29,065         18,712      
                                       ------------------------------------------------------------------------------------
Total revenue                                 $   1,702,113     $  1,164,124     $  580,016     $   90,489      $  36,312    
                                       ====================================================================================
</TABLE>
<TABLE>
<CAPTION>
                                                                          As of
                                       ------------------------------------------------------------------------------------
                                                    DEC. 31,          DEC. 31,     Dec. 31,         Dec. 31,       Jan. 1,       
                                                     1998             1997 (1)     1996 (1)         1995 (1)      1995 (1)      
                                       ====================================================================================
<S>                                              <C>            <C>             <C>            <C>            <C>
Balance Sheet data:
Working capital                                $      16,138     $    481,362   $  397,699     $    240,252   $   110,204    
Total assets                                       1,571,881        1,402,626      840,469          303,801       110,578        
Long term debt                                        15,525          434,035      103,369           93,339        28,186         
Stockholders' equity                               1,070,110          812,842      669,779          195,085        92,142         
</TABLE>

(1)  Includes the financial  information of the Company for the respective years
     noted  above  restated to account for any  material  business  combinations
     accounted for under the pooling-of-interests method of accounting.
(2)  Pro forma net  income  is the  Company's  historical  net  income  less the
     approximate  federal and state income taxes that would have been  incurred,
     if the companies with which the Company merged had been subject to tax as a
     C Corporation.
(3)  Diluted  average  common shares  outstanding  have been computed  using the
     treasury  stock  method  and the as-if  converted  method  for  convertible
     securities  which  includes   dilutive  common  stock   equivalents  as  if
     outstanding during the respective periods.
(4)  Gain on sale  relates  to the  gain on the  sale of the net  assets  of the
     Company's  discontinued  operations.  See  Note  16  to  the   Consolidated
     Financial Statements for a further discussion.

<PAGE>


ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

During 1998, the Company sold its assets that were unrelated to its  Information
Technology and Professional  Services  divisions.  Effective March 30, 1998, the
Company  sold the  Health  Care  division  for  consideration  of $8.0  million,
consisting  of $3.0  million in cash and $5.0 million in a note  receivable  due
March 30, 2000 bearing  interest at 2% in excess of the prime rate. In addition,
the Company  retained the  accounts  receivable  of the Health Care  division of
approximately  $28.2  million.  On  September  27,  1998,  the Company  sold its
Commercial operations and its Teleservices  division for $850 million,  prior to
any purchase price adjustments, in cash.

As  a  result  of  these  transactions,  the  Company's  Consolidated  Financial
Statements and Management's  Discussion and Analysis of Financial  Condition and
Results of Operations have been reclassified to report the results of operations
of its  Commercial,  Teleservices  and Health  Care  divisions  as  discontinued
operations for all periods presented.

The following detailed analysis of operations should be read in conjunction with
the 1998 Financial  Statements and related notes included elsewhere in this Form
10-K.

FISCAL 1998 COMPARED TO FISCAL 1997

Results from continuing operations

Revenue.  Revenue  increased  $538.0 million,  or 46.2%, to $1,702.1  million in
fiscal 1998 from $1,164.1  million in fiscal 1997. The increase was attributable
by division to: Information  Technology,  $383.5 million or an increase of 49.1%
and Professional Services, $154.5 million or an increase of 40.3%. The increases
in the Information  Technology and Professional  Services  divisions were due to
both  internal  growth  and,  more  significantly,  to the  revenues of acquired
companies.  The revenue for the  Company's  Information  Technology  division is
obtained through the modis Solutions and modis Consulting  business units. modis
Solutions provided  approximately  30.3% and 17.6% of the division's revenue for
the years ended 1998 and 1997, as compared to 69.7% and 82.4% which was provided
by the division's modis Consulting unit during the same respective periods.  The
Company  plans to  continue  to expand the  percentage  of  revenue  contributed
through its modis Solutions unit as it expands that unit's offerings  throughout
the offices of the modis Consulting unit through various cross-selling efforts.

During  1998,  the Company  solidified  the  information  technology  division's
management structure.  The Company integrated  substantially all of its acquired
companies from a managerial perspective, including 'next generation' leadership.
In conjunction with this  integration,  the Company has been able to consolidate
its marketing  efforts and promote the modis brand name on a national  level, as
the  majority of its services  are now offered  under the modis brand name.  For
example,  a major advertising  campaign was launched to increase brand awareness
to customers and recruits through print ads and airport billboards.  The Company
believes the managerial  integration  and unified  national  marketing plan will
provide the Company with a platform to increase  sales.  The strong  progress in
our  integration  efforts  in 1998 were  somewhat  attributable  to the  Company
satisfying  all of its domestic  contingent  earn-out  obligations by the end of
1998. The Company will continue to integrate the back office  operations of this
division in conjunction with the Company's Restructuring Plan.

In an effort to increase revenue and gross margin  percentages,  the Company has
rolled  out a  new  incentive  based  compensation  plan  throughout  the  Modis
Consulting  unit.  The  Company  believes  this plan will  better  motivate  its
employees to stimulate revenue growth and provide an incentive to increase gross
margin percentages.

Management  has  observed a current  trend in the  industry  which may  possibly
enhance the  effectiveness of its strategy.  This trend involves the movement of
large users of IT services to larger, national and international providers of IT
services.  The Company has seen a trend among large  national and  international
customers towards scaled back, preferred vendor lists for supplying IT services.
The Company  believes it is well  positioned as one of the  companies  which can
successfully  offer  services  to these  customers  and achieve  selection  as a
preferred provider.  Approximately 2.7% of the IT division's total revenue,  are
derived from two United Kingdom  customers.  If these or other customers  reduce
spending on IT services or exclude the Company from their vendor lists, then the
fiscal  1999 IT  division  revenues  may  experience  a decrease  if the revenue
associated with such customers cannot be replaced.

Another trend in the industry that may limit the  Company's  operating  strategy
has been  articulated by some industry  analysts.  These industry  analysts have
speculated that non Year 2000 related IT spending may be negatively  effected in
the third and fourth quarter of fiscal 1999. This theory speculates, among other
things, that customers will focus their efforts in the third and fourth quarters
of fiscal 1999 on testing and  implementing  legacy systems which have undergone
Year 2000 remediation. The theory further speculates that this focus will result
in a  curtailment  of spending on such IT  services  as ERP  implementation  and
custom software  development  during 1999. As the Company's modis Solutions unit
provides  ERP  implementation  and  custom  software  development  services,  if
spending is curtailed , the Company may possibly experience some weakness in its
ERP practice.

The Company's Professional Services division consists of the accounting,  legal,
engineering / technical,  career  management and consulting and scientific units
which  contributed  33.5%,  17.1%,  34.1%, 9.0% and 6.3%,  respectively,  of the
Professional  Services  division's  revenues by group during 1998 as compared to
24.3%, 20.3%, 39.1% 9.6% and 6.7%,  respectively,  during 1997. The shift in the
Professional  Services  division's  revenues  towards  the  Accounting  unit  is
primarily the result of the  acquisition of a large,  international  provider of
accounting  services during June 1997. This resulted in approximately six months
of post  acquisition  revenue in fiscal 1997 results versus twelve months during
fiscal 1998. Included in the 1998 revenues of the Professional Services division
are  revenues  derived  from a project  in the  Company's  Legal unit and with a
certain customer. The revenues from this project amounted to approximately $16.1
million,  or 3.0% of the division's total revenue.  This project is scheduled to
curtail  significantly or be completed during the early part of fiscal 1999, and
there is no  guarantee  that a  replacement  for that source of revenue  will be
found.  Projects of this nature occur from time to time within the  Professional
Services  division.  However,  management  believes  it is  well  positioned  to
increase  revenue through its existing sales force and makes a concerted  effort
to redeploy consultants after such projects end if possible.

During 1999, the Company created and filled the position of President and COO of
the Professional  Services  division.  This position will be responsible for the
operations of all business  units of the  Professional  Services  division.  The
Company  believes this position will create  inertia to improve the platform for
better operational results throughout the entire professional services division.

Gross Profit. Gross profit increased $139.1 million, or 42.3%, to $467.6 million
in fiscal 1998 from $328.5  million in fiscal 1997.  Gross  margin  decreased to
27.5% in fiscal  1998  from  28.2% in fiscal  1997.  The gross  margin in the IT
division  decreased  from  26.8%  to  25.9%.  The  overall  decrease  in  the IT
division's  gross  margin  was due to a number of  factors,  including:  (1) the
increased percentage of the Information Technology division's revenues generated
by the  U.K.  operations,  which  generally  contribute  a  lower  gross  margin
percentage; (2) in certain cases, the inability of the Company to time increases
in bill rates with increases in pay rates (3) higher  benefits  costs  including
mathcing  401(k) plan and holiday and vacation  pay;  (4)  inability to use more
salaried versus hourly consultants; and (5) the overall decrease in gross margin
percentages in the information  technology  services  industry as a whole.  This
industry decrease may be attributed to the  aforementioned  trend by large users
of IT services toward scaled back preferred vendor lists. The aim of such vendor
list reductions is to push greater services revenue through fewer providers with
the tradeoff being lower gross margin  percentages  to the providers.  If in the
future a  greater  portion  of the  Company's  revenues  are  generated  through
preferred vendor contracts, it is possible that this may result in a decrease in
gross margin  percentages,  although  gross  margin  dollars may  increase.  The
decrease in gross margin  percentages  in the  information  technology  services
industry may also be  attributed  to a continued  shortage of skilled IT workers
worldwide. The current shortage of skilled IT workers creates an upward pressure
on pay rates for such workers.  If the Company must continue to pay higher wages
to attract and retain  skilled  workers and is not able to completely  pass this
increase through to its customers,  this may result in somewhat  depressed gross
margin  percentages.  The gross  margin in the  Professional  Services  division
decreased  to 30.8% in  fiscal  1998  from  31.1% in fiscal  1997.  The  overall
decrease in the  Professional  Services  gross  margin was due  primarily  to an
increased  percentage  of revenues  from the United  Kingdom,  increased  salary
pressures due to a continued shortage of skilled workers,  higher benefits costs
including a matching  401(k) plan and holiday and vacation  pay,  and  increased
competition   within  the  segment  including  downward  pricing  pressure  from
competitors.

Operating  Expenses.  Operating expenses increased $124.7 million,  or 58.9%, to
$336.4  million in fiscal 1998 from $211.7  million in fiscal 1997.  Included in
operating  expenses  in  fiscal  1998 are $34.8  million  in  restructuring  and
impairment  charges  associated  with the  Company's  Integration  and Strategic
Repositioning Plan (the 'Restructuring  Plan').  Operating expenses before these
non-recurring  costs as a  percentage  of revenue  decreased  to 17.7% in fiscal
1998,  from 18.2% in fiscal 1997. The decrease was due to the Company's  ability
to spread its expenses  over a larger  revenue base.  The Company's  general and
administrative ("G&A") expenses before the non-recurring charges increased $75.3
million or 39.8% to $264.6  million in fiscal 1998 from $189.3 million in fiscal
1997.  The  increase in G&A expenses  was  primarily  related to: the effects of
acquisitions  made by the Company,  internal  growth of the operating  companies
post-acquisition,  investments  made to  improve  infrastructure  and to develop
technical practices and increased expenses at the corporate level to support the
growth of the Company including sales, marketing and brand recognition. Included
in G&A expenses during both 1998 and 1997 are the costs associated with projects
underway to ensure accurate date recognition and data processing with respect to
the Year 2000 as it relates to the Company's business, operations, customers and
vendors. These costs have been immaterial to date and are not expected to have a
material impact on the Company's results of operations,  financial  condition or
liquidity in the future. See 'OTHER MATTERS - Year 2000 Compliance' below.

Restructuring  and impairment  charge.  In December 1998, the Company's Board of
Directors approved a restructuring  plan to strengthen overall  profitability of
the  Company  by  implementing  a back  office  integration  program  and branch
repositioning plan in an effort to consolidate or close branches whose financial
performance  does not meet the Company's  expectations.  The Company  recorded a
restructuring  and  impairment  charge  of  $34.8  million  in  relation  to the
Restructuring  Plan. The restructuring  component of the $34.8 million charge is
based, in part, on the evaluation of objective evidence of probable  obligations
to be incurred by the Company or of specifically identified assets.

The Company,  formerly AccuStaff Incorporated,  was formed in 1992 and grew over
the next 6 1/2 years through both acquisitions and internal growth. Prior to the
disposition of the Commercial  operations and the  Teleservices  and Health Care
divisions in 1998,  the Company was largely  organized  and  structured  from an
administrative,  operations and systems capabilities  standpoint as a commercial
staffing  business.  The  Restructuring  Plan focuses on meeting the needs of an
information  technology  and  professional  services  company and is designed to
result in a back office  environment  tailored to serve these  businesses.  Upon
completion of the  Restructuring  Plan,  certain back office  operations will be
centralized at the Company's  headquarters and possibly one additional location,
and certain positions which were necessary under the previous organizational and
operational structure will be eliminated.

The Restructuring Plan calls for the consolidation or closing of 23 Professional
Services  division  branches,   certain  organizational   improvements  and  the
consolidation  of 15 back  office  operations.  This  restructuring,  which will
result in the elimination of approximately 290 positions, will be completed over
a 12- to 18-month  period.  The  reduction in  annualized  revenue and operating
losses  from  the  consolidation  or  closing  of the 23  Professional  Services
branches is estimated to be $12.0  million and $4.9  million,  respectively.  In
addition,  the Company  estimates an annual  operating  cost  reduction of $10.1
million as a result of the  consolidation  of the back  office  operations.  The
Company  expects to begin to realize the benefits of the cost  reductions in the
third  quarter of 1999 and realize the  majority of the  annualized  benefits in
fiscal 2000.

The major components of the  restructuring and impairment plan include:(1) costs
to recognize  severance and related benefits for the approximately 290 employees
to be terminated of $7.5 million. The severance and related benefit accruals are
based  on  the  Company's  severance  plan  and  other  contractual  termination
provisions.  These  accruals  include  amounts  to be  paid  to  employees  upon
termination of employment.  Prior to December 31, 1998,  management had approved
and committed the Company to a plan that involved the involuntary termination of
certain  employees.  The  benefit  arrangements  associated  with this plan were
communicated to all employees in December 1998. The plan specifically identified
the number of  employees to be  terminated  and their job  classifications,  (2)
costs to write down certain  furniture,  fixtures and computer  equipment to net
realizable value at branches not performing up to the Company's  expectations of
$2.5 million,(3) costs to write down goodwill associated with the acquisition of
Legal  Information  Technology,  Inc.  which  was  acquired  in  January,  1996,
calculated  in  accordance  with  SFAS  121  as  described  in  Note  2  to  the
Consolidated Financial Statements,  Summary of Significant Accounting Policies -
Goodwill  of $9.9  million,  (4) costs to  terminate  leases  and other exit and
shutdown  costs   associated  with  the  consolidated  or  closed  branches  and
back-office  operations,  including closing the facilities of $8.0 million,  and
(5) costs to adjust  accounts  receivable  due to the  expected  increase in bad
debts which results  directly from the  termination of employees  which causes a
change in client relationships which results when severed branch and back-office
administrative   employees,   who  have  the  knowledge  to  effectively  pursue
collections  are  terminated  of $6.8  million.  These  costs  were  based  upon
management's best estimates based upon available information.

Since payments pursuant to the Restructuring Plan will not commence until fiscal
1999, there were no charges  recognized by the Company against the restructuring
reserve as of December 31, 1998, at which time the total  restructuring  reserve
amount of $24.8  million  (which  does not  include  the $9.9  million  goodwill
impairment  charge which was recorded  against  goodwill in the fouth quarter of
fiscal  1999) was  included in accounts  payable and accrued  liabilities  Since
payments pursuant to the Restructuring Plan will not commence until fiscal 1999.

Income from  Operations.  Income from  operations  increased  $14.4 million,  or
12.3%,  to $131.2  million in fiscal  1998 from $116.8  million in fiscal  1997.
Income from operations before  non-recurring  integration and impairment charges
increased $49.2 million,  or 42.1%, to $166.0 million in fiscal 1998 from $116.8
million in fiscal 1997. Income from operations before non-recurring  integration
and impairment costs as a percentage of revenue decreased to 9.7% in fiscal 1998
from 10.0% in fiscal 1997.

Other Income (Expense).  Interest expense  increased $9.1 million,  or 56.9%, to
$25.1 million in fiscal 1998 from $16.0 million in fiscal 1997.  The increase in
interest expense resulted from the utilization of the Company's credit facility.
The  increase in interest  expense was  partially  offset by interest  and other
income of $11.1  from  primarily  four  sources:  (1) the sale of the  Company's
Commercial  and  teleservices  divisions  and the resultant net cash proceeds of
approximately  $373.0  million  (net  of  $477.0  million  used  to pay  off and
terminate the Company's then existing  credit  facility)  which earned  interest
income  from  October 1, 1998  through  December  31,  1998;  (2) the  resulting
interest  expense  savings from  October 1, 1998 through  December 31, 1998 from
paying off the existing credit facility (the new facility did not have a balance
as of December 31, 1998); (3) investment  income from certain  investments owned
by the  Company;  and (4)  interest  income  earned from cash on hand at certain
subsidiaries of the Company.

Income Taxes. The Company's effective tax rate was 41.2% in fiscal 1998 compared
to 38.0% in fiscal 1997.  The increase in the  effective tax rate was due to the
increase in taxable  income which  resulted from the recording of  approximately
$9.9 million in  non-deductible  goodwill  impairment  charges  (included in the
restructuring  and  impairment  charge  discussed  above  and in  Note 12 to the
Consolidated Financial Statements included elsewhere herein) during fiscal 1998.
Absent these  impairment  charges,  the Company's  effective tax rate would have
remained  constant at 38.0% for fiscal 1998 compared to fiscal 1997.  Due to the
increase in  certain  non-deductible  expense  items,  the  majority of which is
non-deductible  goodwill amortization  resulting from tax-free mergers accounted
for under the purchase  method of accounting,  the Company's  effective tax rate
will increase in fiscal 1999.

Income from  continuing  operations.  As a result of the foregoing,  income from
continuing  operations increased $5.5 million, or 8.7%, to $68.9 million in 1998
from $63.4  million in fiscal  1997.  Income  from  continuing  operations  as a
percentage of revenue decreased to 4.0% in fiscal 1998 from 5.4% in fiscal 1997,
due  primarily to the decrease in income  attributable  to the  recording of the
integration and impairment  charge, and the increase in the effective income tax
rate due to the non-deductible  goodwill  impairment charge.  Exclusive of these
non-recurring  costs,  income from continuing  operations during 1998 would have
increased  $30.7 million to $94.1  million,  increasing  income from  continuing
operations as a percentage of revenue to 5.5%.

Results from discontinued operations

Income from discontinued  operations,  after income taxes, totaled $30.0 million
for fiscal 1998, a decrease of 22.5%, compared to $38.7 million for fiscal 1997.
Reported  revenues from  discontinued  operations were $919.4 million for fiscal
1998  versus  $1,260.7  million  for  fiscal  1997.  Operating  income  for  the
discontinued  operations  was $54.3 million for fiscal 1998 versus $69.8 million
during fiscal 1997. Results of discontinued  operations  include  allocations of
consolidated  interest expense totaling $4.2 million and $4.4 million for fiscal
1998 and 1997, respectively.  The allocations were based on the historic funding
needs of the  discontinued  operations,  including:  the  purchases of property,
plant  and  equipment,   acquisitions,   current  income  tax   liabilities  and
fluctuating working capital needs. Due to the sale of the Commercial  operations
and Teleservices division on September 27, 1998, and the sale of the Health Care
division on March 30, 1998, fiscal 1998 operations  include  operations for only
nine months of the  Commercial  operations  and  Teleservices  division and only
three months of the Health Care division, compared to twelve months in 1997.

Extraordinary item

During  the  fourth   quarter  of  fiscal  1998,   the  Company   recognized  an
extraordinary  after-tax  charge of $5.6  million  as a result of the  Company's
early retirement of $16.5 million of 7% Convertible Senior Notes Due 2002, which
could have been converted into 1,449,780  shares of the Company's  Common Stock,
and the  termination  of the  Company's  existing  credit  facility  immediately
subsequent to the sale of the Company's  Commercial  operations and Teleservices
division. The Company paid a premium of $7.1 million on the early extinguishment
of the  Senior  Convertible  Notes  and  wrote  off  $0.37  million  of  related
unamortized  debt  issuance  costs.  Additionally,  the  Company  wrote off $1.6
million of unamortized  debt financing  costs related to the  termination of the
credit facility. See Note 4 to the Consolidated Financial Statements for further
information on these transactions.


<PAGE>

FISCAL 1997 COMPARED TO FISCAL 1996

Results from continuing operations

Revenue.  Revenue  increased $584.1 million,  or 100.7%,  to $1,164.1 million in
fiscal 1997 from $580.0 million in fiscal 1996. The increase was attributable by
division to: Information Technology,  $380.2 million or an increase of 95.0% and
Professional Services, $203.9 million or an increase of 113.5%. The increases in
the Information  Technology and Professional Services divisions were due to both
internal growth and, more significantly,  to the revenues of acquired companies.
The  revenue  for the  Company's  Information  Technology  division  is obtained
through the modis Solutions and modis Consulting business units. modis Solutions
provided  approximately  17.6% and 18.4% of the division's revenue for the years
ended 1997 and 1996 as  compared  to 82.4% and 81.6%  which was  provided by the
division's  modis  Consulting  unit  during  the same  respective  periods.  The
Company's  Professional  Services  division  consists of the accounting,  legal,
engineering/technical,  career  management and consulting and scientific  groups
which  contributed  24.3%,  20.3%,  39.1%, 9.6% and 6.7%,  respectively,  of the
Professional  Services  division's  revenues by group during 1997 as compared to
8.8%,  15.1%,  74.0%,  0.0% and 2.1%,  respectively,  during 1996. The mix shift
among the units within the Professioanl  Services  division was primarily due to
the timing of acquisitions during fiscal 1996 and 1997.

Gross  Profit.  Gross profit  increased  $175.3  million,  or 114.4%,  to $328.5
million  in fiscal  1997  from  $153.2  million  in fiscal  1996.  Gross  margin
increased to 28.2% in fiscal 1997 from 26.4% in fiscal 1996. The gross margin in
the IT division  remained  relatively  constant in 1997 at 26.8%  compared  with
26.9% in fiscal 1996. The gross margin in the Professional division increased to
31.1% in fiscal  1997  compared  to 25.2% in fiscal  1996.  The  increase in the
Professional   Services  division's  gross  margin  was  due  primarily  to  the
substantial  increase in revenue  contribution  by the  divisions  higher margin
accounting, legal and career management and consulting units.

Operating  Expenses.  Operating expenses  increased $89.8 million,  or 73.6%, to
$211.7  million in fiscal 1997 from $122.0  million in fiscal 1996.  Included in
operating  expenses in fiscal 1996 is $14.4 million in merger  related  expenses
associated with the merger of the Company with Career Horizons,  Inc.  Operating
expenses  before merger  related  costs as a percentage of revenue  decreased to
18.2% in fiscal  1997,  from 18.5% in fiscal  1996.  The decrease was due to the
Company's  ability  to spread  its  expenses  over a larger  revenue  base.  The
Company's G&A expenses  increased  $92.1  million or 94.8% to $189.3  million in
fiscal 1997 from $97.2 million in fiscal 1996.  The increase in G&A expenses was
primarily related to: the effects of acquisitions made by the Company,  internal
growth of the operating companies post-acquisition,  investments made to improve
infrastructure  and to develop  technical  practices and higher  expenses at the
corporate  level to support the growth of the Company.  Included in G&A expenses
during 1997 are the costs  associated with projects  underway to ensure accurate
date recognition and data processing with respect to the Year 2000 as it relates
to the Company's business,  operations,  customers and vendors. These costs have
been  immaterial  to date and are not expected to have a material  impact on the
Company's results of operations, financial condition or liquidity in the future.
See 'OTHER MATTERS - Year 2000 Compliance' below.

Income from  Operations.  As a result of the foregoing,  income from  operations
increased $85.5 million,  or 273.8%, to $116.8 million in fiscal 1997 from $31.2
million in fiscal  1996.  Income from  operations  before  non-recurring  merger
related costs  increased $71.1 million,  or 155.6%,  to $116.8 million in fiscal
1997  from  $45.7  million  in  fiscal  1996.   Income  from  operations  before
non-recurring merger related costs as a percentage of revenue increased to 10.0%
in fiscal 1997 from 7.9% in fiscal 1996.

Interest Expense.  Interest expense increased $9.2 million, or 135.3%, to  $16.0
million  in fiscal  1997 from $6.8  million  in fiscal  1996.  The  increase  in
interest  expense  resulted  from  use of the  Company's  credit  facility.  The
borrowings  from the  Company's  credit  facility  were  primarily  used for the
purchases of businesses.

Income Taxes. The Company's effective tax rate was 38.0% in fiscal 1997 compared
to 56.7%,  including the effect of the pro forma tax provision,  in fiscal 1996.
The  decrease in the  effective  tax rate was due to the higher level of taxable
income in 1996 as a result of the non-deductible,  non-recurring  merger related
costs in connection  with the  acquisitions  of The McKinley  Group,  Inc.,  HJM
Consulting, Inc. and Career Horizons, Inc. during 1996.

Income from  continuing  operations.  As a result of the foregoing,  income from
continuing  operations  increased $54.8 million,  or 637.2%, to $63.4 million in
1997 from $8.6 million in fiscal 1996.  Income from  continuing  operations as a
percentage of revenue increased to 5.4% in fiscal 1997 from 1.5% in fiscal 1996,
due  primarily  to the  reduction  of merger  related  costs during 1997 and the
acquisition  of  cash-basis  S-corporations  accounted  for under the pooling of
interests  method of  accounting,  which  required  a one-time  increase  to the
current  period  income tax  provision  during  1996.  Exclusive of these costs,
income from continuing operations during 1996 would have increased $10.8 million
to $19.4 million,  increasing pro forma net income as a percentage of revenue to
3.3%.

Results from discontinued operations

Income  from  discontinued  operations,  after  income  taxes,  increased  $16.1
million,  or 71.2%,  to $38.7  million for fiscal 1997 versus $22.6  million for
fiscal 1996.  Reported  revenues  from  discontinued  operations  were  $1,260.7
million for fiscal  1997 versus  $1,031.4  million  for fiscal  1996.  Operating
income for the discontinued  operations was $69.8 million for fiscal 1997 versus
$42.1 million during fiscal 1996.  Results of  discontinued  operations  include
allocations  of  consolidated  interest  expense  totaling $4.4 million and $0.4
million for fiscal 1997 and 1996,  respectively.  The allocations  were based on
the  historic  funding  needs of the  discontinued  operations,  including:  the
purchases of property,  plant and  equipment,  acquisitions,  current income tax
liabilities and fluctuating working capital needs.




<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's capital  requirements have principally  related to the acquisition
of  businesses,   working   capital  needs  and  capital   expenditures.   These
requirements  have been met through a  combination  of bank debt,  issuances  of
Common Stock and internally  generated funds. The Company's operating cash flows
and working capital  requirements  are affected  significantly  by the timing of
payroll and by the receipt of payment from the customer.  Generally, the Company
pays  its  Information   Technology  and   Professional   Services   consultants
semi-monthly, and receives payments from customers within 30 to 80 days from the
date of invoice.

Exclusive of the net assets of discontinued operations,  the Company had working
capital of $16.1  million and $115.3  million as of December  31, 1998 and 1997,
respectively.  Included in current  liabilities during fiscal 1998 and 1997 were
amounts  related  to  earn-out  payments  due to the former  owners of  acquired
companies. These amounts were paid in the first quarter of fiscal 1999 and 1998,
respectively, and capitalized to the goodwill balances related to the respective
acquired companies.  The Company had cash and cash equivalents of $105.8 million
and $23.9 million as of December 31, 1998 and 1997, respectively.  The principal
reason for the decrease in the Company's working capital is that the Company has
recognized  a $175.0  million  current tax  liability  as of  December  31, 1998
relating to the sale of its Commercial operations and Teleservices division. The
majority of the proceeds from the sale have been used to pay down long-term debt
under its credit facility (which did not have a balance as of December 31, 1998)
and to repurchase  the Company's  Common Stock.  For the year ended December 31,
1998, the Company generated $88.9 million of cash flow from operations.  For the
year ended December 31, 1997, the Company  generated  $39.0 million of cash flow
from  operations.  For the year ended December 31, 1996,  the Company  generated
$6.0 million of cash flow from operations. The large increase in cash flows from
operations  during fiscal 1998 versus fiscal 1997 is mainly due to the cash flow
provided from  acquired  companies.  The majority of the Company's  acquisitions
occurred  throughout  the year ended December 31, 1997. Due to the timing of the
acquisitions,  the cash flow from operations has increased substantially through
the year ended December 31, 1998.

For the year ended  December 31, 1998, the Company  generated  $645.0 million of
cash flow from investing activities, as a result of net proceeds received in the
year  ended  December  31,  1998  from  the  Company's  sale  of its  Commercial
operations and Teleservices  division,  of $840.9 million. The balance of $195.9
million relates to cash the Company used for acquisitions of $157.1 million, for
capital  expenditures of $22.9 million,  and advances related to the sale of its
Healthcare  division  of  $15.9 million.  

The Company  will make  payments  of  approximately  $38.0  million in the first
quarter of 1999  related to the net worth  adjustment  and  certain  transaction
expenses associated with the sale of its Commercial  operations and Teleservices
division. In addition, during the first quarter of fiscal 1999, the Company will
make tax payments of  approximately  $175.0  million  related to the gain on the
sale of these  businesses.  In  addition,  the  Company is subject to claims for
indemnification  arising  from  the  sales  of  its  Commercial  operations  and
Teleservices  division and its Health Care division in 1998.  For the year ended
December 31, 1998, the Company did not pay any indemnification  claims. Although
the  Company  has  received  certain  claims for  indemnification  or notices of
possible claims pursuant to such  obligations,  the Company believes that it has
meritorious  defenses against such claims and does not believe that such claims,
if successful,  would have a material adverse effect on the Company's  financial
condition or results of operations.

In connection with the Company's sale of its Health Care operations, the Company
entered  into an  agreement  with the  purchaser  of the Health Care  operations
whereby the Company agreed to make advances to the purchaser to fund its working
capital  requirements.  Any amounts extended are  collateralized by the accounts
receivable and certain other assets of the related health care  operations.  Any
advances  made under  this  agreement  accrue  interest  at 10% per year.  As of
December 31, 1998,  the Company had advanced  approximately  $15.9 million under
this agreement.

For the years ended  December 31, 1997 and 1996, the Company used $365.9 million
and $275.3  million,  respectively,  for investing  activities,  of which $357.8
million, and $306.0 million,  respectively,  were used for acquisitions and $8.1
million, and $7.3 million, respectively, were used for capital expenditures. The
Company made thirteen,  twenty and thirty-one  acquisitions in each of the years
ended December 31, 1998, 1997 and 1996, respectively.

For the year ended  December  31,  1998,  the Company  used  $658.6  million for
financing  activities  of  which  $309.7  million  was  used to  repurchase  the
Company's  Common Stock,  $349.5  million  which  represents  net  repayments on
borrowings  from the  Company's  credit  facility and notes issued in connection
with  the  acquisition  of  certain  companies,  $23.6  million  related  to the
repurchase  of the  Company's 7%  Convertible  Senior Notes Due 2002,  and $24.2
million  related to the proceeds from stock options  exercised.  The  repayments
were mainly  funded from the sale of the  Company's  Commercial  operations  and
Teleservices division.

On October 31, 1998, the Company's Board of Directors  authorized the repurchase
of up to $200.0  million  of the  Company's  Common  Stock  pursuant  to a share
buyback program. On December 4, 1998, the Company's Board of Directors increased
the authorized share buyback program by an additional  $110.0 million,  bringing
the total  authorized  repurchase  amount to $310.0 million.  As of December 31,
1998,  the Company had  repurchased  approximately  21,751,000  shares under the
share buyback  program.  Included in the shares  repurchased  as of December 31,
1998 were approximately  6,150,000 shares repurchased under an accelerated stock
acquisition  plan  ("ASAP").  The Company  entered  into the ASAP with a certain
brokerage firm which agreed to sell to the Company shares of its Common Stock at
a certain cost.  The brokerage firm borrowed these shares from its customers and
was required to enter into market transactions, subject to Company approval, and
purchase shares of Company Common Stock to return to its customers. The Company,
pursuant to the ASAP,  agreed to compensate the brokerage firm for any increases
in the  Company's  stock  price that would  cause the  brokerage  firm to pay an
amount to purchase the stock over the ASAP price. Conversely,  the Company would
receive a refund in the purchase  price if the Company's  stock price fell below
the ASAP price.  Subsequent  to December  31, 1998,  the Company  used  refunded
proceeds from the ASAP to complete the program during January and February 1999,
with the repurchase of approximately  597,000 shares,  bringing the total shares
repurchased under the program to approximately  22,348,000  shares. All of these
shares were retired upon purchase.

For the years ended  December 31, 1997 and 1996,  the Company  generated  $335.8
million  and  $405.1  million,   respectively,   of  cash  flow  from  financing
activities. During fiscal 1997, this amount primarily represented net borrowings
from  the  Company's  credit  facility,   which  were  used  primarily  to  fund
acquisitions. During fiscal 1996, the Company generated the majority of its cash
flows from financing activities through the public sale of Company Common Stock.

The Company is also  obligated  under  various  acquisition  agreements  to make
earn-out  payments to former  stockholders  of acquired  companies over the next
four years.  The Company  estimates that the amount of these payments will total
$82.6 million,  $26.2 million,  $10.1 million and $2.9 million annually, for the
next four years.  Included in the balance sheet in line item  "Accounts  payable
and accrued  expenses" is $65.2 million  related to estimated  earnout  payments
that were  determinable at December 31, 1998. The Company  anticipates  that the
cash  generated  by the  operations  of the  acquired  companies  will provide a
substantial part of the capital required to fund these payments.

The Company  anticipates that capital  expenditures for furniture and equipment,
including  improvements  to its  management  information  and operating  systems
during the next twelve months will be approximately  $15.0 million.  The Company
anticipates  recurring  expenditures in future years to be  approximately  $10.0
million per year.

The Company  believes that funds  provided by operations,  available  borrowings
under the credit  facility,  and current  amounts of cash will be  sufficient to
meet its presently  anticipated needs for working capital,  capital expenditures
and acquisitions for at least the next 12 months.


<PAGE>

Indebtedness of the Company

Prior  to the  sale of the  Company's  Commercial  operations  and  Teleservices
division, the Company had a $500 million credit facility which was syndicated to
a group of 20 banks,  with  NationsBank,  N.A. as principal  agent.  Immediately
subsequent to the sale of the Company's  Commercial  operations and Teleservices
division, that facility was completely repaid and terminated. In connection with
this termination, the Company wrote off unamortized debt issuance costs of $1.63
million.

On October 30,  1998,  the Company  entered  into a new $500  million  revolving
credit  facility  which is syndicated  to a group of 13 banks with  NationsBank,
N.A.  as the  principal  agent.  The  facility  expires  on  October  21,  2003.
Outstanding  amounts  under the credit  facility  will bear  interest at certain
floating rates as specified by the credit facility. The credit facility contains
certain  financial  and  non-financial   covenants  relating  to  the  Company's
operations,  including  maintaining  certain financial ratios.  Repayment of the
credit facility is guaranteed by the material  subsidiaries  of the Company.  In
addition,  approval  is required  by the  majority of the lenders  when the cash
consideration  of  an  individual   acquisition   exceeds  10%  of  consolidated
stockholders' equity of the Company.

As of March 19, 1999, the Company had a balance of approximately  $150.0 million
outstanding under the credit facility.  The Company also had outstanding letters
of credit in the amount of $7.8 million,  reducing the amount of funds available
under the credit facility to approximately $342.2 million as of March 19, 1999.

On  October  16,  1995,  Career  Horizons,  Inc.,  issued  $86.25  million of 7%
Convertible  Senior Notes Due 2002 which were assumed by the Company pursuant to
the  merger  with  Career  Horizons,  Inc.  Interest  on  the  Notes  were  paid
semiannually on May 1 and November 1 of each year. The Notes were convertible at
the option of the holder thereof,  unless  previously  redeemed,  into shares of
Common Stock of the Company at a conversion price of $11.35 per share. The Notes
were redeemable,  in whole or in part, at the option of the Company, at any time
on or after November 1, 1998, at stated redemption prices, together with accrued
interest. The Company called the Notes on October 1, 1998, to be either redeemed
or converted as of November 1, 1998.  Prior to November 1, 1998,  $16.45 million
of Notes were redeemed by the Company, at a premium of $7.13 million, and $69.80
million were converted into shares of Common Stock of the Company. Additionally,
the Company wrote off  unamortized  debt issuance  costs of  approximately  $.37
million  associated  with the redemption and increased  paid-in-capital  by $1.5
million for unamortized debt issuance costs associated with the conversion.

The Company has certain  notes  payable to  shareholders  of acquired  companies
which bear interest at rates ranging from 5.0% to 8.0% and have repayment  terms
from January 1999 to November  2004.  As of December 31, 1998,  the Company owed
approximately $31.5 million in such acquisition indebtedness.



<PAGE>

INFLATION

The effects of inflation on the Company's operations were not significant during
the periods  presented in the financial  statements.  Generally,  throughout the
periods  discussed above, the increases in revenue have resulted  primarily from
higher volumes, rather than price increases.

RECENT ACCOUNTING PRONOUNCEMENTS

During 1998, the American Institute of Certified Public  Accountants'  Executive
Committee issued  Statement of Position Number 98-1 (SOP 98-1),  "Accounting for
the Cost of Computer Software  Developed or Obtained for Internal Use". SOP 98-1
is effective  for fiscal years  beginning  after  December 15, 1998.  Management
believes that the Company is substantially in compliance with this pronouncement
and that  the  implementation  of this  pronouncement  will not have a  material
effect on the Company's consolidated  financial position,  results of operations
or cash flows. Implementation is planned for fiscal 1999.

During 1998, the American Institute of Certified Public  Accountants'  Executive
Committee issued Statement of Position Number 98-5 (SOP 98-5), "Reporting on the
Costs of Start-Up Activities".  SOP 98-5 is effective for fiscal years beginning
after December 15, 1998. Management does not believe that its adoption will have
a material effect on the Company's consolidated financial position or results of
operations. Implementation is planned for fiscal 1999.

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  ("SFAS") No. 133,  "Accounting  for Derivative
Instruments and for Hedging Activities." SFAS No. 133 establishes accounting and
reporting  standards  requiring that every derivative  instrument be recorded on
the balance sheet as either an asset or liability  measured at fair value.  SFAS
No. 133  requires  that  changes  in a  derivative's  fair  value be  recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting  for  qualifying  hedges  allows a  derivative's  gains and losses to
offset related  results on the hedged item in the income  statement and requires
that a company  formally  document,  designate and assess the  effectiveness  of
transactions that receive hedge accounting. SFAS No. 133 is effective for fiscal
years  beginning  after June 15, 1999, and cannot be applied  retroactively.  We
have not yet  quantified  the impacts of adopting  SFAS No. 133 on our financial
statements;  however,  SFAS No. 133 could  increase the  volatility  of reported
earnings and other comprehensive income once adopted.

<PAGE>

OTHER MATTERS

Year 2000 Compliance

The following  disclosure is a Year 2000 Readiness disclosure statement pursuant
to the Year 2000 Readiness and Disclosure Act.

During 1997 the Company began projects to address potential  problems within the
Company's  operations  which could  result  from the century  change in the Year
2000. In 1998,  the Company  created a Year 2000 Project  Office to oversee Year
2000 related  projects and to address  potential  problems  within the Company's
operations,  which could  result from the century  change in the Year 2000.  The
Project  Office  reports  to the  Company's  Board of  Directors  and is staffed
primarily with representatives of the Company's  Information Systems Department,
and has access to key associates in all areas of the Company's  operations.  The
Project Office also uses outside consultants on an as-needed basis.

A four-phase  approach has been utilized to address the Year 2000 issues: (1) an
inventory  phase  to  identify  all  computer-based   systems  and  applications
(including  embedded  systems)  which might not be Year 2000  compliant;  (2) an
assessment phase to determine what revisions or replacements  would be necessary
to achieve Year 2000  compliance and  identification  of remediation  priorities
which would best serve the Company's business interests;  (3) a conversion phase
to  implement  the actions  necessary to achieve  compliance  and to conduct the
tests  necessary  to  verify  that  the  systems  are  operational;  and  (4) an
implementation  phase to  transition  the  compliant  systems  into the everyday
operations  of the  Company.  Management  believes  that  the  four  phases  are
approximately  100%,  100%, 75%, and 65% complete,  respectively.   

The Company's  corporate  accounting,  payroll and human  resources  systems are
recent  implementations  (installed  since  June  1997) of  mainstream  computer
products from vendors such as PeopleSoft, Informix, Microsoft, Digital Equipment
Corporation  and Compaq.  The Company is near  completion  of Year 2000 required
upgrades for corporate  hardware systems,  operating  systems,  network systems,
database systems and applications  systems.  This project is in process,  and on
schedule  with an  anticipated  completion  date  of May  1999. 

The Company operates  approximately 264 branches,  primarily in the U.S., Canada
and the United  Kingdom.  The branch network relies on a variety of front office
automation  systems to provide  sales  support  for resume  tracking  and client
contact management. Because of the diverse architectural nature of these systems
together with the relative ease with which backup/contingency  procedures can be
implemented in the event of an individual branch system outage, the Company does
not believe that these systems pose a material Year 2000 risk. Nevertheless, the
Company has completed  Inventory and Assessment phases for all branch locations.
In conjunction with other business related integration projects,  the Company is
actively replacing noncompliant Year 2000 branch hardware and software with Year
2000 compliant products.  The Company expects that this replacement process will
be complete in July 1999.  To date,  the Company has found that less than 10% of
branch  workstations  require  hardware  or  software  upgrades  for  Year  2000
purposes.

Milestones  and  implementation  dates and the cost of the  Company's  Year 2000
readiness  program are  subject to change  based on new  circumstances  that may
arise  or  new  information  becoming  available,  that  may  change  underlying
assumptions or requirements.  Further,  there are no assurances that the Company
will  identify all data  handling  problems in its business  systems or that the
Company will be able to successfully remedy Year 2000 items that are discovered.

Non-IT  systems have also been  assessed and  inventoried.  Potential  Year 2000
risks in these systems includes landlord-controlled systems, such as heating and
cooling systems,  automated security systems,  elevators,  and office equipment,
phone  systems,  facsimile  machines  and  copiers.  The Company  has  requested
assessments of non-IT systems for Year 2000 compliance from landlords and office
equipment vendors. Based on these responses that the Company  has received,  the
Company  believes  that the Year  2000  risk of non-IT  systems  failure  is not
material.

The Company has  budgeted  approximately  $2.0  million to address the Year 2000
issues,  which includes the estimated cost of the salaries of associates and the
fees of consultants addressing the issue. This cost represents approximately 10%
of the Company's total MIS budget.  Approximately $1.3 has been incurred to date
for outside  consultants,  software and  hardware  applications,  and  dedicated
personnel. The Company does not separately track the internal costs incurred for
portions of the Year 2000  compliance  project  that are  completed as a part of
other business related projects.  Such costs are principally the related payroll
costs for the Company's  information  systems group.  The Company  believes that
cash  flows from  operations  and funds  available  under the  Company's  credit
facility as well as cash on hand are sufficient to fund these costs.

As a part of the Year 2000 review,  the Company is examining  its  relationships
with  certain  key  outside  vendors  and  others  with whom it has  significant
business  relationships  to determine to the extent practical the degree of such
parties' Year 2000  compliance and to develop  strategies and  alternatives  for
working  with  them  through  the  century   change.   Other  than  its  banking
relationships,  which include only large,  federally insured  institutions,  and
utilities (electrical power,  telecommunications,  water and related items), the
Company does not have a relationship  with any third-party  which is material to
the operations of the Company and,  therefore,  believes that the failure of any
such party to be Year 2000 compliant would not have a material adverse effect on
the Company.  However,  banking or utility failures at the Company's branches or
with its customers could have a material effect on the Company's revenue sources
and could disrupt the payment cycle of certain of the Company's customers.

Should the Company or a third  party with whom the Company  deals have a systems
failure due to the century  change,  the Company does not expect any such effect
to be material.  The Company is  developing  contingency  plans for  alternative
methods  of  transaction  processing  and  estimates  that  such  plans  will be
finalized by August 1999.



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  following  assessment  of the  Company's  market  risks  does  not  include
uncertainties  that  are  either  nonfinancial  or   nonquantifiable,   such  as
political, economic, tax and other credit risks.

Interest  Rates.  The Company's  exposure to market risk for changes in interest
rates  relates  primarily  to  the  Company's   short-term  and  long-term  debt
obligations and to the Company's investments.

The  Company's  investment  portfolio  consists  of cash  and  cash  equivalents
including  deposits in banks,  government  securities, money market  funds,  and
short-term  investments with maturities,  when acquired, of 90 days or less. The
Company is adverse to principal loss and ensures the safety and  preservation of
its invested funds by placing these funds with high credit quality issuers.  The
Company  constantly  evaluates its invested funds to respond  appropriately to a
reduction in the credit rating of any investment issuer or guarantor.

The Company's short-term and long-term debt obligations totaled $31.5 million as
of December  31, 1998 and the Company  had $477.1  million  available  under its
current credit facility. The debt obligations consist of notes payable to former
shareholders  of acquired  corporations,  are at a fixed rate of  interest,  and
extend  through  2004.  The  interest  rate  risk on these  obligations  is thus
immaterial due to the dollar amount and fixed nature of these  obligations.  The
interest  rate on the credit  facility  is  variable,  but there were no amounts
outstanding on the facility as of December 31, 1998.

Foreign currency  exchange rates.  Foreign currency exchange rate changes impact
translations of foreign denominated assets and liabilities into U.S. dollars and
future  earnings  and cash  flows from  transactions  denominated  in  different
currencies.  The Company generated approximately 19% of fiscal 1998 consolidated
revenues  from  international  operations,  93% of which  were  from the  United
Kingdom and 7% of which were from other  countries.  Thus, 93% of  international
revenues were derived from the United Kingdom, whose currency has not fluctuated
materially  against the United  States dollar in fiscal 1998.  Foreign  exchange
translation  gains  and  losses  have  been  and  are as of  December  31,  1998
immaterial.  The  Company  did not  hold or  enter  into  any  foreign  currency
derivative instruments as of December 31, 1998.

<PAGE>
FACTORS WHICH MAY IMPACT FUTURE RESULTS AND FINANCIAL CONDITION

Effect of Fluctuations in the General Economy

Demand  for the  Company's  information  technology  and  professional  business
services is significantly  affected by the general level of economic activity in
the markets served by the Company.  During periods of slowing economic activity,
companies  may  reduce  the use of outside  consultants  and staff  augmentation
services prior to undertaking layoffs of full-time  employees.  Also during such
periods, companies may elect to defer installation of new information technology
systems and platforms (such as Enterprise Resource Planning systems) or upgrades
to  existing  systems  and  platforms.  Year 2000  remediation  and  testing for
existing information technology systems may have a similiar effect. As a result,
any  significant  economic  downturn or Year 2000  impact  could have a material
adverse effect on the Company's results of operations or financial condition.

The Company may also be adversely effected by consolidations through mergers and
otherwise of main customers or between major customers with non-customers. These
consolidations  as  well  as  corporate  downsizings  may  result  in  redundant
functions or services and a resulting  reduction in demand by such customers for
the Company's  services.  Also, spending for outsourced business services may be
put on hold until the consolidations are completed.
       
Competition

The Company's industry segments are intensely competitive and highly fragmented,
with  few  barriers  to  entry  by  potential  competitors.  The  Company  faces
significant  competition in the markets that it serves and will face significant
competition  in any  geographic  market  that it may enter.  In each  market and
industry segment in which the Company operates, it competes for both clients and
qualified professionals with other firms offering similar services.  Competition
creates an  aggressive  pricing  environment  and higher wage costs,  which puts
pressure on gross margins.

Ability to Recruit and Retain Professional Employees

The Company  depends on its ability to recruit and retain  employees who possess
the skills, experience and/or professional  certifications necessary to meet the
requirements of the Company's  clients.  Competition for individuals  possessing
the requisite  criteria is intense,  particularly in certain  specialized IT and
professional  skill areas.  The Company  often  competes with its own clients in
attracting  and retaining  qualified  personnel.  There can be no assurance that
qualified personnel will be available and recruited in sufficient numbers on
economic terms acceptable to the Company.

The  continuing  shortage of qualified IT consultants  may adversely  affect the
Company's ability to increase  revenue.  This shortage may be exacerbated by the
difficulties of utilizing the services of qualified foreign nationals working in
the United States under H-1B visas. The use of these  consultants  requires both
the Company and these foreign nationals to comply with United States immigration
laws.  

Ability  to  Continue  Acquisition  Strategy;   Ability  to  Integrate  Acquired
Operations

The Company has experienced significant growth in the past through acquisitions.
Although the Company continues to seek acquisition  opportunities,  there can be
no assurance that the Company will be able to negotiate acquisitions on economic
terms acceptable to the Company or that the Company will be able to successfully
identify  acquisition  candidates and integrate all acquired operations into the
Company.

Possible Changes in Governmental Regulations

From time to time, legislation is proposed in the United States Congress,  state
legislative  bodies  and by  foreign  governments  that would have the effect of
requiring  employers  to  provide  the  same or  similar  employee  benefits  to
consultants  and  other  temporary  personnel  as those  provided  to  full-time
employees.  The  enactment of such  legislation  would  eliminate one of the key
economic reasons for outsourcing certain human resources and could significantly
adversely impact the Company's staff  augmentation  business.  In addition,  the
Company's  costs could increase as a result of future laws or  regulations  that
address insurance, benefits or other employment-related matters. There can be no
assurance that the Company could  successfully  pass any such increased costs to
its clients.

Possible Year 2000 Exposure

The IT division  performs both Year 2000 remediation  services as well as system
upgrades and enhancements for clients.  There is some possibility that customers
who  experience  system  failures  related  to Year 2000 may  institute  actions
against their IT vendors, including the Company. There is no ability to quantify
the likelihood or merit of any such claims;  but if a significant number of such
claims are  asserted  against  the  Company or if one or more  customers  assert
meritorious  claims,  such claims may result in material  adverse effects on the
Company's results of operations and financial condition.


<PAGE>


ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

(a) Consolidated Financial Statements: The following consolidated financial
        statements are included in this Annual Report on Form 10-K:

<TABLE>
<CAPTION>
                                                                                        
                                                                                        
<S>          <C>                                                                         
              Report of Independent Public Accountants                                   
              Covered by the Report of Independent Public Accountants:
              Consolidated Balance Sheet at December 31, 1998 and 1997                   
              Consolidated Statements of Income for the years ended
                 December 31, 1998, 1997, and 1996                                        
              Consolidated Statements of Stockholders' Equity at
                 December 31, 1998, 1997, and 1996                                        
              Consolidated Statements of Cash Flows for the years ended
                 December 31, 1998, 1997, and 1996                                        
              Notes to Consolidated Financial Statements                                  


</TABLE>


<PAGE>


                      Report of Independent Accountants

To the Board of Directors and Stockholders of
Modis Professional Services, Inc.
 
In our opinion,  the  accompanying  consolidated  balance sheets and the related
consolidated  statements  of  income,  stockholders'  equity,  and of cash flows
present  fairly,  in all  material  respects,  the  financial  position of Modis
Professional   Services,   Inc.  (formerly   AccuStaff   Incorporated)  and  its
Subsidiaries at December 31, 1998 and 1997, and the results of their  operations
and their cash flows for each of the three  years in the period  ended  December
31, 1998, in conformity with generally  accepted  accounting  principles.  These
financial  statements are the  responsibility of the Company's  management;  our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We conducted  our audits of these  statements  in  accordance  with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable  assurance about whether the financial statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe  that our audits  provide a reasonable  basis for the opinion  expressed
above.

PricewaterhouseCoopers LLP
March 26, 1999

<PAGE>
Modis Professional Services Inc. and Subsidiaries
Consolidated Balance Sheets.


<TABLE>
<CAPTION>
                                                                                      DECEMBER 31,      DECEMBER 31,    
(dollar amounts in thousands except per share amounts)                                   1998               1997             
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>            <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                          $   105,816      $     23,938   
   Accounts receivable, net of allowance of $13,007 and $8,945                            327,185           230,934       
   Prepaid expenses                                                                        11,219             9,352         
   Deferred income taxes                                                                   16,858               731           
   Net assets of discontinued operations                                                        -           366,045 
   Other                                                                                   28,460                 - 
                                                                                     ----------------------------------
      Total current assets                                                                489,538           631,000        
Furniture, equipment and leasehold improvements, net                                       37,577            27,367         
Goodwill, net                                                                           1,025,240           726,931        
Other assets, net                                                                          19,526            17,328         
                                                                                     ----------------------------------
    Total assets                                                                      $ 1,571,881      $  1,402,626
                                                                                     ==================================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Notes payable                                                                      $    15,988      $     16,366  
   Accounts payable and accrued expenses                                                  206,681            92,433      
   Accrued payroll and related taxes                                                       60,844            37,647
   Income taxes payable                                                                   189,887             3,192
                                                                                     ----------------------------------
     Total current liabilities                                                            473,400           149,638         
Convertible debt                                                                                -            86,250        
Notes payable, long-term portion                                                           15,525           347,785        
Deferred income taxes                                                                      12,846             6,111             
                                                                                     ----------------------------------
     Total liabilities                                                                    501,771           589,784       
                                                                                     ----------------------------------
Commitments and contingencies (Notes 3,4 and 6)
Stockholders' equity:
   Preferred stock, $.01 par value; 10,000,000 shares authorized;
      no shares issued and outstanding                                                          -                 -             
   Common stock, $.01 par value; 400,000,000 shares authorized
      96,306,323 and 103,692,098 shares issued and outstanding on
      December 31, 1998 and December 31, 1997, respectively                                   963             1,037        
Additional contributed capital                                                            564,248           634,194        
Retained earnings                                                                         504,899           181,068        
Deferred stock compensation                                                                     -            (3,457)        
                                                                                     ----------------------------------
     Total stockholders' equity                                                         1,070,110           812,842   
                                                                                     ----------------------------------
     Total liabilities and stockholders' equity                                       $ 1,571,881      $  1,402,626  
                                                                                     ==================================
</TABLE>


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.




<PAGE>


Modis Professional Services Inc. and Subsidiaries
Consolidated Statements of Income


<TABLE>
<CAPTION>
                                                                               Years Ended December 31,
                                                                      ------------------------------------------
(dollar amounts in thousands except per share amounts)                      1998          1997            1996         
- ----------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>            <C>            <C>
Revenue                                                               $  1,702,113   $  1,164,124   $    580,016   
Cost of revenue                                                          1,234,537        835,609        426,814        
                                                                      ------------------------------------------
   Gross Profit                                                            467,576        328,515        153,202        
                                                                      ------------------------------------------
Operating expenses:
   General and administrative                                              264,551        189,271         97,209         
   Depreciation and amortization                                            37,105         22,456         10,303           
   Restructuring and impairment charges                                     34,759              -              -
   Merger related costs                                                          -              -         14,446              
                                                                      ------------------------------------------
      Total operating expenses                                             336,415        211,727        121,958        
                                                                      ------------------------------------------
         Income from operations                                            131,161        116,788         31,244      
                                                                      ------------------------------------------
Other income (expense):
      Interest expense                                                     (25,065)       (15,979)        (6,825)
      Interest income and other, net                                        11,090          1,364          3,851     
                                                                      -------------------------------------------
         Other income (expense)                                            (13,975)       (14,615)        (2,974)

Income from continuing operations before provision for income taxes        117,186        102,173         28,270        
Provision for income taxes                                                  48,326         38,803         19,693        
                                                                      ------------------------------------------
Income from continuing operations                                           68,860         63,370          8,577        
Discontinued operations (Note 16):
Income from discontinued operations (net of income
   taxes of $17,522, $26,739 and $19,079, respectively)                     30,020         38,663         22,633        
Gain on sale of discontinued operations (net of income
   taxes of $175,000)                                                      230,561              -              - 
                                                                      ------------------------------------------
Income before extraordinary loss                                           329,441        102,033         31,210
Extraordinary loss on early extinguishment of debt 
   (net of income tax benefit of $3,512)                                    (5,610)             -              -
                                                                      ------------------------------------------
Net income                                                            $    323,831   $    102,033   $     31,210  
                                                                      ==========================================
Basic income per common share from continuing operations              $       0.63   $       0.62   $       0.09  
                                                                      ==========================================
Basic income per common share from discontinued operations            $       0.28   $       0.38   $       0.25   
                                                                      ==========================================
Basic income per common share from gain on sale of
   discontinued operations                                            $       2.12   $          -   $          -   
                                                                      ==========================================
Basic income per common share from extraordinary item                 $      (0.05)  $          -   $          -
                                                                      ==========================================
Basic net income per common share                                     $       2.98   $       1.00   $       0.34   
                                                                      ==========================================
Average common shares outstanding, basic                                   108,518        101,914         90,582    
                                                                      ==========================================
Diluted income per common share from continuing operations            $       0.61   $       0.59   $       0.09  
                                                                      ==========================================
Diluted income per common share from discontinued operations          $       0.26   $       0.34   $       0.24  
                                                                      ==========================================
Diluted income per common share from gain on sale of
   discontinued operations                                            $       1.97   $          -   $          -   
                                                                      ==========================================
Diluted income per common share from extraordinary item               $      (0.05)  $          -   $          -
                                                                      ==========================================
Diluted net income per common share                                   $       2.79   $       0.93   $       0.33   
                                                                      ==========================================
Average common shares outstanding, diluted                                 116,882        113,109         95,317        
                                                                      ==========================================
Unaudited pro forma data (Note 3):
   Net income before provision for pro forma income taxes                                           $     31,210   
   Provision for pro forma income taxes                                                                   (3,642)        
                                                                                                  --------------
         Pro forma net income                                                                       $     34,852  
                                                                                                  ==============
Pro forma basic income per common share from continuing
   operations                                                                                       $       0.13  
                                                                                                  ==============
Pro forma basic income per common share from discontinued
   operations                                                                                       $       0.25  
                                                                                                  ==============
Pro forma basic net income per common share from continuing operations                              $       0.38  
                                                                                                  ==============
Pro forma diluted income per common share from continuing
   operations                                                                                       $       0.13  
                                                                                                  ==============
Pro forma diluted income per common share from discontinued
   operations                                                                                       $       0.24  
                                                                                                  ==============
Pro forma diluted net income per common share                                                       $       0.37  
                                                                                                  ==============
</TABLE>


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.



<PAGE>


Modis Professional Services Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity


<TABLE>
<CAPTION>
                                            Preferred     Common           Additional              Deferred
(dollar amounts in thousands                  Stock       Stock           Contributed  Retained      Stock
except per share amounts)                Shares  Amount   Shares   Amount   Capital    Earnings  Compensation    Total
----------------------------------------------------------------------------------------------------------------------
<S>                                       <C>     <C> <C>           <C>     <C>         <C>          <C>      <C>

Balance December 31, 1995                  -      -   24,701,102    $ 247   $144,925    $ 49,992     $  (79)  $  195,085
3 for 1 stock split                        -      -   49,402,203      494       (494)          -          -            -
Sale of common stock                       -      -   20,017,575      200    424,477           -          -      424,677
Conversion of subordinated debentures      -      -    1,040,000       10      1,290           -          -        1,300
Issuance of restricted stock               -      -      345,000        3      4,889           -     (4,892)           -
Exercise of stock options and related
   tax benefit                             -      -    2,726,412       27     17,013           -          -       17,040
Vesting of restricted stock                -      -            -        -          -           -        537          537
Net income                                 -      -            -        -          -      31,210          -       31,210
Issuance of stock related to business 
   combinations                            -      -      994,521       11      2,086       1,214          -        3,311
Distribution to former shareholders of
   acquired S-corporations                 -      -            -        -          -      (3,381)         -       (3,381)
                                           -----------------------------------------------------------------------------
Balance, December 31, 1996                 -      -   99,226,813      992    594,186      79,035     (4,434)     669,779
Conversion of subordinated debentures                    727,272        7        993                               1,000
Exercise of stock options and related
   tax benefit                             -      -    3,069,143       31     30,169           -          -       30,200
Vesting of restricted stock                -      -            -        -          -           -        977          977
Net income                                 -      -            -        -          -     102,033          -      102,033
Issuance of stock related to business
   combinations                            -      -      668,870        7      8,846           -          -        8,853
                                           -----------------------------------------------------------------------------
Balance, December 31, 1997                 -      -  103,692,098    1,037    634,194     181,068     (3,457)     812,842
Repurchase of Common Stock                 -      -  (21,750,522)    (218)  (309,517)          -          -     (309,735) 
Conversion of Convertible debt             -      -    6,149,339       61     71,238           -          -       71,299
Exercise of stock options and related
   tax benefit                             -      -    2,741,895       28     27,453           -          -       27,481
Vesting of restricted stock                -      -            -        -          -           -      3,457        3,457
Issuance of common stock related to 
   business combinations                   -      -    5,473,513       55    140,880           -          -      140,935
Net income                                 -      -            -        -          -     323,831          -      323,831
                                           -----------------------------------------------------------------------------
Balance, December 31, 1998                 -      -   96,306,323    $ 963   $564,248    $504,899     $    -   $1,070,110
                                           ===========================================================================
</TABLE>


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>


Modis Professional Services Inc. and Subsidiaries
Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
                                                                             Years Ended December 31,
                                                                    ------------------------------------------
(dollar amounts in thousands except for per share amounts)                 1998          1997           1996         
--------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>             <C>            <C>
Cash flows from operating activities:
   Income from continuing operations                                $   68,860      $  63,370      $    8,577    
   Adjustments to income from operations to net cash
    provided by operating activities:
       Restructuring and impairment charges                             34,759              -               -
       Depreciation and amortization                                    37,105         22,456          10,303            
       Deferred income taxes                                            (9,392)         3,800           1,221           
       Changes in assets and liabilities
         Accounts receivable                                           (55,712)       (45,188)        (34,761)      
         Prepaid expenses and other assets                              (9,072)         1,592           9,335          
         Accounts payable and accrued expenses                          14,161         (8,151)         12,432         
         Accrued payroll and related taxes                              10,007          3,701          (6,433)       
         Other, net                                                     (1,775)        (2,623)          5,294          
                                                                    -----------------------------------------
           Net cash provided by operating activities                    88,941         38,957           5,968         
                                                                    -----------------------------------------
Cash flows from investing activities:
   Proceeds from sale of net assets of discontinued
      operations, net of costs                                         840,937              -               -
   Advances associated with sale of assets, net of 
      repayments                                                       (15,866)             -               - 
   Purchase of investments                                                   -              -         (10,438)       
   Investment in reverse repurchase agreements, net                          -              -          48,449        
   Purchase of furniture, equipment and leasehold
     improvements, net of disposals                                    (22,873)        (8,126)         (7,345)       
   Purchase of businesses, including additional earnouts on
     acquisitions, net of cash acquired                               (157,162)      (357,776)       (305,963)       
                                                                    -----------------------------------------
           Net cash provided by (used in) investing activities         645,036       (365,902)       (275,297)       
                                                                    -----------------------------------------
Cash flows from financing activities: 
   Proceeds from issuance of common stock, net of offering
     expenses paid                                                           -              -         424,677 
   Repurchases of common stock                                        (309,735)             -               - 
   Repurchase of convertible debentures                                (23,581)             -               -     
   Proceeds from stock options exercised                                24,235         23,130           6,977       
   Borrowings on indebtedness                                          302,500        446,583          92,800          
   Repayments on indebtedness                                         (652,000)      (133,853)       (115,745)       
   Other, net                                                                -           (100)         (3,650)        
                                                                    -----------------------------------------
           Net cash provided by (used in) provided by 
              financing activities                                    (658,581)       335,760         405,059        

Net increase in cash and cash equivalents                           -----------------------------------------
   from continuing operations                                           75,396          8,815         135,730        

Net cash provided by  (used in) discontinued operations                  6,482        (81,293)        (77,038)       

Cash and cash equivalents, beginning of year                            23,938         96,416          37,724             
                                                                    -----------------------------------------
Cash and cash equivalents, end of year                              $  105,816     $   23,938      $   96,416     
                                                                    =========================================
</TABLE>


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


<PAGE>




<TABLE>
<CAPTION>
                                                                               Years Ended December 31,
(dollar amounts in thousands except for per share amounts)                 1998           1997           1996
- ----------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>            <C>            <C>
SUPPLEMENTAL CASH FLOW INFORMATION
   Interest paid                                                      $    26,528    $     14,627   $      8,049    
   Income taxes paid                                                       40,440          24,323          8,308        

COMPONENTS OF CASH USED IN DISCONTINUED OPERATIONS

   Cash provided by (used in) operating activities                         81,559          (2,413)         6,081          
   Cash used in investing activities                                      (39,448)        (94,323)       (54,509)       
   Cash (used in) provided by financing activities                        (35,629)         15,443        (28,610)       
                                                                        -----------------------------------------
     Net cash provided by (used in) discontinued operations                 6,482         (81,293)       (77,038)       
                                                                        =========================================

NON-CASH INVESTING AND FINANCING ACTIVITIES 

During fiscal 1996, the Company completed numerous  acquisitions.  In connection
with the acquisitions, liabilities were assumed as follows:

   Fair value of assets acquired                                                                    $    383,008
   Cash paid                                                                                            (306,958)
                                                                                                    ------------
   Liabilities assumed                                                                              $     76,050
                                                                                                    ============
In fiscal 1996, Convertible  Subordinated Debentures of $1,300 were converted by
the Company into 1,040,000 shares of common stock. Also, 345,000 shares of stock
were issued to the President and Chief Executive  Officer  pursuant to the terms
of a restricted stock grant.

During fiscal 1996, in connection with the acquisition of certain companies, the
Company issued 994,521 shares of common stock with a fair value of $3,311.


During fiscal 1997, the Company completed numerous  acquisitions.  In connection
with the acquisitions, liabilities were assumed as follows:

   Fair value of assets acquired                                                                    $    393,474
   Cash paid                                                                                            (280,148)
                                                                                                    ------------
   Liabilities assumed                                                                              $    113,326
                                                                                                    ============

In fiscal 1997, Covertible Subordinated  Debentures of $1,000 were  converted by
the Company into 727,272 shares of common stock.

During fiscal 1997, in connection with the acquisition of certain companies, the
Company issued 668,870 shares of common stock with a fair value of $8,853.

During fiscal 1998, the Company completed numerous  acquisitions.  In connection
with the acquisitions, liabilities were assumed as follows:

   Fair value of assets acquired                                                                    $    104,943
   Cash paid                                                                                             (81,784)
                                                                                                    ------------
   Liabilities assumed                                                                              $     23,159
                                                                                                    ============

In  fiscal  1998,  Convertible  Subordinated  Debentures  of  $69,800  were
converted  by  the  Company  into  6,149,339  shares  of  common  stock.   Also,
paid-in-capital  was increased by $1,499  relating to unamortized  debt issuance
costs associated with the conversion.

During fiscal 1998, in connection with the acquisition of certain companies, the
Company issued 5,473,513 shares of common stock with a fair value of $140,935.
</TABLE>



<PAGE>

Modis Professional Services Inc. and Subsidiaries
Notes to Consolidated Financial Statements

1.  DESCRIPTION OF BUSINESS:

     Modis   Professional   Services,   Inc.   (formerly   known  as   AccuStaff
Incorporated), including all subsidiaries unless the context requires otherwise,
(Modis,  or the Company),  is an  international  provider of business  services,
including   consulting,   training  and  outsourcing   services  to  businesses,
professional  and service  organizations  and  governmental  agencies  through a
branch office network of approximately 264 offices throughout the United States,
Canada, United Kingdom and continental Europe. The Company's ongoing business is
organized  into two  divisions:  the  Information  Technology  division  and the
Professional Services division, which generated 68.4% and 31.6% of the Company's
fiscal 1998 revenue from continuing operations, respectively.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Consolidation

     The consolidated  financial  statements include the accounts of the Company
and its wholly owned subsidiaries.  All material intercompany  transactions have
been eliminated in the accompanying consolidated financial statements.

Cash and Cash Equivalents

     Cash and cash equivalents include deposits in banks, government securities,
money market funds, and short-term  investments with maturities,  when acquired,
of 90 days or less.

Furniture, Equipment, and Leasehold Improvements

     Furniture,  equipment, and leasehold improvements are recorded at cost less
accumulated  depreciation  and  amortization.   Depreciation  of  furniture  and
equipment is computed using the  straight-line  method over the estimated useful
lives of the  assets,  ranging  from 5 to 15 years.  Amortization  of  leasehold
improvements is computed using the straight-line  method over the useful life of
the asset or the term of the lease,  whichever is shorter. Costs associated with
the development of the Company's proprietary software package have been deferred
and  are  being  amortized  over a  five-year  period.  Total  depreciation  and
amortization  expense  was  $10,973, $4,871 and $3,055 for 1998,  1997 and 1996,
respectively.  Accumulated depreciation and amortization of furniture, equipment
and  leasehold  improvements  as of  December  31, 1998 and 1997 was $40,432 and
$29,459, respectively.

Goodwill

     The  Company  has  allocated  the  purchase  price  of  acquired  companies
according to the fair market value of the assets acquired.  Goodwill  represents
the excess of the cost over the fair value of the net tangible  assets  acquired
through these  acquisitions,  including any  contingent  consideration  paid (as
discussed  in Note 3 to the  Consolidated  Financial  Statements),  and is being
amortized on a  straight-line  basis over  periods  ranging from 15 to 40 years.
Management  periodically  reviews  the  potential  impairment  of  goodwill on a
undiscounted cash flow basis to assess recoverability. If the estimated future
cash flows are  projected to be less than the  carrying  amount,  an  impairment
write-down  (representing  the carrying  amount of the goodwill that exceeds the
undiscounted  expected future cash flows) would be recorded as a period expense.
Accumulated  amortization  was $51,846  and $25,714 as of December  31, 1998 and
1997,  respectively.  See Note 12 to the Consolidated  Financial  Statements for
discussion of goodwill impairment charge.

Revenue Recognition

     The Company  recognizes as revenue,  at the time the professional  services
are provided,  the amounts billed to clients.  In all such cases, the consultant
is the  Company's  employee  and all  costs  of  employing  the  worker  are the
responsibility of the Company and are included in the cost of services.

Foreign Operations

     The financial  position and  operating  results of foreign  operations  are
consolidated using the local currency as the functional currency. Local currency
assets and liabilities are translated at the rate of exchange to the U.S. dollar
on the balance  sheet date,  and the local  currency  revenues  and expenses are
translated  at average  rates of exchange to the U.S.  dollar during the period.
Foreign currency  translation  gains and losses during fiscal 1998 and 1997 were
not  material  and  have not  been  segregated  in the  Company's  Statement  of
Stockholders' Equity.

Stock Based Compensation

     During 1995, the Financial  Accounting Standards Board ("FASB") issued SFAS
No.  123,  "Accounting  for  Stock-Based  Compensation,"  which  encourages  all
companies to recognize  compensation  expense based on the fair value,  at grant
date, of instruments issued pursuant to stock-based compensation plans. SFAS No.
123  requires  the fair  value of the  instruments  granted,  which is  measured
pursuant to the  provisions of the statement,  to be recognized as  compensation
expense over the vesting period of the instrument.  However,  the statement also
allows companies to continue to measure compensation costs for these instruments
using the method of accounting prescribed by Accounting Principles Board Opinion
No. 25 ("APB No. 25"),  "Accounting  for Stock Issued to  Employees."  Companies
electing  to  account  for  stock-based   compensation  plans  pursuant  to  the
provisions of APB No. 25 must make pro forma disclosures of net income as if the
fair value  method  defined in SFAS No. 123 had been  applied.  The  Company has
elected to account for stock options under the  provisions of APB No. 25 and has
included the disclosures  required by SFAS No. 123 in Note 9 to the Consolidated
Financial Statements.

Income Taxes

     Deferred tax assets and  liabilities are recognized for the expected future
tax  consequences of events that have been included in the financial  statements
or tax returns in  accordance  with SFAS No. 109,  Accounting  for Income Taxes.
Under this method,  deferred tax liabilities and assets are determined  based on
the differences  between the financial  statement  carrying  amounts and the tax
basis of assets and  liabilities  using enacted tax rates in effect for the year
in which the differences are expected to reverse.

Net Income Per Common Share

     Basic and diluted net income per common share are  presented in  accordance
with SFAS No.  128,  Earnings  per Share.  Basic net income per common  share is
computed  by  dividing  net  income  by the  weighted  average  number of shares
outstanding. Diluted net income per common share includes the dilutive effect of
convertible debentures and stock options.

Comprehensive Income

     During 1997, the FASB issued SFAS No. 130, Reporting  Comprehensive Income,
which  requires  that  changes in  comprehensive  income be shown in a financial
statement  that is  displayed  with  the  same  prominence  as  other  financial
statements.  This  statement is effective  for the  Company's  1998 fiscal year.
Management  does not believe that the Company has material  other  comprehensive
income that would require separate disclosure.

Pervasiveness of Estimates

   The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amount  of  assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenue  and  expenses  during the  reporting  period.
Although  management  believes  these  estimates and  assumptions  are adequate,
actual results may differ from the estimates and assumptions used.

Reclassifications

     Certain  amounts have been  reclassified in 1996 and 1997 to conform to the
1998 presentation.

Recent Accounting Pronouncements

     During 1998,  the  American  Institute  of  Certified  Public  Accountants'
Executive  Committee  issued  Statement  of  Position  Number  98-1 (SOP  98-1),
"Accounting for the Cost of Computer Software Developed or Obtained for Internal
Use". SOP 98-1 is effective for fiscal years  beginning after December 15, 1998.
Management  believes that the Company is  substantially  in compliance with this
pronouncement and that the  implementation of this pronouncement will not have a
material effect on the Company's  consolidated  financial  position,  results of
operations or cash flows. Implementation is planned for fiscal 1999.

     During 1998,  the  American  Institute  of  Certified  Public  Accountants'
Executive  Committee  issued  Statement  of  Position  Number  98-5 (SOP  98-5),
"Reporting  on the Costs of  Start-Up  Activities".  SOP 98-5 is  effective  for
fiscal years beginning after December 15, 1998. Management does not believe that
its adoption will have a material effect on the Company's consolidated financial
position or results of operations. Implementation is planned for fiscal 1999.

     In June 1998, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standards  ("SFAS") No. 133,  "Accounting  for Derivative
Instruments and for Hedging Activities." SFAS No. 133 establishes accounting and
reporting  standards  requiring that every derivative  instrument be recorded on
the balance sheet as either an asset or liability  measured at fair value.  SFAS
No. 133  requires  that  changes  in a  derivative's  fair  value be  recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting  for  qualifying  hedges  allows a  derivative's  gains and losses to
offset related  results on the hedged item in the income  statement and requires
that a company  formally  document,  designate and assess the  effectiveness  of
transactions that receive hedge accounting. SFAS No. 133 is effective for fiscal
years  beginning  after June 15, 1999, and cannot be applied  retroactively.  We
have not yet  quantified  the impacts of adopting  SFAS No. 133 on our financial
statements;  however,  SFAS No. 133 could  increase the  volatility  of reported
earnings and other comprehensive income once adopted.

Unaudited Pro Forma Data

     The McKinley Group, Inc.  (McKinley) and HJM Consulting,  Inc. (HJM), prior
to their acquisition by the Company, had elected to be treated as S Corporations
for federal and state income tax purposes.  As such,  the taxable income of each
company was reported to and subject to tax to its respective  shareholders.  The
unaudited pro forma data on the 1996  consolidated  statement of income provides
approximate  federal and state income taxes (by  applying  statutory  income tax
rates) that would have been incurred if McKinley and HJM had been subject to tax
as a C Corporation.

3.   ACQUISITIONS 

For the year ended December 31, 1998

     The Company acquired the following  companies which have been accounted for
under  the  purchase  method of  accounting:  Technology  Services  Corporation,
Millard Consulting Services,  Inc., Diversified Consulting,  Inc., Avalon, Ltd.,
Cope Management,  Ltd. and Lion Recruitment,  Ltd.,  Accountants  Express of San
Diego, Inc., Software Knowledge, Ltd., Resource Control and Management, Ltd. and
Software  Knowledge  Systems,  Ltd. and Colvin  Resources,  Inc.  The  aggregate
purchase  price of these  acquisitions  during 1998,  was $93,642,  comprised of
$81,784  in  cash  and  $11,858  in  notes   payable  to  former   shareholders.
Additionally, in March 1998, the Company issued 4,598,698 shares of common stock
to the former  shareholders of Actium,  Inc. in exchange for all of their shares
of Actium, Inc., and in August 1998, the Company issued 874,815 shares of Common
Stock to the former  shareholders of Consulting  Partners,  Inc. in exchange for
all of their shares of Consulting  Partners,  Inc. These two  acquisitions  were
also  accounted  for under the purchase  method of  accounting.  The Company has
allocated  the purchase  price  according to the fair market value of the assets
acquired in the  aforementioned  acquisitions  accounted  for under the purchase
method of  accounting.  The excess of the purchase  price over the fair value of
the tangible assets  (goodwill) is being amortized on a straight line basis over
a period of 40 years, including any contingent consideration paid.

For the year ended December 31, 1997

     The Company acquired the following  companies which have been accounted for
under the purchase method of accounting:  Executives Monitor,  Inc., Manchester,
Inc., Consultants in Computer Software, Inc., Preferred Consulting,  Inc., Legal
Information Technology,  Inc., Lenco Computer Consulting, Inc., Computer Action,
Inc.,  AMPL Inc. d/b/a Parker & Lynch,  Wasser,  Inc.,  AMICUS  Staffing,  Inc.,
Custom Software Services, Inc., Accounting Principals, Inc., Keystone Consulting
Group, Inc., Badenoch & Clark Ltd., Computer Systems Development Co. of America,
Inc., Technical Software Solutions,  Inc., Real-Time Consulting,  Inc., IT Link,
Inc.,  and  Hunterskil  Howard,  plc.  The  aggregate  purchase  price  of these
acquisitions  during 1997, was $307,971,  comprised of $280,148 in cash, $19,413
in notes  payable  to former  shareholders  and $8,410 in the  Company's  common
stock. The Company has allocated the purchase price according to the fair market
value of the assets acquired in the  aforementioned  acquisitions  accounted for
under the purchase  method of accounting.  The excess of the purchase price over
the fair  value of the  tangible  assets  (goodwill)  is  being  amortized  on a
straight  line  basis  over  period  of  40  years,   including  any  contingent
consideration paid.

     In addition,  the Company merged with Schwab Carrese and  Associates,  Inc.
which was accounted for under the pooling-of-interests method of accounting. The
Company  acquired  all of the stock of Schwab  Carrese and  Associates,  Inc. in
exchange for 263,550 shares of the Company's common stock. Due to the immaterial
affect on prior periods,  the Company's historical financial statements have not
been restated for this merger.

For the year ended December 31, 1996

     The Company acquired the following  companies which have been accounted for
under  the  purchase  method  of  accounting:   Tekna,   Inc.,   Goldfarb-Wasson
Associates,  Inc. d/b/a/ GW Consulting,  and an affiliated company,  Programming
Enterprises,   Inc.  d/b/a  Mini-Systems   Associates,   Zeitech,  Inc.,  Career
Enhancement   International,   Inc.,  Additional  Technical  Support,  Inc.  and
affiliated companies, HNS Software, Inc., American Computer Professionals, Inc.,
Project  Professionals,  Inc.,  Logue & Rice,  Inc.  and  affiliated  companies,
Contact Recruiters, Inc. and an affiliated company, Openware Technologies, Inc.,
CAD Design,  Inc., Alta Technical Services,  Inc., In-House Counsel,  Inc., TRAK
Services,  Inc., Perspective Technology,  Inc., Datacorp Business Systems, Inc.,
The  Daedalian  Group,  Inc.  d/b/a  Berger  & Co.,  North  American  Consulting
Services, Inc., TSG Professional Services, Inc., Contracted Services Group, Inc.
d/b/a The Blackstone Group,  Scientific Staffing, Inc. and affiliated companies,
and  Resource  Solutions  Group,  Inc.  The  aggregate  purchase  price of these
acquisitions  during 1996, was $336,958,  comprised of $306,958 in cash, $28,000
in notes  payable  to former  shareholders  and $2,000 in the  Company's  common
stock. The Company has allocated the purchase price according to the fair market
value of the assets acquired in the  aforementioned  acquisitions  accounted for
under the purchase  method of accounting.  The excess of the purchase price over
the fair  value of the  tangible  assets  (goodwill)  is  being  amortized  on a
straight  line basis over  periods  ranging from 30 to 40 years,  including  any
contingent consideration paid for the purchase method acquisitions.

<PAGE>


     The Company completed three mergers during 1996, McKinley,  Career and HJM,
which were accounted for under the pooling-of-interests method of accounting and
for which the 1996 financial  statements have been restated.  Additionally,  the
Company merged with Staffware, Inc. and Legal Support Personnel, Inc. which were
accounted for under the pooling-of-interests  method of accounting.  The Company
acquired  all of the stock of the these two  companies  in exchange  for 926,486
shares of the Company's  common  stock.  Due to the  immaterial  effect on prior
periods,  the Company's  historical  financial statements have not been restated
for these two acquisitions.

Earn-out payments

     In addition,  the Company is obligated under various acquisition agreements
to make earn-out  payments to former  stockholders  of  aforementioned  acquired
companies accounted for under the purchase method of accounting, over periods up
to four  years  upon  attainment  of certain  earnings  targets of the  acquired
companies.  The Company anticipates that the cash generated by the operations of
the acquired  companies will provide a substantial  part of the capital required
to fund these payments.

Unaudited pro forma results of operations

     The unaudited  pro forma  consolidated  results of operations  listed below
include the effects of the purchases  discussed above assuming the  acquisitions
had occurred at the beginning of the year in which each company was acquired and
also at the beginning of the preceding  year.  Pro forma  adjustments  have been
made to give effect to amortization of goodwill,  interest expense on additional
borrowings used to fund the acquisitions,  and other adjustments,  together with
income tax effects.

     The results for fiscal  1996,  include  $14,446,  $10,818 net of taxes,  in
acquisition  costs related to the mergers with  McKinley,  Career,  and HJM. The
results for fiscal 1998 include  $25,202,  net of taxes,  in  restructuring  and
impairment  charges.  These pro forma amounts are not necessarily  indicative of
what actually would have occurred if the acquisitions had been in effect for the
entire periods presented.  In addition,  they are not intended to be projections
of future  results and do not reflect any synergies  that might be achieved from
combined operations.

<TABLE>
<CAPTION>
                                                                                        Fiscal
                                                                      -------------------------------------------
(unaudited)                                                               1998           1997            1996
-----------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>            <C>            <C>
Revenue from continuing operations                                    $  1,829,318   $  1,543,006   $  1,127,786
Income from continuing operations                                           71,934         70,747         27,002
Income and gain on sale from discontinued operations                       260,581         39,050         23,312
Net income                                                            $    332,515   $    109,797   $     50,314
Diluted income per common share from continuing
   operations                                                         $       0.64   $       0.66   $       0.28
Diluted income per common share and gain on sale from 
   discontinued operations                                            $       2.23   $       0.35   $       0.24
Diluted net income per common share                                   $       2.87   $       1.01   $       0.52

</TABLE>


<PAGE>

4.  NOTES PAYABLE
Notes payable at December 31, 1998 and 1997 consisted of the following:

<TABLE>
<CAPTION>
                                                                                                Fiscal
                                                                                     ---------------------------
                                                                                          1998            1997            
- --------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>            <C>
Credit facilities                                                                    $         -    $    337,000   
Notes payable to former shareholders of acquired companies (interest               
   ranging from 4.99% to 8.00% due through November 2004)                                 31,513          27,151         
                                                                                     ---------------------------
                                                                                          31,513         364,151         
Current portion of notes payable                                                          15,988          16,366         
                                                                                     ---------------------------
Long-term portion of notes payable                                                   $    15,525    $    347,785   
                                                                                     ===========================
</TABLE>

     Prior to the sale of the Company's  Commercial  operations and Teleservices
division, the Company had a $500 million credit facility which was syndicated to
a group of 20 banks with NationsBank, N.A. as the principal agent. This facility
was unsecured, but guaranteed by each of the Company's subsidiaries. Immediately
subsequent to the sale of the Company's  Commercial and Teleservices  divisions,
the existing  facility was paid-off,  and terminated.  Repayment of the existing
facility totaled $477,000.

     On October 30, 1998, the Company entered into a new $500 million  revolving
credit  facility  which is syndicated  to a group of 13 banks with  NationsBank,
N.A.  as the  principal  agent.  The  facility  expires  on  October  21,  2003.
Outstanding  amounts  under the credit  facility  will bear  interest at certain
floating rates as specified by the credit facility. The credit facility contains
certain  financial  and  non-financial   covenants  relating  to  the  Company's
operations,  including  maintaining certain financial ratios.  Repayments of the
credit facility is guaranteed by the material  subsidiaries  of the Company.  In
addition,  approval is required by the majority of the lenders at such time that
the cash consideration of an individual  acquisition exceeds 10% of consolidated
stockholders' equity of the Company. The Company incurred certain costs directly
related to securing the credit  facility in the amount of  approximately  $788 .
These costs have been  capitalized  and are being amortized over the life of the
credit facility.

     On October 16, 1995,  Career  Horizons,  Inc.,  issued $86.25 million of 7%
Convertible  Senior Notes Due 2002 which were assumed by the Company pursuant to
the  merger  with  Career  Horizons,  Inc.  Interest  on  the  notes  were  paid
semiannually on May 1 and November 1 of each year. The Notes were convertible at
the option of the holder thereof,  unless  previously  redeemed,  into shares of
common stock of the Company at a conversion price of $11.35 per share. The Notes
were redeemable,  in whole or in part, at the option of the Company, at any time
on or after November 1, 1998, at stated redemption prices, together with accrued
interest. The Company called the Notes on October 1, 1998, to be either redeemed
or converted as of November 1, 1998.  Prior to November 1, 1998,  $16.45 million
of Notes were redeemed by the Company at a premium of $7.13  million,  and $69.8
million were converted into shares of common stock of the Company.

     During the  fourth  quarter  of fiscal  1998,  the  Company  recognized  an
extraordinary  after-tax  charge of $5.61  million as a result of the  Company's
early  retirement of $16.45 million of 7% Convertible  Senior Notes Due 2002 and
the termination of the Company's existing credit facility immediately subsequent
to the sale of the Company's Commercial operations and Teleservices division.
 
     The Company paid a premium of $7.13 million on the early  extinguishment of
the 7% Senior  Convertible  Senior Notes and wrote off $0.37  million of related
unamortized  debt  issuance  costs.  Additionally,  the Company  wrote off $1.63
million of unamortized  debt financing  costs related to the  termination of the
credit facility.

     Maturities of notes payable are as follows for the fiscal years  subsequent
to December 31, 1998:

<TABLE>
<CAPTION>

Fiscal year
- ------------------------------------
<S>                         <C>
1999                        $ 15,988
2000                           7,546
2001                               -
2002                               -
2003                           2,475
Thereafter                     5,504
                            --------
                            $ 31,513
                            ========
</TABLE>
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Components of accounts  payable and accrued expenses as of December 31, 1998 and
1997 are as follows:
<TABLE>
<CAPTION>

                                 December 31,        December 31, 
                                     1998               1997
                                   --------           ---------
<S>                                <C>                 <C>    
Trade accounts payable               96,447             58,829
Accrued earn-out payments            65,161             33,604
Restructuring charge                 24,823                  -
Due to Randstad (1)                  20,250                  -
                                   --------            --------   
Total                               206,681             92,433
                                   ========            ========
<FN>
 
(1) The  Due to  Randstad  represents  the  purchase  price  true-up  adjustment
pursuant  to the sale  agreement  which was paid in the first  quarter of fiscal
1999.
</FN>

</TABLE>




6.  COMMITMENTS AND CONTINGENCIES:

Leases

   The Company leases office space under various noncancelable operating leases.
The  following  is a schedule of future  minimum  lease  payments  with terms in
excess of one year:

<TABLE>
<CAPTION>

Fiscal Year
-------------------------------------------------------------------------------------------------------
<S>                                                                                            <C>
1999                                                                                           $ 13,410
2000                                                                                             11,828 
2001                                                                                              8,432
2002                                                                                              6,083
2003                                                                                              3,830
Thereafter                                                                                        6,195
                                                                                               --------
                                                                                               $ 49,778
                                                                                               ========
</TABLE>

     Total rent expense for fiscal 1998, 1997 and 1996 was $13,834, $10,175, and
$4,303 respectively.

Litigation

     The  company is a party to a number of lawsuits  and claims  arising out of
the ordinary conduct of its business. In the opinion of management, based on the
advice of in-house and external legal  counsel,  the lawsuits and claims pending
are not likely to have a material  adverse effect on the Company,  its financial
position, or results of its operations.
<PAGE>

7.   INCOME TAXES:

     A comparative  analysis of the  provision for income taxes from  continuing
operations is as follows:

<TABLE>
<CAPTION>
                                           Fiscal
                          ------------------------------------
                              1998         1997           1996         
- --------------------------------------------------------------
<S>                       <C>        <C>            <C>
Current:
   Federal                $  42,030  $   30,210     $   15,594    
   State                      5,789       3,347          2,878       
   Foreign                    6,257       1,446              -          
                          ------------------------------------
                             54,076      35,003         18,472      
                          ------------------------------------
Deferred:
   Federal:                  (8,256)      2,991            948       
   State:                    (1,136)        361            273        
   Foreign:                   3,642         448              -          
                          ------------------------------------
                             (5,750)      3,800          1,221       
                          ------------------------------------
                          $  48,326  $   38,803     $   19,693      
                          ====================================
</TABLE>


     The  difference  between  the  actual  income  tax  provision  and  the tax
provision  computed by applying the statutory  federal income tax rate to income
from continuing  operations before provision for income taxes is attributable to
the following:

<TABLE>
<CAPTION>
                                                                                Fiscal
                                                         --------------------------------------------------------------
                                                           1998                 1997                  1996                 
                                                         --------------------------------------------------------------
                                                          AMOUNT   PERCENTAGE  AMOUNT   PERCENTAGE  AMOUNT  PERCENTAGE
- -----------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>           <C>     <C>           <C>    <C>          <C>
Tax computed using the federal statutory rate             $   41,015    35.0%   $  35,761     35.0%  $  9,895     35.0%    
State income taxes, net of federal income tax effect           3,024     2.6        2,699      2.6      1,305      4.6         
Pre-acquisition earnings of acquired S corporations                -       -            -        -     (1,081)    (3.8)      
Acquired subsidiaries change from cash to accrual basis            -       -            -        -      4,723     16.7        
Non-deductible merger related costs                                -       -            -        -      4,081     14.4  
Non-deductible goodwill impairment charge                      3,825     3.2            -        -          -        -
Permanent differences and other                                  462     0.4          343      0.4        770      2.8         
                                                         --------------------------------------------------------------
                                                          $   48,326    41.2%   $  38,803     38.0%  $ 19,693     69.7%    
                                                         ==============================================================
</TABLE>


<PAGE>


   The  components  of the deferred tax assets and  liabilities  recorded in the
accompanying consolidated balance sheets are as follows:

<TABLE>
<CAPTION>
                                                                                                 Fiscal
                                                                                     ---------------------------
                                                                                          1998            1997
- ----------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>            <C>
Gross deferred tax assets:
   Self-insurance reserves                                                           $   2,954     $        376  
   Allowance for doubtful accounts receivable                                            4,097              897            
   Purchase accounting adjustments                                                       2,887            2,910         
   Amortization of computer software costs                                                   -              135          
   Depreciation and amortization of furniture, equipment and leasehold improvements          -            1,043 
   Restructuring and impairment charge                                                  10,243                -          
   Other                                                                                 2,207            1,872          
                                                                                     ---------------------------
      Total gross deferred tax assets                                                   22,388            7,233          
                                                                                     ---------------------------
Gross deferred tax liabilities:
   Amortization of goodwill                                                            (15,399)         (10,202)        
   Acquired subsidiaries change from cash to accrual basis                              (2,423)          (2,411) 
   Depreciation and amortization of furniture, equipment and leasehold improvements       (237)               -
   Other                                                                                  (317)               -           
                                                                                     ---------------------------
      Total gross deferred tax liabilities                                             (18,376)         (12,613)       
                                                                                     ---------------------------
      Net deferred tax asset (liability)                                             $   4,012     $     (5,380)   
                                                                                     ===========================
</TABLE>




   Management has determined, based on the history of prior taxable earnings and
its  expectations  for the future,  taxable  income will more likely than not be
sufficient  to fully  realize  deferred  tax assets  and,  accordingly,  has not
reduced deferred tax assets by a valuation allowance.



8.   EMPLOYEE BENEFIT PLANS

Profit Sharing Plans

     The Company  has a qualified  contributory  profit  sharing  plan (a 401(k)
plan) which covers all full-time employees over age twenty-one with over 90 days
of  employment  and 375 hours of service.  The  Company  made  contributions  of
approximately $6,060, net of forfeitures,  to the profit sharing plan for fiscal
1998. No matching  contributions  were made by the Company to the profit sharing
plan in fiscal  1997 or 1996.  The  Company  also has a  non-qualified  deferred
compensation  plan  for its  highly  compensated  employees.  The  non-qualified
deferred   compensation   plan  does  not  provide  for  any  matching,   either
discretionay or formula-based, by the Company.

     The Company has assumed  many 401(k) plans of acquired  subsidiaries.  From
time to time, the Company merges these plans into the Company's plan.  Effective
January 1, 1998, a  significant  number of the profit  sharing plans were merged
and amended to become contributory  plans.  Pursuant to the terms of the various
profit sharing plans, the Company will match 50% of employee contributions up to
the first 5% of total eligible compensation,  as defined.  Company contributions
relating to these merged plans are included in the aforementioned total.

     Prior to the Company's sale of its Commercial  operations and  Teleservices
division, as discussed in Note 16 to the Consolidated Financial Statements,  the
Company had two 401(k) plans: the aforementioned plan covering professional and
IT  employees,  and one  covering  non-highly  compensated  (as  defined  by IRS
regulations)  full time  commercial  employees over age twenty-one with at least
one year of employment and 1,000 hours of service (the  'commercial  plan').  In
connection with the sale, the Company transferred  sponsorship of the commercial
plan to Randstad U.S., L.P. The effective date of the transfer was September 27,
1998.  Company  contributions  relating  to the  commercial  plan  prior  to the
Company's  sale  of its  commercial  businesses  are  included  in  Income  from
Discontinued  Operations,  as disclosed in Note 16 to the Consolidated Financial
Statements.


9.  STOCKHOLDERS' EQUITY 

Public Offerings of Common Stock

     In April 1996, the Company completed an offering for the sale of 11,790,000
shares of common  stock.  The  Company  received  $304,900  from the sale of the
shares, net of underwriting  discount and expenses associated with the offering.
The net  proceeds  were used to repay  all  outstanding  indebtedness  under the
Company's  credit  facility,  which was  approximately  $92,800.  The  remaining
proceeds have been used primarily to fund acquisitions.

     The Company's subsidiary,  Career Horizons,  Inc., prior to the date of the
merger with the Company,  completed  offerings in which Career issued  8,227,575
shares of common stock,  adjusted for the conversion to the Company's  shares of
common stock, in which Career received $119,777,  net of underwriting  discounts
and  expenses  associated  with the  offerings.  Career  used a  portion  of the
proceeds from its initial offering to repay subordinated notes.

Stock Repurchase Plan

     On October 31,  1998,  the  Company's  Board of  Directors  authorized  the
repurchase of up to $200.0  million of the Company's  common stock pursuant to a
share buyback  program.  On December 4, 1998,  the Company's  Board of Directors
increased the authorized  repurchase by an additional  $110.0 million,  bringing
the total  authorized  share buyback  program  amount to $310.0  million.  As of
December 31, 1998, the Company had repurchased  approximately  21,751,000 shares
under the share  buyback  program.  Included  in the  shares  repurchased  as of
December  31, 1998 were  approximately  6,150,000  shares  repurchased  under an
accelerated stock acquisition plan ("ASAP").  The Company entered into the ASAP
with a  certain  investment  bank who  agreed  to sell the  Company  shares at a
certain cost. The  investment  bank borrowed these shares from its customers and
was required to enter into market transactions, subject to Company approval, and
purchase  shares  to return  to its  customers.  The  Company,  pursuant  to the
agreement,  agreed to compensate  the  investment  bank for any increases in the
Company's  stock price that would cause the investment  bank to pay an amount to
purchase  the stock over the ASAP  price.  Conversely,  the  Company  received a
refund in the purchase  price if the  Company's  stock price fell below the ASAP
price.  Subsequent to December 31, 1998, the Company used refunded proceeds from
the ASAP to complete  the program  during  January and February  1999,  with the
repurchase  of   approximately   597,000  shares,   bringing  the  total  shares
repurchased under the program to approximately  22,348,000  shares. All of these
shares were retired upon purchase.


Incentive Employee Stock Plans

   Effective  December 19, 1993, the Board of Directors  approved the 1993 Stock
Option Plan (the 1993 Plan) which  provides  for the granting of options for the
purchase  of up to an  aggregate  of  2,400,000  shares of  common  stock to key
employees.

   Under the 1993 Plan, the Stock Option  Committee (the Committee) of the Board
of Directors  has the  discretion  to award stock  options,  stock  appreciation
rights  (SARS) or  restricted  stock  options or  non-qualified  options and the
option price shall be established by the Committee.  Incentive stock options may
be granted at an exercise price not less than 100% of the fair market value of a
share on the  effective  date of the  grant  and  non-qualified  options  may be
granted at an  exercise  price not less than 50% of the fair  market  value of a
share on the effective date of the grant.

     On August 24, 1995,  the Board of Directors  approved the 1995 Stock Option
Plan (the 1995  Plan)  which  provided  for the  granting  of  options  up to an
aggregate of 3,000,000  shares of common stock to key employees  under terms and
provisions similar to the 1993 Plan. During fiscal 1998, 1997 and 1996, the 1995
Plan was  amended  to  provide  for the  granting  of an  additional  8,000,000,
3,000,000 and 6,000,000 shares, respectively.  During fiscal 1998, the 1995 Plan
was amended to, among other things,  eliminate  the  Company's  ability to issue
SARS and to amend the  definition of a director to comply with Rule 16b-3 of the
Securities  Exchange  Act of 1934,  as amended  and with  Section  162(m) of the
Internal Revenue Code of 1986, as amended.

     The Company  assumed the stock  option  plans of its  subsidiaries,  Career
Horizons,  Inc., Actium, Inc. and Consulting Partners, Inc., upon acquisition in
accordance  with  terms  of the  respective  merger  agreements.  At the date of
respective acquisitions, the assumed plans had 2,566,252 options outstanding. As
of December 31, 1998 and 1997 the assumed plans had 340,719 and 372,445  options
outstanding, respectively.

Non-Employee Director Stock Plan

     Effective December 29, 1993, the Board of Directors of the Company approved
a stock option plan (Director Plan) for non-employee directors,  whereby 600,000
shares  of  common  stock  have  been  reserved  for  issuance  to  non-employee
directors.  The  Director  Plan  allows each  non-employee  director to purchase
60,000 shares at an exercise price equal to the fair market value at the date of
the grant upon election to the Board. In addition, each non-employee director is
granted  20,000  options upon the  anniversary  date of the  director's  initial
election date. The options become  exercisable  ratably over a five-year  period
and  expire  ten years  from the date of the grant.  However,  the  options  are
exercisable  for a maximum of three  years after the  individual  ceases to be a
director  and if the  director  ceases  to be a  director  within  one  year  of
appointment  the options  are  canceled.  In fiscal  1997 and 1996,  the Company
granted 120,000 and 80,000 options,  respectively,  at an average exercise price
of $28.35 and $25.31,  respectively.  During 1997, the Director plan was amended
to increase the number of shares available under the plan to 1.6 million shares.
In fiscal 1998, the Company granted 240,000 options at an average exercise price
of $21.56.

<PAGE>

   The following table summarizes the Company's Stock Option Plans:

<TABLE>
<CAPTION>
                                                                                                         Weighted
                                                                                       Range of          Average
                                                                         Shares     Exercise Prices   Exercise Price
---------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>          <C>                  <C>

Balance, December 31, 1995                                              6,064,456   $ 0.18 - $11.00      $   3.88
   Granted                                                              6,594,535   $11.27 - $33.75      $  19.50
   Exercised                                                           (2,029,163)  $ 0.18 - $12.09      $   2.76
   Canceled                                                               (61,467)  $ 5.81 - $22.22      $  11.69
                                                                       ----------------------------------------------
Balance, December 31, 1996                                             10,568,361   $ 0.69 - $33.75      $  13.67
   Granted                                                              2,452,176   $16.13 - $31.38      $  18.92
   Exercised                                                           (3,069,143)  $ 0.69 - $32.00      $   7.02
   Canceled                                                               (43,273)  $11.80 - $24.92      $  23.18
                                                                       ----------------------------------------------
Balance, December 31, 1997                                              9,908,121   $ 0.83 - $33.75      $  16.76
   Granted                                                              8,560,721   $ 4.80 - $35.13      $  16.00  
   Exercised                                                           (2,741,895)  $ 0.83 - $28.50      $  13.57
   Canceled                                                            (4,522,954)  $ 1.25 - $35.13      $  20.22
                                                                       ----------------------------------------------
BALANCE, DECEMBER 31, 1998                                             11,203,993   $ 0.83 - $33.38      $  15.38 
                                                                       ==============================================
</TABLE>

     Effective  December 15, 1998, the Company's  Board of Directors  approved a
stock option repricing program whereby  substantially all holders of outstanding
options who were active  employees  (except those officers and  directors)  with
exercise prices above $14.44 per share were amended so as to change the exercise
price to $14.44 per share,  the fair market value on the effective date. A total
of 3,165,133  shares,  with exercise prices ranging from $16.13 to $35.13,  were
amended under this program. All other terms of such options remained unchanged.


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

<TABLE>
<CAPTION>
                                                         Outstanding                          Exercisable
                                           ------------------------------------------- -----------------------------
                                                                        Average                        Average
                                                          Average       Exercise                       Exercise
                                            Shares        life (a)        Price          Shares         Price
--------------------------------------------------------------------------------------------------------------------
<S>                                        <C>            <C>           <C>            <C>           <C>
$  0.83 - $  1.25                             180,600     5.03          $  1.22          168,600     $  1.22                       
$  2.54 - $  2.54                              84,078     8.50             2.54           84,078        2.54             
$  2.85 - $  5.17                             595,492     6.85             4.84          487,234        4.98            
$  6.63 - $  9.00                              36,633     8.85             7.85           32,433        7.76
$ 10.20 - $ 14.50                           7,513,857     8.49            13.52        2,351,947       14.37
$ 16.38 - $ 24.00                           1,328,333     8.80            21.16           55,336       19.62                      
$ 24.50 - $ 33.38                           1,465,000     7.97            26.46        1,044,668       26.16                       
                                           -------------------------------------------------------------------------
Total                                      11,203,993     8.31          $ 15.39        4,224,296     $ 15.49  
                                           =========================================================================
</TABLE>

(a) Average contractual life remaining in years.

     At year-end  1997,  options with an average  exercise  price of $15.16 were
exercisable on 5.1 million  shares;  at year-end  1996,  options with an average
exercise price of $8.07 were exercisable on 5.0 million shares.

     The  Company  adopted  the  disclosure-only  provisions  of SFAS  No.  123,
Accounting for Stock-Based  Compensation,  issued in October 1995.  As permitted
by the  provisions  of SFAS No.  123,  the  Company  applies  APB Opinion 25 and
related  interpretations  in accounting for its employee stock option plans and,
accordingly, does not recognize compensation cost. If the Company had elected to
recognize  compensation  cost for options granted in 1998 and 1997, based on the
fair value of the options  granted at the grant date as  prescribed  by SFAS No.
123,  net income and earnings per share would have been reduced to the pro forma
amounts indicated below.
<TABLE>
<CAPTION>
                                                                                          1998             1997             
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>            <C>
Net Income
   As reported                                                                       $    323,831   $    102,033   
   Pro forma                                                                         $    312,029   $     92,353    
Basic net income per common share
   As reported                                                                       $       2.98   $       1.00    
   Pro forma                                                                         $       2.88   $       0.91    
Diluted net income per common share
   As reported                                                                       $       2.79   $       0.93    
   Pro forma                                                                         $       2.69   $       0.85    

</TABLE>

   The weighted average fair values of options granted during 1998 and 1997 were
$5.20 and $6.16 per share, respectively.  The fair value of each option grant is
estimated on the date of grant using the Black Scholes option-pricing model with
the following assumptions:

<TABLE>
<CAPTION>
                                                                                              Fiscal
                                                                                        1998           1997       
-------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>            <C>   
Expected dividend yield                                                                    -              -              
Expected stock price volatility                                                          .35            .30            
Risk-free interest rate                                                                 5.57           6.12           
Expected life of options (years)                                                        3.50           3.40          

</TABLE>

     During Fiscal 1996,  under the 1995 Plan, the Company's  Board of Directors
issued a restricted stock grant of 345,000 shares to the Company's President and
Chief  Executive  Officer,  which was scheduled to vest over a five year period.
The Company recorded $4,892 in deferred compensation expense which was amortized
on a straight line basis over the vesting period of the grant. In December 1998,
the Company's Board of Directors removed the vesting restrictions,  thus vesting
the unamortized portion of the grant in the amount of $2,686.

Stock Splits

     Effective March 6, 1996, the Company's Board of Directors approved a three-
for-one stock split of common stock for  stockholders  of record as of March 20,
1996. A total of $494 was transferred from additional contributed capital to the
stated value of common stock in connection  with the stock split.  The par value
of the common stock remains unchanged. All share and per share amounts have been
restated to retroactively reflect the stock split.
<PAGE>

10.  NET INCOME PER COMMON SHARE

     In accordance  with SFAS No. 128,  Earnings per Share,  the  calculation of
basic net income per common  share and diluted net income per common  share from
continuing and discontinued operations is presented below:

<TABLE>
<CAPTION>
                                                                            1998           1997            1996          
-----------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>            <C>            <C>
Basic net income per common share computation:
   Net Income available to common shareholders from
      continuing operations                                           $     68,860   $     63,370   $      8,577    
                                                                      ------------------------------------------
   Net Income available to common shareholders from
      discontinued operations                                         $     30,020   $     38,663   $     22,633    
                                                                      ------------------------------------------
   Gain on sale of discontinued operations, net of income
      taxes                                                           $    230,561   $          -   $          -    
                                                                      ------------------------------------------
   Extraordinary item of loss on early extinguishment of
      debt, net of income benefit                                     $     (5,610)  $          -   $          -    
                                                                      ------------------------------------------
Basic average common shares outstanding                                    108,518        101,914         90,582         
                                                                      ------------------------------------------
   Basic income per common share from continuing
      operations                                                      $       0.63   $       0.62   $       0.09   
                                                                      ==========================================
   Basic income per common share from discontinued
      operations                                                      $       0.28   $       0.38   $       0.25   
                                                                      ==========================================
   Basic income per common share from gain on sale of
      discontinued operations                                         $       2.12   $          -   $          -   
                                                                      ==========================================
   Basic income per common share from extraordinary item              $      (0.05)  $          -   $          -
                                                                      ==========================================
   Basic net income per common share                                  $       2.98   $       1.00   $       0.34   
                                                                      ==========================================
Diluted net income per common share computation:
   Income available to common shareholders from continuing
      operations                                                      $     68,860   $     63,370   $      8,577    
   Interest paid on convertible debt, net of tax benefit (1)                 2,784          3,712              -           
   Income available to common shareholders and assumed                ------------------------------------------
   conversions from continuing operations                             $     71,644   $     67,082   $      8,577  
Income available to common shareholders from                          ------------------------------------------
      discontinued operations                                         $     30,020   $     38,663   $     22,633    
                                                                      ------------------------------------------
   Average common shares outstanding                                       108,518        101,914         90,582       
   Incremental shares from assumed conversions:
      Convertible debt (1)                                                   5,699          7,599              -         
      Stock options                                                          2,665          3,596          4,735        
                                                                      ------------------------------------------
   Diluted average common shares outstanding                               116,882        113,109         95,317      
                                                                      ------------------------------------------
   Diluted income per common share from continuing
      operations                                                      $       0.61   $       0.59   $       0.09   
                                                                      ==========================================
   Diluted income per common share from discontinued
      operations                                                      $       0.26   $       0.34   $       0.24    
                                                                      ==========================================
   Diluted income per common share from gain on sale of
      discontinued operations                                         $       1.97   $          -   $          -   
                                                                      ==========================================
   Diluted income per common share from extraordinary item            $      (0.05)  $          -   $          -
                                                                      ==========================================
   Diluted net income per common share                                $       2.79   $       0.93   $       0.33    
                                                                      ==========================================
(1) The Company's convertible debt did not have a dilutive effect on earnings per
share from  continuing  operations  during fiscal 1996 and the Fourth quarter of
fiscal 1998.
</TABLE>
     Options to purchase  2,201,757 shares of common stock that were outstanding
during 1998 were not included in the  computation of diluted  earnings per share
as the exercise  prices of these  options  were greater than the average  market
price of the common shares.
<PAGE>


11. CONCENTRATION OF CREDIT RISK:

   The Company's  financial  instruments that are exposed to  concentrations  of
credit risk consist primarily of cash and trade accounts receivable. The Company
places its cash with what it believes to be high credit quality institutions. At
times such investments may be in excess of the FDIC insurance limit. The Company
routinely   assesses  the  financial   strength  of  its  customers  and,  as  a
consequence, believes that its trade accounts receivable credit risk exposure is
limited.

     In connection  with the Company's sale of its health care  operations,  the
Company  entered into an agreement  with the purchaser of the health care assets
whereby the Company  agreed to make  advances to the company to fund its working
capital  requirements.  Any amounts extended are collateralized by the assets of
the related  health care  operations.  As of December 31, 1998,  the company had
advanced  approximately  $15.9 million under this agreement.  Additionally,  the
Company has $5.0 million in notes  receivable  from the purchasers of the health
care opertaions related to the initial sale.

12. RESTRUCTURING OF OPERATIONS AND IMPAIRMENT CHARGE

     Restructuring and impairment  charge. In December 1998, the Company's Board
of Directors approved the Restructuring Plan to strengthen overall profitability
of the  Company by  implementing  a back office  integration  program and branch
repositioning plan in an effort to consolidate or close branches whose financial
performance does not meet the Company's expectations.  Pursuant to the plan, the
Company  recorded  a  restructuring  and  impairment  charge  of  $34,759.   The
restructuring  component of the plan is based,  in part,  on the  evaluation  of
objective  evidence of probable  obligations to be incurred by the Company or of
specifically identified assets.

     The Company,  formerly AccuStaff Incorporated,  was formed in 1992 and grew
over the next 6 1/2 years through both  acquisitions and internal growth.  Prior
to the disposition of the Commercial  operations and the Teleservices and Health
Care divisions in 1998, the Company was largely organized and structured from an
administrative,  operations and systems capabilities  standpoint as a commercial
staffing  business.  The  Restructuring  Plan focuses on meeting the needs of an
information  technology  and  professional  services  company and is designed to
result in a back office  environment  tailored to serve these  businesses.  Upon
completion of the  Restructuring  Plan,  certain back office  operations will be
centralized at the Company's  headquarters and possibly one additional location,
and certain positions which were necessary under the previous organizational and
operational structure will be eliminated.

     The  Restructuring  Plan  calls  for the  consolidation  or  closing  of 23
Professional Services division branches, certain organizational improvements and
the consolidation of 15 back office operations.  This restructuring,  which will
result in the elimination of approximately 290 positions, will be completed over
a 12- to 18-month period.

     The major components of the restructuring and impairment charge include:(1)
costs to recognize  severance  and related  benefits for the  approximately  290
employees to be terminated of $7,494. The severance and related benefit accruals
are based on the  Company's  severance  plan and other  contractual  termination
provisions.  These  accruals  include  amounts  to be  paid  to  employees  upon
termination of employment.  Prior to December 31, 1998,  management had approved
and committed the Company to a plan that involved the involuntary termination of
certain  employees.  The  benefit  arrangements  associated  with this plan were
communicated to all employees in December 1998. The plan specifically identified
the number of  employees to be  terminated  and their job  classifications.  (2)
costs to write down certain  furniture,  fixtures and computer  equipment to net
realizable value at branches not performing up to the Company's  expectations of
$2,476,(3) costs to write down goodwill associated with the acquisition of Legal
Information Technology,  Inc. which was acquired in January, 1996, calculated in
accordance  with SFAS 121 as described in Note 2 to the  Consolidated  Financial
Statements,  Summary of Significant Accounting Policies - Goodwill of $9,936 (4)
costs to terminate  leases and other exit and shutdown costs associated with the
consolidated  or closed  branches  including  closing the  facilities  of $8,035
million,  and (5)  costs  to  adjust  accounts  receivable  due to the  expected
increase in bad debts which results  directly from the  termination or change in
client relationships which results when branch and administrative employees, who
have the knowledge to effectively  pursue  collections are terminated of $6,818.
These costs were based upon  management's  best  estimates  based upon available
information.

     Since payments pursuant to the  Restructuring  Plan will not commence until
fiscal  1999,  there were no  charges  recognized  by the  Company  against  the
restructuring  reserve  as of  December  31,  1998,  at  which  time  the  total
restructuring  reserve  amount of $24,823  (which  does not  include  the $9,936
goodwill  impairment  charge  which was recorded  against  goodwill in the fouth
quarter of fiscal 1999) was included in accounts payable and accrued liabilities
Since payments pursuant to the Restructuring Plan will not commence until fiscal
1999.



13. FAIR VALUE OF FINANCIAL INSTRUMENTS

     The Company's  financial  instruments include cash and cash equivalents and
its debt obligations.  Management believes that these financial instruments bear
interest at rates which approximate prevailing market rates for instruments with
similar  characteristics  and,  accordingly,  that the carrying values for these
instruments are reasonable estimates of fair value.


14.  SEGMENT REPORTING

     The Company  has adopted  SFAS No.  131,  Disclosure  About  Segments of an
Enterprise and Related  Information,  issued during 1997,  which changes the way
public companies report information about segments. SFAS No. 131, which is based
on the management approach to segment reporting, includes requirements to report
selected  segment  information  on a  quarterly  basis  and  to  report  certain
entity-wide  disclosures about products and services,  major customers,  and the
material countries in which the entity holds assets and reports revenues.
<PAGE>

     The Company has two reportable  segments:  information  technology (IT) and
professional  services. The Company's reportable segments are strategic business
units that offer different  services and are managed separately as each business
unit  requires  different  resources and  marketing  strategies.  The IT segment
provides computer related consulting services. The professional segment provides
personnel who perform specialized services such as accounting, legal, technical,
outplacement  and  scientific.   See  Note  16  to  the  Consolidated  Financial
Statements  for  information  on the  discontinued  operations of the Company as
these   operations  are  not  contained  within  the  scope  of  this  footnote.
Discontinued  operations included the Company's former Commercial,  Teleservices
and Health Care divisions.

     The accounting policies of the segments are consistent with those described
in the summary of significant  accounting policies in Note 2 to the Consolidated
Financial Statements, and all intersegment sales and transfers are eliminated.

     The  Company  does  not  have  a  material  reliance  on any  one  customer
relationship as the Company is able to provide a breadth of services to numerous
Fortune 1000 and other leading businesses.

     The Company evaluates segment  performance based on revenues,  gross margin
and pre-tax  income from  continuing  operations.  The Company does not allocate
income taxes or unusual items to the segments.  The following  table  summarizes
segment and geographic information: 
<TABLE>
<CAPTION>
                                                                                    Fiscal
                                                               ------------------------------------------------
                                                                    1998              1997             1996
---------------------------------------------------------------------------------------------------------------
<S>                                                             <C>               <C>              <C>
Revenues 
   IT                                                           $  1,164,140      $    780,634      $    400,408
   Professional                                                      537,973           383,490           179,608      
                                                                ------------      ------------      ------------
         Total Revenues                                         $  1,702,113      $  1,164,124      $    580,016
                                                                ============      ============      ============
Gross Profit
   IT                                                           $    301,816      $    209,170      $    107,869             
   Professional                                                      165,760           119,345            45,333     
                                                                ------------      ------------      ------------
         Total Gross Profit                                     $    467,576      $    328,515      $    153,202
                                                                ============      ============      ============
Income from Operations
   IT                                                           $    114,332      $     79,339       $    20,673             
   Professional                                                       51,588            37,449            10,571
                                                                ------------      ------------      ------------
                                                                     165,920           116,788            31,244   
   Restucturing and impairment charges and
        Other expenses                                                48,734            14,615             2,974
                                                                ------------      ------------      ------------
         Total pre-tax income from Continuing Operations        $    117,186      $    102,173      $     28,270
                                                                ============      ============      ============
Assets
   IT                                                           $  1,037,722      $    687,283                   
   Professional                                                      400,563           330,553                   
                                                                ------------      ------------     
                                                                   1,438,285         1,017,836 
   Corporate                                                         133,596           384,790
                                                                ------------      ------------     
         Total Assets                                           $  1,571,881      $  1,402,626
                                                                ============      ============      
Geographic Areas
   Revenues 
      United States                                             $  1,348,120      $  1,074,183      $    580,016
      U.K.                                                           329,746            73,679                 -
      Other                                                           24,247            16,262                 -
                                                                ------------      ------------      ------------
         Total                                                  $  1,702,113      $  1,164,124      $    580,016
                                                                ============      ============      ============
   Identifiable Assets
      United States                                             $  1,222,821      $  1,175,056               
      U.K.                                                           345,182           222,095
      Other                                                            3,878             5,475
                                                                ------------      ------------      
         Total                                                  $  1,571,881      $  1,402,626                 
                                                                ============      ============      
 </TABLE>
     

<PAGE>

15.  QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
                                                     For the Three Months Period Ended                  For the
                                       ----------------------------------------------------------     Year Ended
                                          Mar. 31,        June 30,       Sept. 30,       Dec. 31,       Dec. 31,
                                            1998            1998           1998           1998(1)         1998
-------------------------------------------------------------------------------------------------   ---------------
<S>                                    <C>            <C>             <C>            <C>            <C>
Revenue                                 $   374,492   $    425,383    $    441,580   $    460,658   $  1,702,113
Gross profit                                104,443        117,810         120,700        124,623        467,576
Income from continuing operations            22,097         24,124          22,021            618         68,860
Income from discontinued operations,
   net of taxes                              10,479         12,634           6,907              -         30,020
Gain on sale of discontinued
   operations, net of taxes (1)                   -              -         216,365         14,196        230,561
Extraordinary item of loss on early
   extinguishment of debt, net of 
   benefit                                        -              -               -         (5,610)        (5,610)  
Net income                                   32,576         36,758         245,293          9,204        323,831
Basic income per common share from
   continuing operations                       0.21           0.22            0.20           0.01           0.63
Basic income per common share from
   discontinued operations                     0.10           0.11            0.06              -           0.28
Basic income per common share from 
   gain on sale of discontinued 
   operations                                     -              -            1.94           0.13           2.12
Basic income per common share from 
   extraordinary item                             -              -               -          (0.05)         (0.05)
Basic net income per common share              0.31           0.33            2.20           0.09           2.98
Diluted income per common share from
   continuing operations                       0.20           0.21            0.19           0.01           0.61
Diluted income per common share from
   discontinued operations                     0.09           0.10            0.06              -           0.26
Diluted income per common share from 
   gain on sale of discontinued 
   operations                                     -              -            1.79           0.13           1.97
Diluted income per common share from 
   extraordinary item                             -              -               -          (0.05)         (0.05)
Diluted net income per common share     $      0.29   $       0.31    $       2.04   $       0.09   $       2.79
</TABLE>

<TABLE>
<CAPTION>
                                                     For the Three Months Period Ended                  For the
                                       ----------------------------------------------------------     Year Ended
                                          Mar. 31,        June 30,       Sept. 30,      Dec. 31,        Dec. 31,
                                            1997            1997           1997           1997           1997
-------------------------------------------------------------------------------------------------   ---------------
<S>                                    <C>            <C>             <C>            <C>            <C>
Revenue                                 $   242,234   $    273,675    $    302,271   $    345,944   $  1,164,124
Gross profit                                 65,413         75,888          87,991         99,223        328,515
Income from continuing operations            14,750         12,886          16,549         19,185         63,370
Income from discontinued operations,
   net of taxes                               6,711         11,001          12,142          8,809         38,663
Net income                                   21,461         23,887          28,691         27,994        102,033
Basic income per common share from
    continuing operations                      0.14           0.13            0.16           0.19           0.62
Basic income per common share from
    discontinued operations                    0.07           0.11            0.12           0.08           0.38
Basic net income per common share              0.21           0.24            0.28           0.27           1.00
Diluted income per common share from
   continuing operations                       0.14           0.12            0.15           0.18           0.59
Diluted income per common share from
   discontinued operations                     0.06           0.10            0.11           0.07           0.34
Diluted net income per common share     $      0.20   $       0.22    $       0.26   $       0.25   $       0.93

</TABLE>
     (1) In the fourth quarter of 1998, the Company recorded a restructuring and
impairment  charge  of  $34,759.  See  Note  12 to  the  Consolidated  Financial
Statements for further discussion on the restructuring and impairment charge. 

     (2) During the fourth quarter of 1998, the Company recorded  adjustments to
estimated  costs  relating  to the third  quarter  gain on sale of net assets of
discontinued  operations  to  reflect  the final  determination  of  transaction
related costs and income taxes.
<PAGE>

16.  DISCONTINUED OPERATIONS  


     Effective  September  27, 1998 and March 30,  1998,  the  Company  sold its
Commercial operations and Teleservices  division, and the operations and certain
assets of its Health  Care  division,  respectively,  (jointly  the  "Commercial
Businesses").  As a result,  the Commercial  Businesses  have been reported as a
discontinued  operation,  and the  consolidated  financial  statements have been
reclassified to segregate the net assets and operating results of the Commercial
Businesses. The Commercial operations and Teleservices division were sold with a
final adjusted  purchase price of $826.2 million in cash to Randstad U.S.,  L.P.
('Randstad'),  the  U.S.   operating   company  of   Ranstad   Holding   nv,  an
international  staffing company based in The Netherlands.  The after-tax gain on
the sale was $230.6  million.  The  operations  and certain assets of the Health
Care division were sold for  consideration  of $8.0 million,  consisting of $3.0
million in cash and $5.0 million in a note receivable due March 30, 2000 bearing
interest at 2% in excess of the prime rate.  The after-tax  gain on the sale was
$0.1 million

     In connection  with the Company's sale of its health care  operations,  the
Company  entered into an agreement  with the purchaser of the health care assets
whereby  the  Company  agreed to extend  capital  to the  purchaser  to fund its
working capital  requirements.  Any amounts extended are  collateralized  by the
accounts  receivable  and  certain  other  assets  of the  related  health  care
operations.  Any advances made under this agreement  accrue  interest at 10% per
year.  As of December 31, 1998,  the Company had  extended  approximately  $15.9
million under this agreement.

     The sale of the Commercial  Businesses represents the disposal of a segment
of the Company's business.  Accordingly,  the financial statements for the years
ended December 31, 1998,  1997 and 1996 have been  reclassified  to separate the
revenues,  costs and  expenses,  assets and  liabilities,  and cash flows of the
Commercial  Businesses  sold.  The  net  operating  results  of  the  Commercial
Businesses have been reported,  net of applicable  income taxes, as 'Income from
Discontinued Operations'.  The net assets of the Commercial Businesses have been
reported as 'Net Assets of Discontinued  Operations';  and the net cash flows of
the Commercial  Businesses  have been reported as 'Net Cash Used In Discontinued
Operations'.

Summarized financial information for the discontinued operations follows:
<TABLE>
<CAPTION>

      For the years ended
      December 31                                               1998              1997              1996
      (dollars in thousands)
<CAPTION>
<S>                                                        <C>               <C>               <C>
      Revenue                                              $     919,400     $   1,260,702     $   1,031,431
      Cost of Revenue                                            708,930           975,489           807,940
      Operating Expense                                          156,180           215,437           181,350
           Operating Income                                       54,290            69,776            42,141
      Interest, net                                                4,200             4,374               429
      Provision for income taxes                                  20,070            26,739            19,079
           Income from discontinued operations                    30,020            38,663            22,633
</TABLE>
<PAGE>

     Results of the discontinued  Commercial  Business include the allocation of
certain net common  expenses  for  corporate  support and back office  functions
totaling  approximately  $0.9 million,  $1.2  million,  and $1.5 million for the
years ended December 31, 1998, 1997 and 1996,  respectively.  Corporate  support
and back office allocations are based on the ratio of the Company's consolidated
revenues,  operating  income and assets to that of the  discontinued  Commercial
Business.   Additionally,   the  results  of  discontinued   operations  include
allocations of consolidated interest expense totaling $4.2 million, $4.4 million
and $0.4 million for fiscal 1998,1997 and 1996,  respectively.  Interest expense
is allocated based on the historic funding needs of the discontinued operations,
using a rate that  approximates  the weighted  average interest rate outstanding
for the Company for each fiscal year presented.  Historic funding needs include:
the purchases of property, plant and equipment, acquisitions, current income tax
liabilities  and  fluctuating  working  capital  needs.  The net  assets  of the
Company's discontinued operations are as follows:
 <TABLE>
<CAPTION>

                                                              December 31,
     (dollars in thousands)                                       1997
<S>                                                         <C>              
     Receivables                                             $   195,415
     Other current assets                                         60,674
          Total current assets                                   256,089

     Furniture, Equipment and Leasehold Improvements, net         21,210
     Goodwill, net                                               189,659
     Other Assets                                                  9,581
          Total Assets                                           476,539

     Current Liabilities                                          79,623
     Non-current liabilities                                      30,871
          Total liabilities                                      110,494
                                                            ----------------
             Total Net assets of discontinued operations      $  366,045
                                                            ================
</TABLE>



                            PART III
 
     Information  required  by Part  III is  incorporated  by  reference  to the
Registrant's  Definitive  Proxy Statement to be filed pursuant to Regulation 14A
("the Proxy Statement") not later than 120 days after the end of the fiscal year
covered by this report.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this item is incorporated by reference from the
section  entitled  "Election of Directors" and "Compliance with Section 16(a) of
the Securities Exchange Act of 1934" contained in the proxy statement.
 
ITEM 11. EXECUTIVE COMPENSATION

     The information required by this item is incorporated by reference from the
section entitled "Executive Compensation" contained in the Proxy Statement.

ITEM 12. SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this item is incorporated by reference from the
section entitled "Voting Securities" contained in the Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this item is incorporated by reference from the
sections  entitled  'Certain  Relationships  and  Related   Transactions';   and
'Compensation  Committee Interlocks and Insider Participation'  contained in the
Proxy Statement.

                                  PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)

1.  Financial Statements

     The  following  consolidated  financial  statements  of the Company and its
subsidiaries are included in Item 8 of this report:

Report of Independent Accountants
 
Consolidated  Balance Sheets as of December 31, 1998 and 1997

Consolidated  Statements  of Income  for each of the three  years in the  period
ended December 31, 1998
<PAGE>

Consolidated  Statements of Cash Flows for each of the three years in the period
ended December 31, 1998

Consolidated  Statements of Stockholders'  Equity for each of the three years in
the period ended December 31, 1998

Notes to Consolidated Financial Statements.

      2. Financial Statement Schedules
 
               Financial  statement  schedules  required  to be included in this
          report are either shown in the financial  statements and notes thereto
          included in Item 8 of this report or have been  omitted  because  they
          are not applicable.

      3. Exhibits
 
 
         3.1      Amended and restated Articles of Incorporation.(1)
 
         3.2      Amended and Restated Bylaws.
 
         10.1     AccuStaff Incorporated Employee Stock Plan. (2)
 
         10.2     AccuStaff Incorporated amended and restated Non-Employee
                  Director Stock Plan.
 
         10.3     Form of Employee Stock Option Award Agreement. (2)
 
         10.4     Form of Non-Employee Director Stock Option Award Agreement, 
                  as amended.

         10.5     Profit Sharing Plan. (2)
 
         10.6     Revolving Credit and  Reimbursement  Agreement by and  between
                  the  Company   and   NationsBank   National   Association   as
                  Administration   Agent  and  certain  lenders  named  therein,
                  dated October 30, 1998.

         10.7     Employment Agreement with Derek E. Dewan, as amended. (3)
                  
         10.8     Modis Professional Services, Inc., 1995 Stock Option Plan, as 
                  amended.
 
         10.9     Form  of  Stock  Option  Agreement  under  Modis  Professional
                  Services, Inc.amended and restated 1995 Stock Option Plan. (5)

         10.10    Executive Employment Agreement with Michael D. Abney.  (1)
 
 
         10.11    Executive Employment Agreement with Marc M. Mayo. 
<PAGE>

 
         10.12    Form of Director's and Officer's Indemnification Agreement.(2)
        
         10.13    Executive Employment Agreement with Timothy D. Payne
 
         21.1     Subsidiaries of the Registrant.
 
         23.1     Consent of PricewaterhouseCoopers LLP.
 
         27       Financial Data Schedule

(1)      Incorporated  by reference to the Company's  Definitive Proxy Statement
         on Schedule 14A filed July 14, 1998.

(2)      Incorporated  by reference to the Company's  Registration  Statement on
         Form S-1 (No. 33-79806).

(3)      Employment Agreement, First, Second and Third Amendments incorporated
         by reference to the Company's Registration Statement on Form S-1, filed
         August 29, 1996(Reg. No. 33-96372).  Fourth Amendment  incorporated  by
         reference to the Company's Quarterly Report on Form 10-Q for the period
         ended March 31, 1996. 

(4)      Incorporated  by reference to the  Company's  Quarterly  Report on Form
         10-Q for the period ended September 30, 1996.

(5)      Incorporated by reference to the Company's Registration on Form S-8 
         (No. 333-49495).

(b)      Reports on Form 8-K. The Registrant filed the following reports on Form
         8-K during the fourth quarter of 1998:
 
         (i)  Form 8-K dated October 1, 1998 as  amended by  Forms 8-K/A   dated
              October 16, 1998, and  November 13, 1998, reporting the following:

              1.   The  completion  of  the  sale  of  its  commercial  staffing
                   business to Randstad U.S., L.P. filed pursuant to Item 2.

              2.   The change of the Company's name  from AccuStaff Incorporated
                   to Modis Professional Services, Inc., and  the change of  the
                   Company's trading symbol on the New York  Stock Exchange from
                   'ASI' to 'MPS' filed pursuant to Item 5.

<PAGE>

              3.   The Company's  Notice of  Redemption  to  the  holders of the
                   Company's 7% Convertible Senior Notes due 2002 filed pursuant
                   to Item 5.  Included in such Form 8-K, as amended, were:  (a)
                   unaudited  pro forma condensed  consolidated balance sheet as
                   of   June  30,  1998;  (b)   unaudited  pro forma   condensed
                   consolidated  statement of income for the year ended December
                   31, 1997;  (c) unaudited  pro  forma  condensed  consolidated
                   statement of income  for  the six months ended June 30, 1998;
                   and (d) notes to unaudited pro forma condensed consolidated
                   financial statements.

         (ii) Form  8-K  dated  November  13, 1998, reporting the closing of the
              sale  of  the  operations  and  certain  assets  of its Commercial
              Businesses to Randstad U.S., L.P. filed pursuant to Item 5 of Form
              8-K.  Included in  such Form  8-K were:  (a) audited  consolidated
              financial statements; (b) management's discussion and analysis  of
              results of operations  for  the three  years  in the  period ended
              December 31, 1997  and  as of  December 31, 1997 and 1996; and (c)
              selected financial highlights.
 
(c)      The  response  to this  portion of Item 14 is  submitted  as a separate
         section of this report.
 
(d)      Financial Statement Schedule - not applicable.



SIGNATURES

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

MODIS PROFESSIONAL SERVICES, INC.

 

By:  /s/ Derek E. Dewan
   --------------------------
Derek E. Dewan
President, Chairman of
the Board and Chief Executive
Officer

Date: March 30, 1999

     Pursuant to the  requirements  of  Securities  Exchange  Act of 1934,  this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

 

Signatures                  Title                     Date



 
/s/ DEREK E. DEWAN       President, Chairman       March 30, 1999
----------------------   of the Board and Chief
Derek E. Dewan           Executive Officer
 
/s/ MICHAEL D. ABNEY     Senior Vice President,    March 30, 1999
----------------------   Chief Financial Officer,
Michael D. Abney         Treasurer, and Director
 
/s/ ROBERT P. CROUCH     Vice President and        March 30, 1999
----------------------   Chief Accounting Officer
Robert P. Crouch

/s/ JOHN K. ANDERSON, JR.    Director              March 30, 1999
----------------------
John K. Anderson

/s/ T. WAYNE DAVIS           Director              March 30, 1999
----------------------
T. Wayne Davis

/s/ DANIEL M. DOYLE          Director              March 30, 1999
----------------------
Daniel M. Doyle

/s/ PETER J. TANOUS          Director              March 30, 1999
----------------------
Peter J. Tanous

 
<PAGE>
 
 
 

EXHIBIT INDEX

3.2    Amended and restated bylaws

10.2   AccuStaff Incorporated amended and restated non-employee director stock
       option plan

10.6   Revolving Credit and Reimbursement Agreement

10.7   Fifth amendment to employment agreement of Derek E. Dewan

10.8   Modis Professional Services, Inc., 1995 Stock Option Plan, as 
       amended.

10.11  Executive employment agreement of Marc M. Mayo

10.13  Executive employment agreement of Timothy D. Payne

23     Consents of Experts and Counsel

27     Financial Data Schedule

<PAGE>