SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A
                                 Amendment No. 1

[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>

DISCUSSION OF FORM 10-K/A, AMENDED ANNUAL REPORT, FILING

This annual report on Form 10-K/A  includes  additional  disclosure  items which
were  added  to  Item  8  -  Financial   Statements  and   Supplementary   Data.
Specifically,  additional  disclosure  was added to Notes 2, 3, 9, 11, and 12 of
the Consolidated  Financial  Statements.  These additional disclosure items have
been added as the result of suggested  additional  disclosures received from the
United States Securities and Exchange  Commission in connection with a review of
the Company's  annual report on Form 10-K for the year ended  December 31, 1998.
In addition, the Company is filing a new consent of PricewaterhouseCoopers LLP.



<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/A:

<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

Jacksonville, Florida
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.  The  Company  has
developed a proprietary  software  package which allows the Company to implement
imaging, time capture, and data-warehouse  reporting.  The costs associated with
the development of this  proprietary  software package have been capitalized and
are being amortized over a five-year period. Unamortized computer software costs
of $4,231 and $4,197, have been included in 'Furniture,  equipment and leasehold
improvements,  net' as of  December  31,  1998  and  1997,  respectively.  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.
<TABLE>
<CAPTION>
                                                                                               December 31,
                                                                                  -------------------------------------
                                                                                     1998                         1997
------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                          <C>
Beginning Balance of Goodwill, net                                              $   726,931                  $   348,774

  Goodwill recorded for companies purchased in current year                         227,442                      284,242
  Goodwill recorded for earn-out payments made, but not accrued at prior
     year-end                                                                        41,774                       77,628
  Goodwill accrued, but not paid, for determinable earn-outs                         65,161                       33,604
  Amortization                                                                      (26,132)                     (17,317)
  Impairment charge                                                                  (9,936)                           -
                                                                                  ---------                    ---------
     Net Increase in Balance of Goodwill                                            298,309                      378,157

Ending Balance of Goodwill, net                                                 $ 1,025,240                  $   726,931
                                                                                  =========                    =========
</TABLE>


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  stockholders.  In March
1998, the Company issued 4,598,698  shares of common stock,  valued at $130,000,
to the former  stockholders of Actium,  Inc. in exchange for all of their shares
of Actium,  Inc. In August 1998,  the Company  issued  874,815  shares of common
stock,  valued at $10,935,  to the former  stockholders 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  stockholders  and $8,410 in the Company's common stock,
consisting  of 668,870  shares of 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

     The Company is  obligated  under  various  acquisition  agreements  to make
earn-out  payments  to  former  stockholders  of  the  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  agreements  do  not  specify  a  fixed  payment  of  contingent
consideration  to be issued,  however,  the  Company  has  limited  its  maximum
exposure under some earn-out agreements to a cap which is negotiated at the time
of acquisition.

     The Company  records  these  payments as goodwill in  accordance  with EITF
95-8,  Accounting for Contingent  Consideration  Paid to the  Shareholders of an
Acquired Enterprise in a Purchase Business Combination, rather than compensation
expense.  Earn-outs  are  utilized  by the  Company to  supplement  the  partial
consideration  initially paid to the stockholders of the acquired companies,  if
certain  earnings  targets are  achieved.  All earnout  payments are tied to the
ownership interests of the selling stockholders of the acquired companies rather
than being contingent upon any further  employment with the Company.  Any former
owners who remain as employees  of the Company  receive a  compensation  package
which is  comparable  to other  employees  of the  Company  at the same level of
responsibility.

     The Company has accrued contingent payments related to earn-out obligations
in Accounts  payable and Accrued  expenses of $65.2 million and $33.6 million as
of December 31, 1998 and 1997,  respectively.  These accrued contingent payments
represent  the  liabilities  related  to  earn-out  payments  that  are  readily
determinable,  as a  result  of  resolved  and  issuable  earn-outs,  as of  the
respective fiscal year ends. The Company applies the relevant profits related to
the earn-out  period to the earn-out  formula,  and determines  the  appropriate
amount to accrue.  The Company  records these  obligations  in  accordance  with
paragraph 80 of APB 16. 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 the reduction of the compensation
of the former owners of the acquired companies to the amount of compensation the
former  owners would be entitled to under their current  employment  agreements,
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.  The  Committee  has  not  issued
non-qualified  options at an  exercise  price less than 100% of the fair  market
value and,  therefore,  the Company does not  currently  recognize  compensation
expense for its stock option plans in accordance with APB Opinion 25.

     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 purchaser to fund its working
capital  requirements  not to  exceed  the  lesser  of $25.0  million  or 85% of
accounts   receivable   through   September   30,  1999.   These   advances  are
collateralized  by all the assets of the sold  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 sale of
the health care operations, which is offset by a reserve of $1.5 million.

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 reduction in annualized revenue, gross profit, and
operating  losses  from the  consolidation  or  closing  of the 23  Professional
Services  branches  is  estimated  to be $12.0  million,  $3.4  million and $4.9
million, respectively.

     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. The
write down of  goodwill  associated  with Legal  Information  Technology  became
necessary  due to the  branch  incurring  losses  combined  with  the  Company's
decision  not to  further  invest  in this  capital  intensive  legal  specialty
solution in the future.  The  decision  to close down the  facility  was made in
December 1998.  (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.



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>

<PAGE>

   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.



<PAGE>




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

September 8, 1999
<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