##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 10-K

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934


|                          |  |                  
|------------------------- |  | -----------------
|For the fiscal year ended |  | December 31, 2003




OR


[  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934


|                                                                
|----------------------------------------------------------------
|For the transition period
from________________TO________________

|                       |  |         
|---------------------- |  | --------
|Commission file number |  | 001-5519
|                       |  |         

CDI Corp.




(Exact name of Registrant as specified in its charter)


|                             |  |                       
|---------------------------- |  | ----------------------
|Pennsylvania                 |  | 23-2394430            
|                             |  |                       
|(State or other jurisdiction |  | (I.R.S. Employer      
|of incorporation or          |  | Identification Number)
|organization)                |  |                       

1717 Arch Street, 35th Floor, Philadelphia, PA 19103-2768




(Address of principal executive offices)


|                                                   |  |               
|-------------------------------------------------- |  | --------------
|Registrants telephone number, including area code |  | (215) 569-2200
|                                                   |  |               

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

|                             |  |                                       
|---------------------------- |  | --------------------------------------
|Common stock, $.10 par value |  | New York Stock Exchange               
|                             |  |                                       
|(Title of each class)        |  | (Name of exchange on which registered)

Indicate 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 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.
Indicate whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

Yes [X]     No
[  ]

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, on the last business day of
the registrants most recently completed second fiscal quarter, as reported on the New York Stock Exchange.

|                                     |  |  |                | 
|------------------------------------ |  |  | -------------- | 
|Common stock, $.10 par value         |  |  | $316,044,257   | 
|Class B common stock, $.10 par value |  |  | Not applicable | 

The outstanding shares of each of the Registrants classes of common stock as of February 22, 2004 were:

|                                     |  |  |            |  |  |       
|------------------------------------ |  |  | ---------- |  |  | ------
|Common stock, $.10 par value         |  |  | 19,593,302 |  |  | shares
|Class B common stock, $.10 par value |  |  | None       |  |  |       

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrants Proxy Statement to be filed with the Securities and Exchange Commission for the Registrants 2004 Annual Meeting are incorporated by reference in Part III.





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##### 



TABLE OF CONTENTS

|         |  |                                                                                                |  |  |  |      |  | 
|-------- |  | ---------------------------------------------------------------------------------------------- |  |  |  | ---- |  | 
|         |  |                                                                                                |  |  |  | PAGE
|Part
I   |  |                                                                                                |  |  |  |     
|Item 1   |  | Business                                                                                       |  |  |  |     
|Item 2   |  | Properties                                                                                     |  |  |  |     
|Item 3   |  | Legal Proceedings                                                                              |  |  |  |     
|Item 4   |  | Submission of Matters to a Vote of Security Holders                                            |  |  |  |     
|Part
II 
|Item 5   |  | Market
for Registrants Common Equity and Related Stockholder Matters                          |  |  |  |     
|Item 6   |  | Selected Financial Data                                                                        |  |  |  |     
|Item 7   |  | Managements Discussion and Analysis of Financial Condition and
Results of Operations          |  |  |  |     
|Item 7a  |  | Quantitative and Qualitative Disclosures About Market Risk                                     |  |  |  |     
|Item 8   |  | Financial Statements and Supplementary Data                                                    |  |  |  |     
|Item 9   |  | Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures          |  |  |  |     
|Item 9a  |  | Controls and Procedures                                                                        |  |  |  |     
|PART III
|Item 10  |  | Directors and Executive Officers of the Registrant                                             |  |  |  |     
|Item 11  |  | Executive Compensation                                                                         |  |  |  |     
|Item 12  |  | Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters |  |  |  |     
|Item 13  |  | Certain Relationships and Related Transactions                                                 |  |  |  |     
|Item 14  |  | Principal Accountant Fees and Services                                                         |  |  |  |     
|PART IV 
|Item 15  |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                                |  |  |  |     





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##### 



Forward-looking Information

Certain information in this report, including Managements Discussion and
Analysis of Financial Condition and Results of Operations, contains
forward-looking statements as such term is defined in Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Certain forward-looking statements can be identified by the use of
forward-looking terminology such as, believes, expects, may, will,
should, seeks, approximately, intends, plans, estimates, or
anticipates or the negative thereof or other comparable terminology, or by
discussions of strategy, plans or intentions. Forward-looking statements
involve risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. These include risks
and uncertainties such as the effects of, and changes in general economic
conditions, competitive market pressures, material changes in demand from
larger customers, availability of labor, the Companys performance on
contracts, changes in customers attitudes toward outsourcing, government
policies or judicial decisions adverse to the staffing industry, and ability to
successfully complete the implementation and integration of the Companys
vertical go-to-market strategy on a timely basis. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as
of the date hereof. The Company assumes no obligation to update such
information. Certain other risk factors are discussed more fully under Risk
Factors in Part I, Item 1 of this filing.

Item 1. BUSINESS

The Company  Overview

CDI Corp. (the Company or CDI) (NYSE: CDI) is a provider of engineering and
information technology outsourcing solutions, professional
services, specialized staffing and permanent placement services. CDI
concentrates on several vertical markets, including aerospace, government
services, information technology, life sciences, process and industrial and
construction. The Company derives the majority of its revenues from Fortune
1000 companies serviced primarily in the United States. There was no single
customer from whom the Company derived 10% or more of its consolidated
revenues, during 2003, 2002 or 2001. All of the Companys segments operate in
highly competitive multi-billion dollar markets with no single competitor being
dominant.

During 2003, the Company substantially completed its previously announced
multi-phased plan to restructure and reorganize its operations, systems, and
support infrastructure. The key elements of this Plan of Restructure (the
Plan) included:



| |  |  | Reducing staff headcount by approximately 33 percent and operating
offices by approximately 25 percent;                                                                                     
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Reorganizing the business into four reporting segments: Professional
Services (PS), Project Management (PM), Management Recruiters
International (MRI) and Todays Staffing (Todays);
|
| |  |  | Exiting under-performing contracts and businesses;                                                                                                                                          
|
| |  |  | Streamlining and simplifying core information systems; and                                                                                                                                  
|
| |  |  | Consolidating back-office services.                                                                                                                                                         

As a result of the foregoing restructuring and reorganization efforts, the
Company was able to reduce its fixed operating costs. This reduction has
significantly lowered CDIs breakeven point and provides enhanced economies of
scale. Further, the Company has generated significant cash flows and was able
to pay a special dividend of $2.00 per share to its shareholders in 2003.

The ability to recruit talent is a core competency for the Company. In PS, PM
and Todays and, to a limited extent, MRI, personnel are recruited by the
Company and assigned to work for customers at either customer locations or in
the Companys own offices. Such recruited personnel are employees of CDI. In
some cases, the Company may assume risk with respect to the performance of its
services and the acceptability of its employees to its customers.

1



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##### 



Market Opportunity and Growth Strategy

CDIs primary services are intended to meet the engineering and information
technology solutions and professional staffing needs of a broad spectrum of
Fortune 1000 customers. The Company is well positioned to benefit from
business trends favoring outsourcing of non-core, highly skilled functions and
operations. CDI offers a broad range of services from
high-value engineering, design, consulting, information
technology staffing and
project management solutions, in addition to traditional staffing and permanent
placement services. With this broad level of service offerings, CDI can
address demand in the marketplace for more cost effective, single-source
providers of engineering and information technology solutions, and professional
staffing.

CDIs growth strategy is to capitalize on its market position and core
competencies in six key vertical markets: aerospace (commercial and military),
government services (defense and federal information technology), information
technology services, life sciences (pharmaceutical and biotechnology), process
and industrial (chemical, oil, gas, power generation, telecommunications) and
the United Kingdom infrastructure market (construction). Key elements of CDIs
strategy are:

Capture market share in key verticals and permanent placement business.

The Company is implementing a new business development organization in vertical
markets to capture new accounts, enhance cross-selling and incremental business
opportunities and secure long-term customer relationships. In addition, CDI is
executing initiatives to improve productivity in two key revenue generating
areas: recruiter productivity and account management. MRI, the Companys
permanent placement business, is expanding into new international markets such
as Japan.

Continue to execute vertical strategy and deliver tailored products to
customers.

The Company will remain focused on its six key vertical markets and leverage
the experience of its industry specialists to provide tailored products to
customers  offering project specific expertise or a cost effective,
single-source, provider to fulfill their multiple needs.

Continue to increase skill and scale to enhance core capabilities and expand
existing range of services.

The Company intends to pursue strategic acquisitions, when prudent, to increase
scale, skill and service offerings to key verticals.

2



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##### 



Reporting Segments

The following table sets forth (in thousands) the revenues and pre-tax earnings
from continuing operations of the reporting segments of the Company and its
consolidated subsidiaries during the years indicated and the assets
attributable to each segment as of the end of each year.

|                                                                                                                               |                          |                                   |           |                          |         |      |           |      |         |   |           |   |         |  
|------------------------------------------------------------------------------------------------------------------------------ | ------------------------ | --------------------------------- | --------- | ------------------------ | ------- | ---- | --------- | ---- | ------- | - | --------- | - | ------- | -
|                                                                                                                               |                          |                                   |           | Years ended December 31,
|                                                                                                                               |                          |                                   |           |                         
|                                                                                                                               |                          |                                   |           | 2003                     |         | 2002 |           | 2001
|                                                                                                                               |                          |                                   |           |                          |         |      |           |     
|Revenues:                                                                                                                      |                          |                                   |           |                          |         |      |           |      |         |   |           |  
|                                                                                                                               |                          | Professional Services             |           | $                        | 564,790 |      |           |      | 622,931 |   |           |   | 809,549 |  
|                                                                                                                               |                          | Project Management                |           |                          | 302,902 |      |           |      | 311,256 |   |           |   | 352,210 |  
|                                                                                                                               |                          | Todays Staffing                   |           |                          | 135,746 |      |           |      | 149,387 |   |           |   | 193,666 |  
|                                                                                                                               |                          | Management Recruiters             |           |                          | 56,876  |      |           |      | 85,901  |   |           |   | 103,167 |  
|                                                                                                                               |                          |                                   |           |                          |         |      |           |      |         |   |           |  
|                                                                                                                               |                          | $                                 | 1,060,314 |                          |         |      | 1,169,475 |      |         |   | 1,458,592 |  
|                                                                                                                               |                          |                                   |           |                          |         |      |           |      |         |   |           |  
|Earnings (loss) from continuing
operations before income taxes,
minority interests and cumulative
effect of accounting change: |                          |                                   |           |                          |         |      |           |      |         |   |           |  
|                                                                                                                               | Operating profit (loss): |                                   |           |                          |         |      |           |      |         |   |           |   |        
|                                                                                                                               |                          | Professional Services             |           | $                        | 19,799  |      |           |      | 6,880   |   |           |   | (3,984  | )
|                                                                                                                               |                          | Project Management                |           |                          | 16,352  |      |           |      | 9,423   |   |           |   | (10,957 | )
|                                                                                                                               |                          | Todays Staffing                   |           |                          | 6,371   |      |           |      | 1,486   |   |           |   | 2,616   |  
|                                                                                                                               |                          | Management Recruiters             |           |                          | 3,622   |      |           |      | 6,902   |   |           |   | 12,746  |  
|                                                                                                                               |                          | Corporate expenses                |           |                          | (12,951 | )    |           |      | (17,990 | ) |           |   | (23,448 | )
|                                                                                                                               |                          |                                   |           |                          |         |      |           |      |         |   |           |  
|                                                                                                                               |                          |                                   | 33,193    |                          |         |      | 6,701     |      |         |   | (23,027   | )
|                                                                                                                               |                          | Interest (income) expense, net    |           |                          | (1,053  | )    |           |      | (115    | ) |           |   | 3,065   |  
|                                                                                                                               |                          |                                   |           |                          |         |      |           |      |         |   |           |  
|                                                                                                                               |                          | $                                 | 34,246    |                          |         |      | 6,816     |      |         |   | (26,092   | )
|                                                                                                                               |                          |                                   |           |                          |         |      |           |      |         |   |           |  
|Assets:                                                                                                                        |                          |                                   |           |                          |         |      |           |      |         |   |           |  
|                                                                                                                               |                          | Professional Services             |           | $                        | 165,477 |      |           |      | 155,650 |   |           |   | 212,148 |  
|                                                                                                                               |                          | Project Management                |           |                          | 84,362  |      |           |      | 89,996  |   |           |   | 120,032 |  
|                                                                                                                               |                          | Todays Staffing                   |           |                          | 40,495  |      |           |      | 44,779  |   |           |   | 50,171  |  
|                                                                                                                               |                          | Management Recruiters             |           |                          | 37,838  |      |           |      | 38,934  |   |           |   | 47,247  |  
|                                                                                                                               |                          | Corporate                         |           |                          | 73,390  |      |           |      | 103,415 |   |           |   | 28,134  |  
|                                                                                                                               |                          | Assets of discontinued operations |           |                          |        |      |           |      |        |   |           |   | 14,840  |  
|                                                                                                                               |                          |                                   |           |                          |         |      |           |      |         |   |           |  
|                                                                                                                               |                          | $                                 | 401,562   |                          |         |      | 432,774   |      |         |   | 472,572   |  
|                                                                                                                               |                          |                                   |           |                          |         |      |           |      |         |   |           |  

During the second half of 2003, the Company initiated a new growth and business
integration plan to more closely align the Company with the key vertical
markets it serves. This growth strategy and integration plan is designed to
better serve the Companys customers, generate higher revenues and achieve
greater operating efficiencies. As a result of this plan, in January 2004, the
Company made certain organization and reporting changes in support of its
vertical go-to-market strategy. The new organizational structure will have
four reporting segments: Business Solutions, AndersElite, Todays Staffing and
MRI. Management has realigned its PS and PM segments to form a new segment
called Business Solutions. Business Solutions will focus on specific vertical
markets  aerospace, government services, information technology services, life
sciences, and process and industrial. AndersElite, previously part of the PS
reporting segment, is a major provider of building and construction
professionals on a permanent and temporary basis in the United Kingdom. Todays
and MRI segments remain unchanged. Refer to Notes 17 and 18 of the
Consolidated Financial Statements for information concerning the Companys
segments and new reporting structure.

3



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##### 



The following segment discussion reflects the reporting structure of the
Company as it existed in 2003.

Professional Services (PS)

Markets

PS offers information technology, engineering and technical staffing solutions
to customers in targeted vertical markets, including:



| |  |  | Financial services,     
| | - |  | ------------------------
|
| |  |  | Pharmaceuticals,        
|
| |  |  | Industrials,            
|
| |  |  | Information services and
|
| |  |  | Government.             

The Companys PS segment also includes AndersElite, a major provider of
building and construction professionals on a permanent and temporary basis in
the United Kingdom. Approximately 66 percent of the segments revenue is
derived domestically with the balance coming from foreign operations.

Services

The segments service delivery is tailored to the unique needs of the customer.
The most basic service is providing skilled professionals to work at a single
customer location on a temporary or permanent basis. The segments highest
value to customers is in the provision of customized managed staffing
solutions, which may include serving as the lead recruiter among several
vendors, the procurement of hundreds of professional employees across a broad
geographic area, the provision of on-site management of staffing requirements
and certain human resources functions and the utilization of web-based
technology to support these functions.

In certain cases, the services of personnel (supplier associates employees)
supplied by other staffing companies or contractors (supplier associates) are
used to fulfill customer contract requirements. In these cases, the Company
receives an administrative fee for arranging for, billing for and collecting
the billings related to the supplier associates. Typically, the customer is
responsible for assessing the work of the supplier associates, who have the
responsibility for the performance acceptability of their personnel to the
customer.

When providing staffing services the segment recruits and hires employees and
provides these personnel to customers for assignments that domestically, on
average, last approximately one year. The vast majority of these services are
performed in the customers facilities (in-customer). Customers use the
segments employees or supplier associates employees to meet peak period
personnel needs, to fill in for employees who are ill or on vacation, to
provide additional capabilities in times of expansion and change, and to work
on projects requiring specialized skills.

When supplying staffing services the segment provides not only employees but
may also manage all of the customers contract staffing needs, as well as
certain human resource functions required to manage the customers contract
workforce. When providing managed staffing services, the segment frequently
establishes on-site offices at one or more of the customers facilities, staffs
it with employees from the segment and ties that office into the segments
business systems. Managed staffing services include the coordination of
supplier associates employees assigned to the customer from other staffing
companies. If desired, managed staff services utilizes web-based technology to
help accelerate and streamline the procurement and management of contract
employees and the coordination and supervision of supplier associates.

Customers

During the year ended December 31, 2003, PS provided services to approximately
3,600 customers worldwide. Historically, much of its business has been
performed for large multi-national manufacturing, industrial and construction
corporations, but the segment has continued to penetrate non-industrial fields
such as financial services, pharmaceuticals, information services, and
government. In 2003, one large industrial corporation comprised 10 percent of
PS total revenues while the top 10 customers accounted for less than 27
percent of PSs total revenues. Managed staffing services are concentrated
among a small number of these customers, which tend to be among the largest
U.S. and U.K. corporations.

4



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Pricing

Pricing under substantially all contracts between PS and its customers is based
on mark-ups on contractual rates of pay and agreed-upon fees for permanent
placements. Contracts generally do not obligate the customer to pay for any
fixed number of hours. Segment revenues are recorded on a gross basis as
services are performed and associated costs have been incurred. The segment
records an administrative fee as revenue when supplier associates are used.
Generally the customer has the right to terminate the contract, usually on
short notice. PS maintains the right to terminate its staffing employees at
will.

Marketing

PS operates through a network of approximately 42 sales and recruiting offices
located in major markets throughout the United States and 15 international
offices that are primarily located in the U.K. and Canada. Marketing
activities are conducted by divisional and regional management to ascertain
opportunities in specific geographical areas. Each office assists in
identifying the potential markets for services in its geographic area, and
develops that market through personal contact with prospective and existing
customers. Customers typically invite several companies to bid for contracts,
which are awarded primarily on the basis of price, value-added services and
prior performance. Many times customers grant multi-vendor contracts.

Recruitment

The ability of PS to find and hire employees with the capabilities required by
customers is critical to its operations. Such personnel usually have prior
experience in their area of expertise. During periods of high demand for
specific skills, it is not uncommon for PS to experience pressure to pay higher
wage rates or lose employees to competitors who will pay such rates in an
attempt to attract personnel with the required skills. Similarly, wage rates
typically decline in periods of lower demand for such skills. To assist in
fulfilling its personnel needs, a computerized retrieval system facilitates the
rapid selection of resumes on file so that customers requirements may be
filled quickly.

Project Management (PM)

Markets

PM offers a wide range of project management, outsourcing services, and
technical consulting services to customers in high technology and
capital-intensive vertical markets such as:



| |  |  | Aerospace technologies,          
| | - |  | ---------------------------------
|
| |  |  | Biotechnology,                   
|
| |  |  | Pharmaceuticals,                 
|
| |  |  | Chemical and specialty chemical, 
|
| |  |  | Manufacturing and industrial, and
|
| |  |  | Government.                      

Substantially all of the segments revenue is derived from domestic operations.

Services

The segment provides high value-added engineering and consulting services and
solutions to customers with contractual engagements that generally are more
than a year in duration. These services include feasibility studies,
turnaround management, validation services and technical publications. In
addition, PM provides information technology outsourcing services such as
infrastructure management, enterprise support services and technology advisory
services.

PMs services typically involve managing a discrete portion or portions of a
customers capital project, including, but not limited to, preliminary or
detailed plant design and construction management; validation and commissioning
of a facility; and lifecycle support. To the extent such activities entail
design and planning work, they are typically performed in-house. However,
construction management, validation, commissioning and lifecycle support
activities are generally performed on-site.

5



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##### 



In providing information technology outsourcing services, this segment usually
takes over a customers technical department, staffing the department with its
employees, and managing the production of the departments output. In most
instances, the managed department is located on-site at the customers
premises, but in some cases the customer may prefer an off-site location. In
this case, this segment may need to maintain a stand-alone operation.

PMs employees are on PMs payroll and are subject to its administrative
control. When services are performed in-house, PM generally provides
supervision for employees, and may have increased responsibility for the
performance of work that is generally monitored in conjunction with customer
personnel. In addition, PM also provides technical staffing services on an
in-customer basis. This segment is not reliant on supplier associates to any
significant degree.

Customers

During the year ended December 31, 2003, PM provided services to approximately
220 customers. In 2003, one large multinational corporation comprised
approximately 11% of PMs total revenues. Customers and project locations are
geographically dispersed.

Pricing

Pricing under the majority of contracts between PM and its customers is based
on mark-ups on contractual hourly rates of pay, whereby revenues are recorded
on a gross basis. Contracts generally do not obligate the customer to pay for
any fixed number of hours. To a lesser extent, PMs revenues are derived from
fixed-price and outsourcing contracts. In these instances, the Company
recognizes revenue using the percentage of completion method. Generally, the
customer has the right to terminate the contract, usually on short notice. PM
maintains the right to terminate its employees at will. Customers typically
invite several companies to bid for contracts, which are awarded primarily on
the basis of price, technological capability, value-added services, and prior
performance.

Marketing

PM maintains approximately 25 offices across the United States and has 2
international offices. Marketing activities are conducted by divisional and
regional management to ascertain opportunities for PM in specific vertical
markets. Each office assists in identifying the potential markets and develops
that market through personal contact with prospective and existing customers.
Additionally, PMs operating management stays abreast of emerging demand for
services so that efforts can be expanded or redirected to take advantage of
potential business in either established or new marketing areas.

Recruitment

The ability of PM to find and hire employees with the capabilities required by
its customers is critical to its operations. Such personnel usually have prior
experience in their field of expertise. During periods of high demand for
specific skills, it is not uncommon for PM to experience pressure to pay higher
wage rates or lose employees to competitors who will pay such rates in an
attempt to attract personnel with the required skills. Similarly, wage rates
typically decline in periods of lower demand for such skills.

Other

In mid-2002, the Company sold the net operating assets of its Modern
Engineering, Inc. (Modern) subsidiary that operated within the PM segment.
Modern provided technical staffing services to the automotive industry. Refer
to Note 11 to the Consolidated Financial Statements for information concerning
this discontinued operation.

Todays Staffing (Todays)

Markets

Todays provides temporary and permanent administrative, clerical, and legal
staffing as well as managed staffing services through company-owned offices and
a small number of franchised offices. The segment recruits and hires employees
and provides these personnel to the customer. In managed staffing, the segment
not only provides the employees but also manages the customers entire contract
staffing needs. Most of the segments revenue is derived from the United
States with the balance coming from Canada.

6



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##### 



Services

Services are performed in customers facilities by Todays employees who are
hired to work on customers projects. The period of assignment depends on the
need for the skills of the individual employee and can range from several days
to several months. The average assignment duration is approximately five
weeks. At the end of an assignment, an employee is either reassigned within
the current customer, assigned to perform services with another customer, or
employment is terminated. Todays personnel are on Todays payroll and are
subject to its administrative control. The customer retains supervisory
control and responsibility for the performance of the employees services.

Todays also supports franchised offices and employs all of the temporary
personnel, including those recruited by the franchised offices, and also bears
the responsibility for billing services to customers. Franchisees are
responsible for selling services to customers, recruiting temporary personnel
and for administrative costs. The franchisee receives a portion of the gross
profit on the franchised accounts.

Customers

Customers retain Todays to meet peak manpower needs, to temporarily replace
personnel on vacation and to staff special projects. During the year ended
December 31, 2003, these services were provided to approximately 3,500
customers. This segment focuses on small to medium-sized customers including
banks, mortgage and insurance companies, investment companies, utilities,
hospitals, law firms and universities, as well as larger national accounts. In
2003, no one customer exceeded 6% of total segment revenue.

Pricing

Pricing is based on mark-ups on contractual rates of pay, and arrangements with
the customer generally do not obligate the customer to pay for any fixed number
of hours. Segment revenues are recorded on a gross basis. Generally the
customer has the right to terminate services, usually on short notice. Todays
maintains the right to terminate its staffing employees at will.

Marketing

Todays operates through a network of approximately 79 sales and recruiting
offices, with 69 offices in the United States, of which 7 are franchised, and
10 offices in Canada. Each office is responsible for determining the potential
market for services in its geographic area and developing that market through
personal contact with prospective and existing customers.

Recruitment

The ability of Todays to locate and hire personnel with customer-specific
capabilities is critical to its operations.

Management Recruiters International (MRI)

Markets

MRI is a franchisor providing support services to its franchisees who engage in
the search, recruitment and employment of management and sales personnel. MRI
also provides temporary management and specialty staffing services.

Services/Customers/Pricing

Franchisees located in the U.S. pay an initial fee approximating $79,000 to
acquire a franchise, while franchises located internationally pay an initial
fee approximating $63,000. The fee is charged for establishing and bringing a
new franchisee into the franchise system and for the franchisees participation
in a comprehensive training program and providing office software and hardware.
Franchisees also pay royalties based on a percentage of the franchisees
placement fees. Franchisees benefit from MRIs expertise in the business, from
its Internet presence, national marketing and sales campaigns, public relations
support and purchasing leverage. Franchisees also have the right to use MRIs
trade names, trademarks, the inter-office referral system, operating
techniques, advertising materials, sales programs, video and live interactive
training programs, computer programs, Internet and intranet systems, manuals
and forms. MRI does not control the business operations of its franchisees.

7



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Marketing

As of December 31, 2003, MRI had approximately 1,000 franchised offices
providing services to both large and small employers in virtually all
industries. There are approximately 800 offices located throughout the United
States with approximately 200 offices located internationally. Support for
MRIs franchise network is provided by administrative offices in Cleveland,
Ohio and Philadelphia, Pennsylvania for domestic operations, and in the U.K for
international franchise operations. The broad geographic scope of operations
enables franchisees to provide international recruiting and matching of
employers with job candidates. The network utilizes an inter-office referral
system on both national and regional levels, which enables offices to cooperate
in fulfilling a customers requirements.

Recruitment

Employers commonly offer more than one company the opportunity to find
qualified candidates for a position making competition for qualified
individuals intense. Franchisees ability to obtain placements with employers
is determined more on their ability to find qualified candidates than on their
fee structure.

Other

In the latter part of 2001, management decided to divest MRI of its
company-owned permanent placement offices. MRI exited a majority of such
offices in 2002. In 2003, MRI signed a contract to exit the remaining
company-owned offices. Refer to Note 15 to the Consolidated Financial
Statements for information concerning these dispositions.

Other Information

Safeguards  Business, Disaster and Contingency Planning

CDI has a number of safeguards to protect the Company from various
system-related risks. Given the significant amount of data generated in the
Companys key processes including recruiting, payroll and customer invoicing,
CDI on a daily basis, has established redundant processing capability within
the Companys primary data center. This redundancy mitigates the risks related
to hardware failure. Additionally, CDI has contracted with a third-party
provider to restore its primary data center operations in the event of a
disruption. Finally, the Company maintains site disaster plans for a majority
of its operating offices as well as maintaining data back-up requirements
throughout the Company.

Competition

All segments of the Companys operations face competition in attracting both
clients and high-quality specialized employment candidates. The temporary and
permanent placement businesses are highly competitive, with limited barriers to
entry. CDI competes in global, national and local markets with numerous
temporary staffing and permanent placement companies. In many areas the local
companies are the strongest competitors. In 2003, some of CDIs largest
competitors included Kelly Services, Inc., Adecco, S.A., Spherion Corporation,
Volt Information Sciences, Inc., and Jacobs Engineering Group, Inc.

The most significant competitive factors in the temporary, project-based and
permanent placement businesses are price and the reliability of service, both
of which are often a function of the availability and quality of personnel. The
Company believes it derives a competitive advantage from its long experience
in and commitment to the specialized employment market, its national
presence, and its various marketing activities.

Seasonality

The Companys temporary, project-based and permanent staffing services
operations are generally less active in the first and fourth quarters of a
calendar year. This seasonality is due to customers plant closures, vacation
and holiday schedules.

Employees

At December 31, 2003 the Company had approximately 16,600 employees. The
Company believes that its relations with its employees are generally good.

8



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Risk Factors

The Companys business involves a number of risks, some of which are beyond its
control. The risk and uncertainties described below are not the only ones the
Company faces. Management believes that the most significant of these risks
and uncertainties are as follows:

Economic Trends- The Companys growth and earnings prospects are influenced by
broad economic trends. The pace of customer capital spending programs, new
product launches and similar activities have a direct impact on the need for
temporary and permanent employees. The Company believes that its fiscal
discipline and strategic focus on targeted vertical markets provides some
insulation from adverse trends. However, further declines in the economy would
adversely affect the Companys operating performance and could result in the
need for future cost reductions or changes in strategy.

Government Regulations- Changes in government regulations could result in
prohibition or restriction of certain types of employment services or the
imposition of new or additional benefits, licensing or tax requirements with
respect to the provision of employment services that may reduce CDIs future
earnings. There can be no assurance that CDI would be able to increase the
fees charged to its clients in a timely manner or in a sufficient amount to
cover increased costs as a result of any of the foregoing.

Highly Competitive Business-The staffing services and outsourcing markets are
highly competitive and have limited barriers to entry. CDI competes in global,
national, regional and local markets with numerous temporary staffing and
permanent placement companies. Price competition in the staffing industry is
significant, particularly for the provision of office clerical and light
industrial personnel, and pricing pressures from competitors and customers are
increasing. In addition, there is increasing pressure on companies to
outsource certain areas of their business to low cost offshore outsourcing
firms. CDI expects that the level of competition will remain high in the
future, which could limit CDIs ability to maintain or increase its market
share or profitability.

Dependence Upon Personnel-The Companys operations depend on the continued
efforts of its officers and executive management. The loss of key officers and
members of executive management may cause a significant disruption to the
Companys business. CDI also depends on the performance and productivity of
its local managers and field personnel. The Companys ability to attract and
retain new business is significantly affected by local relationships and the
quality of service rendered. The loss of key managers and field personnel may
also jeopardize existing client relationships with businesses that continue to
use our services based upon past relationships with local managers and field
personnel, which could cause future revenues to decline in that event.

Foreign Currency Fluctuations and Changes in Exchange RatesThe Company is
exposed to risks associated with foreign currency fluctuations and changes in
exchange rates. CDIs exposure to foreign currency fluctuations relates to
operations in foreign countries conducted through subsidiaries primarily in the
United Kingdom and Canada. Exchange rate fluctuations impact the U.S. dollar
value of reported earnings derived from these foreign operations as well as the
carrying value of our investment in the net assets related to these operations.
The Company generally does not engage in hedging activities with respect to
foreign operations except for isolated situations involving inter-company
payments that have not been material. The effects of foreign currency exchange
fluctuations have been immaterial on CDIs consolidated earnings.

Concentration of Stock Ownership Certain of CDIs Board of Directors, and trusts for
which some of the Companys directors serve as trustees, own, in the aggregate,
a substantial portion of the Companys outstanding common stock. By virtue of
this stock ownership, such shareholders have the power to significantly
influence CDIs affairs and are able to influence the outcome of matters
required to be submitted to shareholders for approval, including the election
of members of the Board of Directors and the amendment of the Companys
Articles of Incorporation or Bylaws. Management cannot guarantee that such
shareholders will not exercise influence over the Company in a manner
detrimental to the interests of CDIs other shareholders.

Integration of Acquisitions The Company intends to seek acquisitions as an
element of its growth strategy. The failure to successfully integrate any
future acquisition may divert managements attention from its core operations
or could negatively affect the Companys ability to timely meet the needs of
its customers.

9



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Data Center Capacity and Telecommunication Links- The Companys ability to
protect its data centers against damage from fire, power loss,
telecommunications failure and other disasters is critical. In order to
provide many of its services, CDI must be able to store, retrieve, process and
manage large databases and periodically expand and upgrade its capabilities.
Any damage to the Companys data centers or any failure of the Companys
telecommunication links that interrupts its operations or results in an
inadvertent loss of data could adversely affect CDIs ability to meet its
customers needs and their confidence in utilizing CDI for future services.

Access to Company Information

The Company electronically files its annual report on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and all amendments to those
reports with the Securities and Exchange Commission (SEC). The public may read
and copy any of the reports that are filed with the SEC at the SECs Public
Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov)
that contains reports, proxy, information statements, and other information
regarding issuers that file electronically.

CDI makes available, free of charge, through its website or by responding to
requests addressed to the Companys Vice President of Corporate Communications,
its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K, and all amendments to those reports filed by the Company with the
SEC pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act, as
amended. This report is available as soon as reasonably practicable after such
material is electronically filed with or furnished to the Securities and
Exchange Commission. CDIs website address is: http://www.cdicorp.com. CDI
posts its audit committee, compensation committee, and governance and
nominating committee charters, corporate governance guidelines, and code of
ethics on the Companys website. The information contained on the Companys
website, or on other websites linked to the Companys website, is not part of
this document.

10



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Item 2. PROPERTIES

The Company presently maintains its principal executive offices at 1717 Arch
Street, Philadelphia, Pennsylvania 19103 in approximately 21,300 square feet of
leased office space under a sublease expiring in 2005. The Company also
maintains corporate offices at 1801 Market Street, Philadelphia, Pennsylvania
19103 in approximately 65,000 square feet of leased office space expiring in
2006. During 2003, CDIs shared services center was transitioned from
Philadelphia to Charleston, West Virginia.

The Company has closed or sold approximately 100 operating sites since 2001,
primarily in the United States, as a result of its restructuring and cost
reduction efforts. Many of these facilities are under non-cancelable operating
leases. Accordingly, the Company has negotiated lease buy-outs or subleases to
minimize the cash outflow requirements. In connection with the Companys
office closings, reserves were established to reflect the net estimated future
cash outlays related to closed office leases. Actual future cash outlays could
exceed these reserves in the event of sublease defaults. Refer to Note 14 to
Consolidated Financial Statements for further information concerning operating
lease obligations and related sublease arrangements.

As part of the Companys restructuring and reorganization efforts, some of the
Companys offices accommodate more than one operating segment. In such cases,
square-foot usage is allocated among the segments based on planned utilization.

Each reporting segment has numerous active facilities and locations under
operating lease agreements. Most of the leased space is devoted to sales,
marketing and administrative functions, in-house services, and back-office
functions. These facilities are leased under terms generally extending up to
five years.

Item 3. LEGAL PROCEEDINGS

Not applicable.

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

Not applicable.

11



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PART II

Item 5. MARKET FOR
REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market information

CDIs common shares are traded on the New York Stock Exchange (trading symbol
CDI). The following table sets forth the high and low quarterly sales prices
of the Companys common shares during the two most recent years (all as
reported by The Wall Street Journal).

|               |  |      |       |      |  |      |       |     |  |  |       |  |  |  |       | 
|-------------- |  | ---- | ----- | ---- |  | ---- | ----- | --- |  |  | ----- |  |  |  | ----- | 
|               |  | 2003 |       | 2002
|               |  |      |       |     
|               |  | High |       | Low  |  | High |       | Low
|               |  |      |       |      |  |      |       |    
|First quarter  |  | $    | 27.70 |      |  |      | 20.90 |     |  |  | 23.78 |  |  |  | 18.58 | 
|Second quarter |  |      | 27.99 |      |  |      | 22.25 |     |  |  | 32.55 |  |  |  | 22.06 | 
|Third quarter  |  |      | 28.15 |      |  |      | 23.74 |     |  |  | 32.49 |  |  |  | 22.90 | 
|Fourth quarter |  |      | 34.60 |      |  |      | 27.78 |     |  |  | 29.30 |  |  |  | 23.43 | 

Shareholders

Shareholders of record on February 23, 2004 numbered 483. This number counts
each street name account as only one shareholder, when, in fact, such an
account may represent multiple owners. Taking into account such multiple
owners, the total number of shareholders on February 23, 2004 approximated
3,500.

Dividends

On August 19, 2003, the Company paid a special dividend of $2.00 per share and
a dividend of $0.09 per share, with a total of $40.7 million being distributed
to shareholders on that date. On November 18, 2003, the Company paid a
dividend of $0.09 per share, with a total of $1.7 million being distributed to
shareholders on that date. The declaration and payment of future dividends
will be at the discretion of the Companys Board of Directors and will depend
upon many factors including the Companys earnings, financial condition,
capital requirements, and other factors.

Sales of unregistered securities

On October 1, 2001 and November 13, 2001, the Company issued a total of 40,000
restricted shares of the Companys common stock to Roger H. Ballou, the
Companys Chief Executive Officer, as part of an arrangement made to induce Mr.
Ballou to join the Company. These shares were issued in consideration for
services performed or to be performed by the recipient. The issuance was made
in reliance on the exemption from registration found in section 4(2) of the
Securities Act of 1933.

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Item 6. SELECTED FINANCIAL DATA

The following is selected financial data derived from the Companys audited
Consolidated Financial Statements for each of the last five years. The data
should be read in conjunction with the Companys Consolidated Financial
Statements (and related notes) appearing elsewhere in this report and with Item
7 of this report. The data presented below is in thousands, except for per
share data.

|                                           |                                                                                          |                                            |                     |         |      |        |           |         |       |        |           |         |       |         |           |         |      |        |           |         |      |        | 
|------------------------------------------ | ---------------------------------------------------------------------------------------- | ------------------------------------------ | ------------------- | ------- | ---- | ------ | --------- | ------- | ----- | ------ | --------- | ------- | ----- | ------- | --------- | ------- | ---- | ------ | --------- | ------- | ---- | ------ | 
|                                           |                                                                                          |                                            |                     |         | 2003 |        | 2002      |         | 2001  |        | 2000      |         | 1999 
|                                           |                                                                                          |                                            |                     |         |      |        |           |         |       |        |           |         |      
|Earnings Data:                             |                                                                                          |                                            |                     |         |      |        |           |         |       |        |           |         |       |         |           |         |      |        |           |        
|Revenues                                   |                                                                                          | $                                          | 1,060,314           |         |      |        | 1,169,475 |         |       |        | 1,458,592 |         |       |         | 1,675,455 |         |      |        | 1,552,831 |        
|                                           |                                                                                          |                                            |                     |         |      |        |           |         |       |        |           |         |       |         |           |         |      |        |           |        
|                                           | Earnings (loss) from
continuing operations
before cumulative
effect of accounting
change |                                            | $                   | 22,546  |      |        |           | 4,082   |       |        |           | (16,704 | )     |         |           | 28,811  |      |        |           | 45,514  |     
|                                           | Discontinued operations                                                                  |                                            |                     |        |      |        |           | 527     |       |        |           | 1,094   |       |         |           | 4,192   |      |        |           | 6,933   |     
|                                           | Cumulative effect of
accounting change, net
of tax                                       |                                            |                     |        |      |        |           | (13,968 | )     |        |           |        |       |         |           |        |      |        |           |        |     
|                                           |                                                                                          |                                            |                     |         |      |        |           |         |       |        |           |         |       |         |           |         |      |        |           |        
|                                           |                                                                                          |                                            | Net earnings (loss) |         | $    | 22,546 |           |         |       | (9,359 | )         |         |       | (15,610 | )         |         |      | 33,003 |           |         |      | 52,447 | 
|                                           |                                                                                          |                                            |                     |         |      |        |           |         |       |        |           |         |       |         |           |         |      |        |           |        
|Basic earnings (loss)                      |                                                                                          |                                            |                     |         |      |        |           |         |       |        |           |         |       |         |           |         |      |        |           |        
|                                           | Per share:                                                                               |                                            |                     |         |      |        |           |         |       |        |           |         |       |         |           |         |      |        |           |         |     
|                                           |                                                                                          | Earnings (loss) from
continuing operations |                     | $       | 1.16 |        |           |         | 0.21  |        |           |         | (0.88 | )       |           |         | 1.51 |        |           |         | 2.39 |       
|                                           |                                                                                          | Discontinued operations                    |                     | $       |     |        |           |         | 0.03  |        |           |         | 0.06  |         |           |         | 0.22 |        |           |         | 0.36 |       
|                                           |                                                                                          | Cumulative effect of
accounting change     |                     | $       |     |        |           |         | (0.73 | )      |           |         |      |         |           |         |     |        |           |         |     |       
|                                           |                                                                                          |                                            | Net earnings (loss) |         | $    | 1.16   |           |         |       | (0.49  | )         |         |       | (0.82   | )         |         |      | 1.73   |           |         |      | 2.76   | 
|Diluted earnings (loss)                    |                                                                                          |                                            |                     |         |      |        |           |         |       |        |           |         |       |         |           |         |      |        |           |        
|                                           | Per share:                                                                               |                                            |                     |         |      |        |           |         |       |        |           |         |       |         |           |         |      |        |           |         |     
|Earnings (loss) from
continuing operations |                                                                                          | $                                          | 1.14                |         |      |        | 0.21      |         |       |        | (0.88     | )       |       |         | 1.51      |         |      |        | 2.38      |        
|Discontinued operations                    |                                                                                          | $                                          |                    |         |      |        | 0.03      |         |       |        | 0.06      |         |       |         | 0.22      |         |      |        | 0.36      |        
|Cumulative effect of
accounting change     |                                                                                          | $                                          |                    |         |      |        | (0.71     | )       |       |        |          |         |       |         |          |         |      |        |          |        
|Net earnings (loss)                        |                                                                                          | $                                          | 1.14                |         |      |        | (0.48     | )       |       |        | (0.82     | )       |       |         | 1.73      |         |      |        | 2.74      |        
|Cash dividends declared
per common share   |                                                                                          | $                                          | 2.18                |         |      |        |          |         |       |        |          |         |       |         |          |         |      |        |          |        
|Balance Sheet Data:                        |                                                                                          |                                            |                     |         |      |        |           |         |       |        |           |         |       |         |           |         |      |        |           |        
|                                           | Total assets                                                                             |                                            | $                   | 401,562 |      |        |           | 432,774 |       |        |           | 472,572 |       |         |           | 572,029 |      |        |           | 531,680 |     
|                                           | Long-term debt
(including current
portion)                                               |                                            | $                   |        |      |        |           |        |       |        |           | 7,913   |       |         |           | 49,623  |      |        |           | 65,651  |     
|Shareholders equity                       |                                                                                          | $                                          | 297,351             |         |      |        | 307,801   |         |       |        | 310,650   |         |       |         | 325,795   |         |      |        | 293,844   |        

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Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

Economic and Industry-wide Factors Relevant to CDI:

CDI participates in an industry that is cyclical in nature and extremely
sensitive to economic changes in the markets where its operations are
conducted. The Companys revenue growth is largely dependent on capital
spending by customers and job growth. In 2003, capital spending by customers in
CDIs key vertical markets declined significantly. The Companys PS and PM
segments were particularly impacted by this contraction. Capital spending in
the process and industrial, aerospace, and information technology vertical
markets declined significantly and impacted CDIs ability to grow its revenue
base during 2003. In addition, during 2003 customers postponed the hiring of
both permanent and temporary workers, which adversely impacted CDIs Todays and
MRI segments.

CDI relies growth in the economy to fuel its growth. Some of the economic
indicators used to gauge demand and develop forecasts, budgets and make capital
deployment decisions include: U.S. GDP forecasts, capital spending forecasts in
such industries and sectors as process and power, information technology,
aerospace and government services, and changes in energy costs.

During the first half of 2003, there were sporadic and even conflicting
indicators that made it difficult to assess whether the U.S. economy was truly
improving or if job growth was sustainable. In the second half of 2003,
while the overall U.S. economy showed clear signs of recovery, the
GDP growth did not translate into job growth or increased capital
spending. As a result, CDI did not experience an
increase in its U.S. based businesses. Management believes there are several
factors contributing to the Companys lack of revenue growth in 2003. These
are:



| |  |  | To the extent there was job growth in 2003, CDI believes the majority
of such growth may have been in the lower-level skill sets such as the
light industrial labor market. As a result of CDIs restructuring
efforts over the past two years, the Company no longer has a meaningful
presence in this portion of the staffing market.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Capital spending, a key driver of demand in many of the vertical
markets in which the Company participates, has been very sluggish in the
Companys key verticals.                                                                                                                                                                     
|
| |  |  | CDI has implemented aggressive restructuring and business realignment
efforts. An integral part of these efforts has been the recruiting,
hiring and promotion of new executives into key roles. Management
believes the Company will benefit from these initiatives, once these
executives are fully integrated.                      

Historically, during the early stages of an economic recovery, companies are
quite cautious in ramping up major capital spending programs and hiring
personnel to handle forecasted new demand. Therefore, in the early stages of a
recovery, companies will utilize temporary employees to augment their headcount
requirements. Historically, PS and Todays segments were considered leading
indicators of demand during the early stages of recovery. So far, the 2003
economic upturn has not translated into increased order flow. Management
anticipates that it will take 3 to 6 months into 2004 for CDIs business to see
the revenue growth normally associated with an economic upturn. Later, as
companies gain more confidence that a recovery is underway, management expects
to see more demand for permanent placement services and, therefore, increases
in MRIs revenue base. During these latter stages of a recovery, CDI would
experience the profit leverage inherent in its permanent placement business
where margins are substantially greater than those available in staffing or
project-outsourcing services.

As noted above, CDI has seen only limited indications of a recovery based on
revenue trends throughout 2003. A prolonged jobless recovery and anemic
capital spending in 2004 would further impede revenue growth.

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Revenue and Cash Generation:

CDI generates the majority of its revenues and resultant cash flows from
several activities as outlined below:



| |  |  | Project management, technical engineering and information technology
outsourcing services to facilitate customers efforts to reduce costs
and or support important growth initiatives
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Temporary staffing to meet customers demand for temporary staff augmentation                                                                                                         
|
| |  |  | Permanent placement activities including initial franchise fees and ongoing franchise royalties                                                                                       

Payrolls for billable employees are typically paid weekly and revenues for
temporary staffing are recognized coincident with the payroll cycle. This
schedule applies to the majority of CDIs technical engineering business as
well. In some cases, CDI provides technical engineering services under
fixed-price contracts. Revenue recognition for fixed-price contracts is
determined under the percentage-of-completion method. Revenue recognition for
fixed-price outsourcing services contracts is recognized evenly over the
contractual period. Customers are invoiced weekly, semi-monthly, or monthly for
staffing services. Projects under fixed-price contracts are invoiced when
specific milestones are met or based on a periodic schedule. Customers are
typically invoiced for outsourcing services contracts on a monthly basis.

MRI generates revenues and cash flows from the expansion of its global
franchise organization and from the collection of royalties as its franchisees
collect cash from their customers for permanent placement services.

CDIs Business Structure:

Historically, CDI has organized and managed its operations based on the
technical nature of services performed or the characteristics of customer
contracts. Management believes that this form of business alignment is no
longer optimal because many of our customers are increasingly looking to
consolidate vendors and have a broader array of services offered by a smaller
number of vendors with a uniform single point-of-contact.

Accordingly, during the latter part of 2003, CDI management initiated a plan to
realign the service capabilities of the Company along targeted customer
verticals and to provide the array of services needed under a more consolidated
management structure. Effective January 1, 2004 the Company implemented this
new go-to-market strategy. This new strategy is designed to leverage CDIs
broad service capabilities to targeted vertical markets. Coincident with this
change, the leadership structure of the verticals was consolidated. CDI will
begin managing and reporting its results consistent with the new structure
beginning in 2004. Refer to notes 17 and 18 to the Companys Consolidated
Financial Statements for further information about this internal
reorganization.

Significant Opportunities, Challenges, and Risks:

CDI believes that its newly integrated vertical go-to-market strategy should
improve revenue opportunities in a more robust capital spending and hiring
environment. The success of this strategy is dependant on the Companys ability
to leverage its broad and integrated services offerings to its customers. In
addition, during periods of growth, management must continue to focus on
leveraging its existing infrastructure, maintaining cost discipline and strong
control over its contracting processes and management of its working capital.

Another key opportunity for CDI is to leverage its recruiting capabilities.
Management believes that substantial increases in recruiter productivity can be
achieved through process re-engineering and consistent application of
technology across the organization. The ability to fill open positions timely
and manage the Companys human capital in an efficient manner is important to
the Companys long-term performance.

Continued job growth should also benefit CDIs permanent placement business,
which traditionally lags an economic recovery. MRI continues its global
expansion into new markets and given its profitable history during sustained
economic growth, there is considerable upside potential. Ensuring that the MRI
franchisee community is ready to take advantage of an upturn in the economy is
also important to the Companys growth.

The Company is subject to many risks inherent to the industry. The most
significant risk is the aforementioned dependency on a robust economy to fuel
the Companys revenue growth. In addition, price competition,

15



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particularly for temporary office and clerical assignments, have increased
throughout 2003. Management does not expect competitive pressures to lessen in
the foreseeable future, which could limit the Companys ability to grow
organically.
Refer to the Risk Factors in Item 1 of this report for further information
regarding risk.

Three-year Financial Overview

Key Financial Trends:

The table that follows presents a three-year trend of key performance
indicators management focuses on in managing the Company:

|                                                            |  |      |         |      |  |      |         |   |  |   |         |   
|----------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | --
|(dollars in millions)                                       |  | 2003 |         | 2002 |  | 2001
|                                                            |  |      |         |      |  |     
|Revenues                                                    |  | $    | 1,060.3 |      |  | $    | 1,169.5 |   |  | $ | 1,458.6 |   
|Gross profit as a percent of revenues                       |  |      | 24.2    | %    |  |      | 26.1    | % |  |   | 25.2    | % 
|Operating and administrative costs                          |  | $    | 223.8   |      |  | $    | 284.3   |   |  | $ | 368.1   |   
|Operating and administrative costs
as a percent of revenues |  |      | 21.1    | %    |  |      | 24.3    | % |  |   | 25.2    | % 
|Cash, cash equivalents, and
short-term investments          |  | $    | 72.8    |      |  | $    | 99.6    |   |  | $ | 26.3    |   
|Cash flow from operations                                   |  | $    | 23.0    |      |  | $    | 83.9    |   |  | $ | 98.8    |   
|Return on equity (1)                                        |  |      | 7.5     | %    |  |      | 1.3     | % |  |   | (5.2    | )%



| | (1) |  | Continuing earnings (loss) divided by average shareholders
equity
| | --- |  | ------------------------------------------------------------------

In October 2001, CDI hired a new Chief Executive Officer who launched a
multi-phased plan to restructure the Company for sustainable profitable growth.
The initial phase of the plan focused on implementation of a more operationally
efficient and financially disciplined business model. This required the exiting
of lower-margin customer contracts, the re-deployment of assets to support
higher-margin businesses and the lowering of the Companys breakeven point
through structural cost reductions. These measures extended to all segments of
the Company and were substantially completed during 2003.

Approximately 50% of the revenue reduction noted over the past three years is
attributable to the above referenced exit of lower-margin contracts throughout
2002. The remaining portion of the revenue decline is primarily attributable
to the struggling economy over the past two plus years, which impacted all of
CDIs lines of business, as well as the sale of MRIs company-owned permanent
placement offices. While the reduction of lower-margin business did improve
CDIs gross profit margins, particularly in 2002, the decline in MRIs high
margin permanent placement revenues and the sale of MRIs company-owned offices
were the primary causes of the decline in gross profit margins in 2003.

The impact of the contraction in revenue and related gross profit margins was
more than offset in 2002 and 2003 by substantial reductions in costs from the
Companys restructuring program. Beginning in 2001, CDI reduced its fixed costs
for systems and back-office support, realigned its business structure, reduced
redundant staffs and office facilities and imposed strict cost discipline
throughout the organization. As a result, operating and administrative costs
have declined 39.2% over the last three years and constitute approximately
21.1% of 2003 consolidated revenues compared to 25.2% of consolidated revenues
in 2001.

Over the past three years, CDI has been successful in reducing its accounts
receivable balances and has generated $205.7 million in cash flow from
operations. During this time period, CDI eliminated all debt and funded its
operations from internal cash generation. In addition, the Company was able to
pay dividends during the second half of 2003 aggregating $42.4
million while still maintaining a strong level of cash, cash equivalents and
short-term investments to fund potential growth.

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Consolidated Results of Operations
2003 versus 2002

The following table presents year-over-year changes in revenues, gross profit,
and operating profit from 2002 to 2003:

|              |  |         |         |        |  |            |       |        |  |            |       |           |  |  |       |    |  |   |      |  
|------------- |  | ------- | ------- | ------ |  | ---------- | ----- | ------ |  | ---------- | ----- | --------- |  |  | ----- | -- |  | - | ---- | -
|              |  |         |         |        |  | Percentage |       | Gross  |  | Percentage |       | Operating
|(in millions) |  | Revenue |         | Change |  | Profit     |       | Change |  | Profit    
|              |  |         |         |        |  |            |       |        |  |           
|2002          |  | $       | 1,169.5 |        |  |            |       |        |  | $          | 304.8 |           |  |  |       |    |  | $ | 6.7  |  
|PS            |  |         | (58.1   | )      |  |            | (9.3  | )%     |  |            | (9.7  | )         |  |  | (7.8  | )% |  |   | 12.9 |  
|PM            |  |         | (8.4    | )      |  |            | (2.7  | )      |  |            | (6.5  | )         |  |  | (8.6  | )  |  |   | 6.9  |  
|Todays        |  |         | (13.6   | )      |  |            | (9.1  | )      |  |            | (4.2  | )         |  |  | (10.0 | )  |  |   | 4.9  |  
|MRI           |  |         | (29.1   | )      |  |            | (33.8 | )      |  |            | (27.6 | )         |  |  | (43.1 | )  |  |   | (3.3 | )
|Corporate     |  |         |        |        |  |            |      |        |  |            |      |           |  |  |      |    |  |   | 5.1  |  
|              |  |         |         |        |  |            |       |        |  |            |       |           |  |  |       |    |  |   |      |  
|2003          |  | $       | 1,060.3 |        |  |            | (9.3  | )%     |  | $          | 256.8 |           |  |  | (15.7 | )% |  | $ | 33.2 |  
|              |  |         |         |        |  |            |       |        |  |            |       |           |  |  |       |    |  |   |      |  

Consolidated revenues for 2003 were $1,060.3 million, compared to $1,169.5
million in 2002. Revenues decreased in each of the Companys four segments.
The $109.2 million or 9.3% decrease in revenues was due primarily to the
sluggish U.S. economy during 2003 and the planned exit of lower-margin accounts
in 2002. As a result, a large number of CDIs customers reduced their
capital spending and staffing levels in 2003, which created weak demand for
engineering staffing and permanent and temporary services. Also contributing
to the decline in revenue was the exiting of company-owned offices within MRI
in 2002 and 2003 and to pricing pressures within the PS and Todays segments.
Partially offsetting these declines was strong revenue growth in AndersElite in
PS and the chemical and industrial vertical in PM. AndersElite is a major
provider of building and construction professionals on a permanent and
temporary basis in the United Kingdom. Management does not expect competitive
pressures to lessen for the foreseeable future.

The Companys consolidated gross profit of $256.8 million was 15.7% lower than
2002, due largely to lower sales volume, as well as to a decrease in gross
profit margins from 26.1% in 2002 to 24.2% in 2003. This gross profit margin
decrease was driven principally by the exit of company-owned offices in MRI,
which historically had higher margins, as well as to growth in lower margin
staffing project work and shrinkage in higher margin project business within
the PS and PM segments.

Operating and administrative expenses of $223.8 million decreased $60.5 million
or 21.3% from last year. This improvement was due primarily to the Companys
lower cost structure resulting from the Plan of Restructure substantially
completed in 2003 as well as to lower sales volume. Also included in this
decline were reductions in bad debt expense of $1.4 million as the result of
better than expected collection of exited lower margin accounts, primarily in
the PS segment, and the implementation in the third quarter of 2003 of a new
replacement policy for personal computers, which extended the useful life of
these assets from three to four years. As a result of the change in useful
lives, depreciation expense in 2003 was $1.0 million lower than in 2002.
Included in operating and administrative expenses in 2002 were $7.5 million of
event-driven charges primarily related to the accelerated depreciation of both
the Companys impaired former enterprise resource planning system and leasehold
improvements of exited offices.

Operating profit for 2003 was $33.2 million, a $26.5 million increase over
2002. The significant improvement in operating profit was due largely to the
reduction in operating and administrative expenses of $60.5 million, which more
than offset the volume-based decline in gross profit of $48.0 million, as well
as lower restructuring expense of $12.7 million and a loss from the sale of
assets of $1.3 million in 2002. Included in operating and administrative
expenses in 2002 were $7.5 million of event-driven charges noted above.

Net interest income was $1.1 million in 2003 as compared to net interest income
of $0.1 million in 2002. This increase is the result of increased invested
funds.

The Companys effective income tax rate for continuing operations decreased
from 38.1% in 2002 to 34.2% in 2003. The reduction in the effective tax rate
relates primarily to favorable resolutions of prior years tax

17



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exposures. Refer to Note 10 to the Consolidated Financial Statements for
further information concerning the Companys income taxes.

Net earnings per diluted share were $1.14 in 2003 compared to a net loss per
diluted share of $0.48 in 2002.

Segment Discussion

Professional Services (PS)

PS revenues of $564.8 million decreased $58.1 million or 9.3% in 2003 compared
to 2002. This revenue decline was largely attributable to the continued weak
demand for engineering staffing, the planned exit of lower margin accounts
during 2002 and strong pricing pressures within the information technology
vertical, partially offset by strong revenue growth in the U.K. based
AndersElite business. AndersElite continues to experience strong demand in
professional services in the construction trades.

Gross profit of $114.1 million in 2003 decreased $9.7 million or 7.8% as
compared to $123.8 million in 2002. This decline in gross profit was primarily
due to the lower revenues noted above, partially offset by improvement in the
gross profit margin from 19.9% to 20.2%, which was due to the exit of lower
margin accounts in 2002.

PS operating profit was $19.8 million in 2003 as compared to $6.9 million in
2002. This $12.9 million increase in operating profit was due principally to a
$20.0 million improvement in operating and administrative expenses, which more
than offset the volume-based decline in gross profit of $9.7 million, as well
as lower restructuring expenses of $2.6 million. Included in the $20.0 million
improvement in operating and administrative expenses was a $1.4 million
reduction in bad debt expense in 2003 and a $5.7 million reduction of
event-driven charges recorded in 2002.

Project Management Services (PM)

PMs revenues of $302.9 million in 2003 decreased $8.4 million or 2.7% compared
to 2002. The lower revenues were primarily attributable to reduced capital
spending by customers in the aerospace and telecommunications verticals, as
well as customer project delays in the pharmaceutical vertical. These declines
were significantly offset by a strong performance in the chemical and
industrial vertical due to additions of new customer accounts.

PMs gross profit was $68.9 million in 2003 as compared to $75.4 million in
2002. The decline of $6.5 million or 8.6% in 2003 gross profit was principally
due to a reduction in gross profit margin from 24.2% to 22.8% resulting from
delays in several high margin projects in the pharmaceutical vertical as well
as to growth in lower margin staffing work and shrinkage in higher margin
project business within the chemical and industrial vertical. These declines
in gross profit were partially offset by improved margins in both the aerospace
and government services verticals as the Company continues to seek high-margin
value added business.

PMs operating profit was $16.3 million in 2003 as compared to $9.4 million in
2002. The $6.9 million improvement was primarily due to a reduction in
operating and administrative expenses of $9.6 million and lower restructuring
expenses of $3.8 million, which more than offset the decline in gross profit of
$6.5 million. Included in the $9.6 million of improvement in operating and
administrative expenses were $1.6 million of event-driven charges recorded in
2002.

Todays Staffing (Todays)

Todays revenues of $135.7 million in 2003 decreased $13.6 million or 9.1% from
last year. The lower revenue was due to continued strong competitive pricing
pressures and a continued challenging economic environment in the United
States. The demand for temporary clerical help is particularly dependent on
overall economic conditions.

Todays gross profit of $37.3 in 2003 was lower by $4.2 million or 10.0% as
compared to 2002. The decreased gross profit was primarily due to the revenue
decline discussed above and to a lesser extent to a decrease in gross profit
margin of 30 basis points resulting from competitive pricing pressures and a
change in the business mix from higher margin retail accounts to lower margin
national accounts.

18



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Todays operating profit was $6.4 million in 2003 as compared to $1.5 million
in 2002. This improvement of $4.9 million was largely attributable to the
reduction in operating and administrative expenses of $4.9 million and lower
restructuring expenses of $4.2 million, which more than offset the reduction in
gross profit of $4.2 million. Included in the $4.9 million improvement in
operating and administrative expenses was $0.2 million for an event-driven
charge recorded in 2002.

Management Recruiters International (MRI)

MRIs revenues of $56.9 million in 2003 declined $29.1 million or 33.8% as
compared to 2002. The decrease in revenue was primarily attributable to the
exit of the company-owned permanent placement offices in 2002 and 2003. In
addition, franchise royalty revenue declined in 2003 due principally to the
overall soft employment market.

MRIs gross profit of $36.4 million in 2003 was lower by $27.6 million or 43.1%
as compared to 2002. This decline in gross profit resulted from the exiting of
company-owned offices discussed above, which also reduced the gross profit
margin from 74.6% to 64.1%.

MRIs operating profit was $3.6 million in 2003 as compared to $6.9 million in
2002. The reduction of $3.3 million in operating profit was primarily due to
the decline in gross profit of $27.6 million. This decline in gross profit was
significantly offset by lower operating and administrative expenses of $24.3
million. Included in the $24.3 million improvement was $1.5 million of
restructuring charges and $1.3 million from loss on sale of assets in 2002.

Corporate

Corporate expenses totaled $12.9 million in 2003 as compared to $18.0 million
in 2002. The reduction of $5.1 million in corporate expenses was the result of
the Plan of Restructure noted above, as well as to continued spending
discipline. Included in the $5.1 million improvement was $0.6 million of
restructuring charges in 2002.

Consolidated Results of Operations
2002 versus 2001

The following table presents year-over-year changes in revenues, gross profits,
and operating profit from 2001 to 2002.

|              |  |         |         |        |  |            |       |        |  |            |       |           |  |  |       |    |  |   |       |  
|------------- |  | ------- | ------- | ------ |  | ---------- | ----- | ------ |  | ---------- | ----- | --------- |  |  | ----- | -- |  | - | ----- | -
|              |  |         |         |        |  | Percentage |       | Gross  |  | Percentage |       | Operating
|(in millions) |  | Revenue |         | Change |  | Profit     |       | Change |  | Profit    
|              |  |         |         |        |  |            |       |        |  |           
|2001          |  | $       | 1,458.6 |        |  |            |       |        |  | $          | 367.0 |           |  |  |       |    |  | $ | (23.0 | )
|PS            |  |         | (186.6  | )      |  |            | (23.1 | )%     |  |            | (25.4 | )         |  |  | (17.0 | )% |  |   | 10.8  |  
|PM            |  |         | (40.9   | )      |  |            | (11.6 | )      |  |            | (3.4  | )         |  |  | (4.3  | )  |  |   | 20.4  |  
|Todays        |  |         | (44.3   | )      |  |            | (22.9 | )      |  |            | (11.4 | )         |  |  | (21.7 | )  |  |   | (1.1  | )
|MRI           |  |         | (17.3   | )      |  |            | (16.8 | )      |  |            | (22.0 | )         |  |  | (25.6 | )  |  |   | (5.8  | )
|Corporate     |  |         |        |        |  |            |      |        |  |            |      |           |  |  |      |    |  |   | 5.4   |  
|              |  |         |         |        |  |            |       |        |  |            |       |           |  |  |       |    |  |   |       |  
|2002          |  | $       | 1,169.5 |        |  |            | (19.8 | )%     |  | $          | 304.8 |           |  |  | (17.0 | )% |  | $ | 6.7   |  
|              |  |         |         |        |  |            |       |        |  |            |       |           |  |  |       |    |  |   |       |  

The Company recorded consolidated revenues of $1,169.5 million in 2002, down
$289.1 million or 19.8% from 2001, as each operating segment reported lower
revenues. This decline was principally attributable to the following three
items: 1) the decision to exit lower-margin contracts primarily in the PS
segment; 2) the sale of the company-owned offices in MRI; and 3) the dramatic
decline in telecommunications work that was part of the PM segment. The
remaining decline was due to the weak business climate in the U.S. economy,
particularly in the information technology sector within PS and in the Todays
segment. However, AndersElite in the U.K., which operates in the PS segment,
experienced strong growth in 2002.

The Companys gross profit of $304.8 million in 2002 was lower by $62.2 million
or 17.0% as compared to 2001, primarily due to lower sales volume, partially
offset by the consolidated gross profit margin increase from

19



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25.2% in 2001 to 26.1% in 2002. This margin improvement reflects the shift
from lower-margin contracts to higher-margin and longer-cycle assignments.
With the exception of MRI, all operating segments showed improved gross profit
margins in 2002 as compared to 2001.

In 2002, operating and administrative expenses of $284.3 million were $83.8
million or 22.8% lower than operating and administrative expenses incurred in
2001. This reduction was directly attributable to savings from the
aforementioned Plan of Restructure and other actions taken to reduce personnel
requirements, office locations, and systems infrastructure as well as declines
in revenue and enhanced financial discipline. Finally, operating expenses in
2001 included $5.7 million of goodwill amortization.

As previously discussed, beginning in 2001, the Company instituted a
multi-phased Plan of Restructure. The first phase of the Plan resulted in a
pre-tax charge in 2001 of $22.0 million. Follow-up phases of the Plan resulted
in pre-tax charges of $12.6 million in 2002.

In the third quarter of 2002, the Company recorded a loss on the sale of its
MRI company-owned permanent placement offices of $1.3 million. This
transaction was completed to focus MRIs resources on its franchise operations.

Operating profit for the year ended 2002 was $6.7 million, a $29.7 million
improvement over 2001. The significant decline in gross profit of $62.2
million was more than offset by significant reductions in the Companys
operating and administrative expenses of $83.8 million. In addition,
restructuring provisions were $9.4 million lower in 2002, which were partially
offset by a loss of $1.3 million on the sale of its MRI company-owned permanent
placement offices.

Net interest income was $0.1 million in 2002 as compared to net interest
expense of $3.1 million in 2001. This was due to the elimination of all bank
borrowings, as well as interest income from invested cash.

The Companys effective income tax rate was 38.1% in 2002 and 37.5% in 2001.

In June 2002, the Company sold the net operating assets of its subsidiary
Modern Engineering, Inc. (Modern), which operated in its PM operating
segment. Modern is reflected as a discontinued operation in the accompanying
financial statements.

In 2002, the Company recorded impairment charges of $21.4 million, ($14.0
million after-tax) for the write-off of goodwill. These charges primarily
related to a former acquisition in the PS segment, and are presented as a
change in accounting as of January 1, 2002, in accordance with the provisions
of SFAS No. 142, Goodwill and Other Intangible Assets.

The Companys net loss per diluted share in 2002 was $0.48 compared to a net
loss per diluted share of $0.82 in 2001.

Segment Discussion

Professional Services (PS)

PS revenues of $622.9 million decreased $186.6 million in 2002 or 23.1%
compared to 2001. A significant reason for this segments year-over-year
decline in revenue was the exit of certain lower-margin contracts as part of
the Companys previously described Plan of Restructure. The remaining decline
was related to softening demand in both technical services and information
technology sectors, a weakening economy, offshore competition, and pricing
pressures particularly within the information technology sector. Partially
offsetting this revenue trend in 2002, was strong revenue improvement in the
U.K. operations of AndersElite. AndersElites market, professional services in
the construction trades, has remained largely immune to the general declines in
the U.K. staffing market.

PS operating profit was $6.9 million in 2002 compared to an operating loss of
$4.0 million in 2001. The most significant factor in this improvement was the
reduction in operating and administrative expenses of approximately $27.1
million that resulted from restructuring efforts in 2002. In addition,
improved segment performance was due to lower restructuring charges in 2002 of
$9.1 million. Partially offsetting these

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improvements in operating profit was a $25.3 million reduction in gross profit.
This decline in gross profit was comprised of a $34.4 million decline related
to the fall-off in revenue, partially offset by a $9.1 million improvement in
the gross profit margin. This segments gross profit margin improved 150 basis
points on a year-over-year basis due primarily to having exited very low margin
business during the first half of 2002. In 2001, goodwill amortization was
approximately $1.9 million.

Project Management (PM)

PMs revenues of $311.3 million in 2002 decreased $40.9 million or 11.6%
compared to 2001. This segment includes the telecommunications sector, which
experienced significant revenue declines due to the dramatic issues that faced
that industry. Excluding the impact of the telecommunications business
fall-off, the PM segment experienced 5.6% revenue growth year-over-year.

PMs operating profit was $9.4 million in 2002 compared to an operating loss of
$11.0 million in 2001. Several factors contributed to the improvement in 2002
operating profit. The most significant factor in this improvement in
profitability was the reduction in operating and administrative expenses of
$20.7 million, primarily as a result of restructuring efforts implemented in
early 2002. In addition, reductions in restructuring provisions of $3.1
million further improved the operating results. PMs year-over-year gross
profit declined $3.4 million. This decline was comprised of $9.2 million
related to reduction in revenue, which was substantially offset by a $5.8
million improvement in gross profit margin. PMs gross profit margin
performance improved by 180 basis points, on a year-over-year basis, due to
PMs focus on high-margin value-added business particularly within the
pharmaceuticals vertical. In 2001, goodwill amortization was approximately
$0.8 million.

Todays Staffing (Todays)

Todays revenues of $149.4 million in 2002 decreased $44.3 million or 22.9%
compared to 2001. Todays volume of business declined steadily throughout 2002
and 2001. The primary factors that contributed to Todays revenue declines
were the softening of the U.S. economy and severe competitive pressures on
pricing that resulted in lost customers.

Todays operating profit was $1.5 million as compared to $2.6 million in 2001.
The restructuring and cost-saving initiatives in 2002 and 2001 resulted in a
reduction in operating and administrative expenses of $13.8 million compared to
2001, which was partially offset by an increase in restructuring provisions of
$3.4 million. These actions resulted in a lower fixed cost base. These
savings were offset by an $11.5 million reduction in gross profit that was
primarily attributable to the revenue decline noted above. Gross profit
margins were relatively comparable year-over-year. In 2001, goodwill
amortization was approximately $1.7 million.

Management Recruiters (MRI)

MRIs revenues of $85.9 million in 2002 decreased $17.3 million or 16.8%
compared to 2001, primarily as the result of a sluggish economy, which reduced
demand for its services. Also contributing to the revenue decline was the sale
of company-owned permanent placement offices that were sold in the third
quarter of 2002. The overall decline in revenue was experienced in both MRIs
company-owned offices and its franchised locations.

Operating profit in 2002 was $6.9 million as compared to $12.7 million in 2001.
The lower operating profit in 2002 was primarily due to the reduction in
revenues, which were partially offset by the elimination of goodwill
amortization. In 2001, goodwill amortization was approximately $1.3 million.

Corporate

Corporate expenses totaled $18.0 million in 2002 as compared to $23.4 million
in 2001. The reduction in corporate expenses of $5.4 million resulted from
reduced spending on information technology infrastructure and tighter cost
controls. Further, operating and administrative expenses in 2001 included $3.1
million of event-driven charges that were primarily attributable to various
investment write-offs.

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Liquidity and Capital Resources

Historically, CDI has financed its operations from its operating cash flows
coupled with borrowings from a revolving credit facility. Over the past three
years, CDI has improved its working capital management. This effort, along
with the lowering of the CDIs fixed cost base, has resulted in increased cash
flow. As a result of this improved cash flow, the Company was able to
eliminate $63.0 million in debt and pay dividends to its shareholders totaling
$42.4 million.

The following table summarizes the major captions from the Companys
Consolidated Statements of Cash Flows:

|                     |  |      |       |      |  |      |       |   |  |  |       |  
|-------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|(in millions)        |  | 2003 |       | 2002 |  | 2001
|                     |  |      |       |      |  |     
|Operating Activities |  | $    | 23.0  |      |  |      | 83.9  |   |  |  | 98.8  |  
|Investing Activities |  | $    | 25.1  |      |  |      | (70.4 | ) |  |  | (29.2 | )
|Financing Activities |  | $    | (39.0 | )    |  |      | (7.4  | ) |  |  | (57.2 | )

Operating Activities

Over the past three years, CDI has generated approximately $205.7 million of
cash flows from operating activities. The most significant factors impacting
the Companys operating cash flows were improved operating earnings, discipline
in the contracting process, and ongoing timely collection of accounts
receivable.

During the past three years, the Company has steadily increased its operating
performance as management completed its restructuring and reorganization
efforts. This steady improvement in operating earnings primarily reflects the
Companys lower fixed cost and operating structure.

Discipline during the customer contracting process is important to ensure that
terms and conditions are within authorized guidelines and that administrative
requirements to process billings and secure collections are increasingly
standardized. The Company has instituted enhanced controls and standardization
over these processes, which facilitates the timely collection of receivables.
Over the past three years, CDI has lowered its accounts receivable balances by
approximately $158.4 million, reflecting a much steeper decline in receivables
levels than the corresponding decline in revenue levels. However, in the year
ended December 31, 2003 accounts receivable increased $7.3 million from
year-end 2002 due primarily to the deceleration in the collection of accounts
during 2003 compared to 2002. Reductions in accounts receivable
during 2002 were enhanced by the successful collection from exited PS
customers. Also contributing to the increase in
accounts receivable in 2003 was the implementation of a new accounting system
in the third quarter of 2003 that caused some disruption in the pattern of
customer billings and collections. This disruption was stabilized during the
fourth quarter of 2003.

During the past three years, accounts payable and accrued expenses decreased by
$54.5 million. A significant portion of this decline is generally consistent
with the falloff of business volume during this three-year period. Another use
of cash relates to the payment of severance and operating leases in connection
with the Companys Plan of Restructure. The remaining liabilities for operating
leases and severance will be substantially paid by December 31, 2005.

Another important source of cash for CDI has been the recovery of previously
paid income taxes related to the realization of operating loss carry-backs from
prior years, which aggregated $12.1 million in 2003.

The Companys working capital position (current assets less current
liabilities) was $194.4 million at the end of 2003, a decrease of $4.0 million
from year-end 2002 and an increase of $25.4 million from year-end 2001. The
current ratio improved to 3.0 at the end of 2003 from 2.7 and 2.1 at the end of
2002 and 2001, respectively.

Investing Activities

CDIs primary investing activities include purchases of property and equipment
to support the enterprise, acquisitions, and investments of excess cash in
highly liquid short-term investments. The Company has gradually reduced its
capital expenditure levels and anticipates further declines in future years.
These lower spending levels primarily reflect the streamlining of CDIs system
infrastructure.

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During the past three years the Company has invested $17.1 million in
acquisitions. Cash generated from operations has been conservatively invested
and is readily available to fund Company operations and investment
opportunities. During 2003, the Company sold $35.9 million of short-term
investments to partially fund the payment of $42.4 million of dividends during
2003.

Financing Activities

The Company has eliminated all its debt and terminated its credit facility.
The Company paid shareholders a special dividend and two quarterly dividends
totaling $42.4 million in 2003. The declaration and payment of future dividends
will be at the discretion of the Companys Board of Directors and will depend
upon many factors including the Companys earnings, financial condition,
capital requirements, and other factors.

Summary

The Companys financial condition continues to remain strong. At December 31,
2003, cash, cash equivalents, and short-term investments totaled $72.8 million
and the Company had no debt. Management believes that its current funds and
funds generated from operations will be sufficient to meet currently
anticipated working capital and other capital requirements. Should the Company
require additional funds in the future, management believes that it will be
able to obtain these funds at competitive rates.

Contractual Obligations and Commitments

Summarized below are the Companys obligations and commitments to make future
payments under lease agreements as of year-end 2003. There were no debt
obligations outstanding as of December 31, 2003.

|                 |  |       |        |        |  |           |        |       |  |       |        |        |  |  |       |  |  |      |       | 
|---------------- |  | ----- | ------ | ------ |  | --------- | ------ | ----- |  | ----- | ------ | ------ |  |  | ----- |  |  | ---- | ----- | 
|                 |  |       |        |        |  |           |        |       |  |       |        |        |  |  |       |  |  | More
|                 |  |       |        |        |  | Less than |        | 1-3   |  | 3-5   |        | than 5
|(in thousands)   |  | Total |        | 1 year |  | years     |        | years |  | years
|                 |  |       |        |        |  |           |        |       |  |      
|Operating Leases |  | $     | 39,036 |        |  |           | 15,367 |       |  |       | 16,222 |        |  |  | 3,880 |  |  |      | 3,567 | 
|                 |  |       |        |        |  |           |        |       |  |       |        |        |  |  |       |  |  |      |       | 

Critical Accounting Policies and Estimates

The financial statements were prepared in accordance with generally accepted
accounting principles, which requires management to make subjective decisions,
assessments, and estimates about the effect of matters that are inherently
uncertain. As the number of variables and assumptions affecting the judgments
increases, such judgments become even more subjective. While management
believes that its assumptions are both reasonable and appropriate, actual
results may be materially different than estimated. The Company has identified
certain critical accounting policies, described below, that are the most
susceptible to judgment and estimate.

Allowance for Uncollectible Receivables

The Company makes ongoing estimates relating to the collectibility of its
accounts receivable and maintains an allowance for estimated losses resulting
from the inability of its customers to make required payments. Estimates used
in determining accounts receivable allowances are based on specific customer
account reviews and historical experience. The Company also applies judgment
including assessments about changes in economic conditions, concentration of
receivables among clients and industries, recent write-off trends, rates of
bankruptcy, credit quality of specific customers. Unanticipated changes in the
financial condition of customers, the resolution of various disputes, or
significant changes in the economy could impact the reserves required. At
December 31, 2003, 2002, and 2001 the allowance for doubtful accounts was $5.5
million, $7.7 million and $8.2 million, respectively.

Accounting for Income Taxes

In establishing the provision for income taxes and deferred income tax assets
and liabilities, and valuation allowances against deferred tax assets, the
Company makes judgments and interpretations based on enacted tax laws,
published tax guidance, as well as estimates of future earnings. As of December
31, 2003, the

23



---



##### 



Company has total net deferred tax assets of $15.6 million. This includes $4.5
million, which relates primarily to state net operating loss carry forwards,
capital loss carry forwards and other miscellaneous credits. Realization of
deferred tax assets is dependent upon the likelihood that future taxable income
will be sufficient to realize these benefits over time, and the effectiveness
of tax planning strategies in the relevant tax jurisdictions. In the event that
actual results differ from these estimates and assessments, additional
valuation allowances may be required.

Accounting for Impairment of Goodwill

Effective January 1, 2002, the Company adopted SFAS 142, Goodwill and Other
Intangible Assets.Accordingly, the Company discontinued amortizing goodwill
and began applying the specific guidance contained in SFAS 142 to evaluate the
carrying value and recoverability of its goodwill by evaluating the fair market
value of the reporting units within which goodwill resides. The process of
estimating fair value, in part, relies on the use of forecasts to estimate
future cash flows expected from a reporting unit. The estimation of future cash
flows, based on reasonable and supportable assumptions and projections,
requires managements subjective judgments. The time periods for estimating
future cash flows are lengthy, which increases the risk that actual future
results could significantly deviate from estimates.

The Company completed its impairment test as of the date of adoption, January
1, 2002, as required under SFAS 142 and determined that goodwill was impaired.
The Company had net goodwill of $87.5 million, of which $21.4 million pre-tax
was considered impaired and written off as of January 1, 2002. In both 2003
and 2002, the Company completed its impairment test during the third quarter
and determined that goodwill was not further impaired.

Changes in future market conditions, the Companys strategy, or other factors
could impact upon the future values of the Companys reporting units, which
could result in future impairment charges. At December 31, 2003, total
goodwill amounted to $68.2 million.

Accounting for Stock Options

The Company has used stock options to attract, retain and reward employees for
long-term service. Generally accepted accounting principles allow alternative
methods of accounting for these awards. The Company has chosen to account for
its stock plans (including stock option plans) under APB Opinion 25,
Accounting for Stock Issued to Employees. Since option exercise prices
equaled the market value per share of the Companys stock at the time of the
grant, no compensation expense related to stock options is reflected in the
Companys income statement. SFAS 123, Accounting for Stock-Based
Compensation", prescribes the alternative method of accounting for stock
options. Had SFAS 123 been adopted, the Company would have recorded additional
pre-tax costs of approximately $2.2 million for the year ended December 31,
2003. The pro-forma compensation cost was calculated using the Black-Scholes
Options Pricing Model, which includes estimates based on assumptions for the
risk-free interest rate, life of options and stock price volatility. Changes
in the underlying assumptions could impact the pro-forma compensation cost.

Item 7a.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to risks associated with foreign currency fluctuations
and changes in interest rates. The Companys exposure to foreign currency
fluctuations relates to its operations in foreign countries conducted through
subsidiaries operating primarily in the United Kingdom and Canada. Exchange
rate fluctuations impact the U. S. dollar value of reported earnings derived
from these foreign operations as well as the carrying value of the Companys
investment in the net assets related to these operations. The Company generally
does not engage in hedging activities with respect to foreign operations except
for isolated situations involving inter-company payments that have not been
material. The effects of foreign currency exchange rate fluctuations have
historically not been material.

The Companys exposure to interest rate changes is not significant. As of
December 31, 2003, there were no bank borrowings outstanding. The Companys
investment in money market and other short-term instruments are primarily at
variable rates.

24



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##### 



CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except per share data)

|                                                                                                                               |                                                                     |   |                          |      |      |  |           |       |   |  |           |       |  
|------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------- | - | ------------------------ | ---- | ---- |  | --------- | ----- | - |  | --------- | ----- | -
|                                                                                                                               |                                                                     |   | Years ended December 31,
|                                                                                                                               |                                                                     |   |                         
|                                                                                                                               |                                                                     |   | 2003                     |      | 2002 |  | 2001     
|                                                                                                                               |                                                                     |   |                          |      |      |  |          
|Revenues                                                                                                                       |                                                                     | $ | 1,060,314                |      |      |  | 1,169,475 |       |   |  | 1,458,592 |      
|Cost of services                                                                                                               |                                                                     |   | 803,490                  |      |      |  | 864,682   |       |   |  | 1,091,575 |      
|                                                                                                                               |                                                                     |   |                          |      |      |  |           |       |   |  |           |      
|Gross profit                                                                                                                   |                                                                     |   | 256,824                  |      |      |  | 304,793   |       |   |  | 367,017   |      
|Operating and administrative expenses                                                                                          |                                                                     |   | 223,774                  |      |      |  | 284,282   |       |   |  | 368,086   |      
|Restructuring                                                                                                                  |                                                                     |   | (143                     | )    |      |  | 12,551    |       |   |  | 21,958    |      
|Loss on sale of assets                                                                                                         |                                                                     |   |                         |      |      |  | 1,259     |       |   |  |          |      
|                                                                                                                               |                                                                     |   |                          |      |      |  |           |       |   |  |           |      
|Operating profit (loss)                                                                                                        |                                                                     |   | 33,193                   |      |      |  | 6,701     |       |   |  | (23,027   | )    
|Interest (income) expense, net                                                                                                 |                                                                     |   | (1,053                   | )    |      |  | (115      | )     |   |  | 3,065     |      
|                                                                                                                               |                                                                     |   |                          |      |      |  |           |       |   |  |           |      
|Earnings (loss) from continuing operations
before income taxes, minority interests,
and cumulative effect of accounting change |                                                                     |   | 34,246                   |      |      |  | 6,816     |       |   |  | (26,092   | )    
|Income tax (expense) benefit                                                                                                   |                                                                     |   | (11,700                  | )    |      |  | (2,599    | )     |   |  | 9,794     |      
|                                                                                                                               |                                                                     |   |                          |      |      |  |           |       |   |  |           |      
|Earnings (loss) from continuing operations
before minority interests and cumulative effect
of accounting change                |                                                                     |   | 22,546                   |      |      |  | 4,217     |       |   |  | (16,298   | )    
|Minority interests                                                                                                             |                                                                     |   |                         |      |      |  | 135       |       |   |  | 406       |      
|                                                                                                                               |                                                                     |   |                          |      |      |  |           |       |   |  |           |      
|Earnings (loss) from continuing operations
before cumulative effect of accounting change                                       |                                                                     |   | 22,546                   |      |      |  | 4,082     |       |   |  | (16,704   | )    
|Discontinued operations, net of tax                                                                                            |                                                                     |   |                         |      |      |  | 527       |       |   |  | 1,094     |      
|Cumulative effect of change in accounting for
goodwill, net of tax                                                             |                                                                     |   |                         |      |      |  | (13,968   | )     |   |  |          |      
|                                                                                                                               |                                                                     |   |                          |      |      |  |           |       |   |  |           |      
|Net earnings (loss)                                                                                                            |                                                                     | $ | 22,546                   |      |      |  | (9,359    | )     |   |  | (15,610   | )    
|                                                                                                                               |                                                                     |   |                          |      |      |  |           |       |   |  |           |      
|Basic earnings (loss) per share:                                                                                               |                                                                     |   |                          |      |      |  |           |       |   |  |           |      
|                                                                                                                               | Earnings (loss) from continuing operations
before accounting change |   | $                        | 1.16 |      |  |           | 0.21  |   |  |           | (0.88 | )
|                                                                                                                               | Discontinued operations                                             |   | $                        |     |      |  |           | 0.03  |   |  |           | 0.06  |  
|                                                                                                                               | Cumulative effect of accounting change, net
of tax                  |   | $                        |     |      |  |           | (0.73 | ) |  |           |      |  
|                                                                                                                               | Net earnings (loss)                                                 |   | $                        | 1.16 |      |  |           | (0.49 | ) |  |           | (0.82 | )
|Diluted earnings (loss) per share:                                                                                             |                                                                     |   |                          |      |      |  |           |       |   |  |           |      
|                                                                                                                               | Earnings (loss) from continuing operations
before accounting change |   | $                        | 1.14 |      |  |           | 0.21  |   |  |           | (0.88 | )
|                                                                                                                               | Discontinued operations                                             |   | $                        |     |      |  |           | 0.03  |   |  |           | 0.06  |  
|                                                                                                                               | Cumulative effect of accounting change, net of tax                  |   | $                        |     |      |  |           | (0.71 | ) |  |           |      |  
|                                                                                                                               | Net earnings (loss)                                                 |   | $                        | 1.14 |      |  |           | (0.48 | ) |  |           | (0.82 | )

See accompanying notes to consolidated financial statements.





---



##### 



CDI CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)

|                                     |                                                                                                                          |                            |         |              |         |      |         |         |         | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------ | -------------------------- | ------- | ------------ | ------- | ---- | ------- | ------- | ------- | 
|                                     |                                                                                                                          |                            |         | December 31,
|                                     |                                                                                                                          |                            |         |             
|                                     |                                                                                                                          |                            |         | 2003         |         | 2002
|                                     |                                                                                                                          |                            |         |              |         |     
|Assets                               |                                                                                                                          |                            |         |              |         |      |         |        
|Current assets:                      |                                                                                                                          |                            |         |              |         |      |         |        
|                                     | Cash and cash equivalents                                                                                                |                            | $       | 50,230       |         |      |         | 41,148  |        
|                                     | Accounts receivable, less allowance for doubtful
accounts of $5,496 - 2003; $7,683 - 2002                                |                            |         | 199,630      |         |      |         | 189,557 |        
|                                     | Short-term investments                                                                                                   |                            |         | 22,606       |         |      |         | 58,477  |        
|                                     | Prepaid expenses                                                                                                         |                            |         | 8,744        |         |      |         | 6,403   |        
|                                     | Income taxes receivable                                                                                                  |                            |         |             |         |      |         | 6,101   |        
|                                     | Deferred income taxes                                                                                                    |                            |         | 8,484        |         |      |         | 13,195  |        
|                                     |                                                                                                                          |                            |         |              |         |      |         |         |        
|                                     |                                                                                                                          | Total current assets       |         |              | 289,694 |      |         |         | 314,881 | 
|Property and equipment, net          |                                                                                                                          |                            | 31,121  |              |         |      | 29,134  |        
|Deferred income taxes                |                                                                                                                          |                            | 7,133   |              |         |      | 11,750  |        
|Goodwill, net                        |                                                                                                                          |                            | 68,211  |              |         |      | 68,334  |        
|Other assets                         |                                                                                                                          |                            | 5,403   |              |         |      | 8,675   |        
|                                     |                                                                                                                          |                            |         |              |         |      |         |         |        
|                                     |                                                                                                                          | $                          | 401,562 |              |         |      | 432,774 |        
|                                     |                                                                                                                          |                            |         |              |         |      |         |         |        
|Liabilities and Shareholders Equity |                                                                                                                          |                            |         |              |         |      |         |        
|Current liabilities:                 |                                                                                                                          |                            |         |              |         |      |         |        
|                                     | Obligations not liquidated because of outstanding checks                                                                 |                            | $       | 5,848        |         |      |         | 5,978   |        
|                                     | Accounts payable                                                                                                         |                            |         | 23,824       |         |      |         | 25,008  |        
|                                     | Withheld payroll taxes                                                                                                   |                            |         | 2,596        |         |      |         | 2,773   |        
|                                     | Accrued compensation and related expenses                                                                                |                            |         | 44,343       |         |      |         | 52,914  |        
|                                     | Other accrued expenses                                                                                                   |                            |         | 18,191       |         |      |         | 29,808  |        
|                                     | Income taxes payable                                                                                                     |                            |         | 464          |         |      |         |        |        
|                                     |                                                                                                                          |                            |         |              |         |      |         |         |        
|                                     |                                                                                                                          | Total current liabilities  |         |              | 95,266  |      |         |         | 116,481 | 
|Deferred compensation                |                                                                                                                          |                            | 8,945   |              |         |      | 8,492   |        
|                                     |                                                                                                                          |                            |         |              |         |      |         |         |        
|                                     |                                                                                                                          | Total liabilities          |         |              | 104,211 |      |         |         | 124,973 | 
|                                     |                                                                                                                          |                            |         |              |         |      |         |         |        
|Shareholders equity:                |                                                                                                                          |                            |         |              |         |      |         |        
|                                     | Preferred stock, $0.10 par value - authorized
1,000,000 shares; none issued                                              |                            |         |             |         |      |         |        |        
|                                     | Common stock, $0.10 par value - authorized
100,000,000 shares; issued 20,535,835 shares -
2003; 20,313,915 shares - 2002 |                            |         | 2,054        |         |      |         | 2,031   |        
|                                     | Class B common stock, $0.10 par value -
authorized 3,174,891 shares; none issued                                         |                            |         |             |         |      |         |        |        
|                                     | Additional paid-in capital                                                                                               |                            |         | 28,205       |         |      |         | 22,975  |        
|                                     | Retained earnings                                                                                                        |                            |         | 286,466      |         |      |         | 306,339 |        
|                                     | Accumulated other comprehensive income (loss)                                                                            |                            |         | 3,467        |         |      |         | (610    | )      
|                                     | Unamortized value of restricted stock issued                                                                             |                            |         | (544         | )       |      |         | (800    | )      
|                                     | Less common stock in treasury, at cost -
963,465 shares - December 31, 2003;
958,465 shares - December 31, 2002          |                            |         | (22,297      | )       |      |         | (22,134 | )      
|                                     |                                                                                                                          |                            |         |              |         |      |         |         |        
|                                     |                                                                                                                          | Total shareholders equity |         |              | 297,351 |      |         |         | 307,801 | 
|                                     |                                                                                                                          |                            |         |              |         |      |         |         |        
|                                     |                                                                                                                          | $                          | 401,562 |              |         |      | 432,774 |        
|                                     |                                                                                                                          |                            |         |              |         |      |         |         |        

See accompanying notes to consolidated financial statements.





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##### 



CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Shareholders Equity
(In thousands)

|                                              |                                        |   |                          |         |      |  |        |         |   |  |         |         |  
|--------------------------------------------- | -------------------------------------- | - | ------------------------ | ------- | ---- |  | ------ | ------- | - |  | ------- | ------- | -
|                                              |                                        |   | Years ended December 31,
|                                              |                                        |   |                         
|                                              |                                        |   | 2003                     |         | 2002 |  | 2001  
|                                              |                                        |   |                          |         |      |  |       
|Common stock                                  |                                        |   |                          |         |      |  |        |         |   |  |         |        
|                                              | Beginning of year                      |   | $                        | 2,031   |      |  |        | 2,008   |   |  |         | 2,002   |  
|                                              | Exercise of stock options              |   |                          | 18      |      |  |        | 18      |   |  |         |        |  
|                                              | Restricted stock issued                |   |                          |        |      |  |        | 1       |   |  |         | 5       |  
|                                              | Stock purchase plans                   |   |                          | 5       |      |  |        | 4       |   |  |         | 1       |  
|                                              |                                        |   |                          |         |      |  |        |         |   |  |         |         |  
|                                              | End of year                            |   | $                        | 2,054   |      |  |        | 2,031   |   |  |         | 2,008   |  
|                                              |                                        |   |                          |         |      |  |        |         |   |  |         |         |  
|Additional paid-in capital                    |                                        |   |                          |         |      |  |        |         |   |  |         |        
|                                              | Beginning of year                      |   | $                        | 22,975  |      |  |        | 17,629  |   |  |         | 16,677  |  
|                                              | Exercise of stock options              |   |                          | 4,194   |      |  |        | 4,069   |   |  |         | 57      |  
|                                              | Restricted stock-issued                |   |                          |        |      |  |        | 338     |   |  |         | 698     |  
|                                              | Restricted stock-vesting/forfeiture    |   |                          |        |      |  |        | 5       |   |  |         | (83     | )
|                                              | Restricted stock-change in value       |   |                          | 3       |      |  |        | 14      |   |  |         | 8       |  
|                                              | Stock purchase plans                   |   |                          | 1,033   |      |  |        | 920     |   |  |         | 272     |  
|                                              |                                        |   |                          |         |      |  |        |         |   |  |         |         |  
|                                              | End of year                            |   | $                        | 28,205  |      |  |        | 22,975  |   |  |         | 17,629  |  
|                                              |                                        |   |                          |         |      |  |        |         |   |  |         |         |  
|Retained earnings                             |                                        |   |                          |         |      |  |        |         |   |  |         |        
|                                              | Beginning of year                      |   | $                        | 306,339 |      |  |        | 315,698 |   |  |         | 331,308 |  
|                                              | Net earnings (loss)                    |   |                          | 22,546  |      |  |        | (9,359  | ) |  |         | (15,610 | )
|                                              | Dividends paid to shareholders        |   |                          | (42,419 | )    |  |        |        |   |  |         |        |  
|                                              |                                        |   |                          |         |      |  |        |         |   |  |         |         |  
|                                              | End of year                            |   | $                        | 286,466 |      |  |        | 306,339 |   |  |         | 315,698 |  
|                                              |                                        |   |                          |         |      |  |        |         |   |  |         |         |  
|Accumulated other comprehensive income (loss) |                                        |   |                          |         |      |  |        |         |   |  |         |        
|                                              | Beginning of year                      |   | $                        | (610    | )    |  |        | (2,038  | ) |  |         | (1,999  | )
|                                              | Translation adjustment                 |   |                          | 4,077   |      |  |        | 1,428   |   |  |         | (582    | )
|                                              | Unrealized loss on investment          |   |                          |        |      |  |        |        |   |  |         | 543     |  
|                                              |                                        |   |                          |         |      |  |        |         |   |  |         |         |  
|                                              | End of year                            |   | $                        | 3,467   |      |  |        | (610    | ) |  |         | (2,038  | )
|                                              |                                        |   |                          |         |      |  |        |         |   |  |         |         |  
|Unamortized value of restricted stock issued  |                                        |   |                          |         |      |  |        |         |   |  |         |        
|                                              | Beginning of year                      |   | $                        | (800    | )    |  |        | (690    | ) |  |         | (230    | )
|                                              | Restricted stock-issued                |   |                          |        |      |  |        | (339    | ) |  |         | (702    | )
|                                              | Restricted stock-vesting/forfeiture    |   |                          |        |      |  |        | 45      |   |  |         | 23      |  
|                                              | Restricted stock-change in value       |   |                          | (3      | )    |  |        | (14     | ) |  |         | (8      | )
|                                              | Restricted stock-amortization of value |   |                          | 259     |      |  |        | 198     |   |  |         | 227     |  
|                                              |                                        |   |                          |         |      |  |        |         |   |  |         |         |  
|                                              | End of year                            |   | $                        | (544    | )    |  |        | (800    | ) |  |         | (690    | )
|                                              |                                        |   |                          |         |      |  |        |         |   |  |         |         |  
|Treasury stock                                |                                        |   |                          |         |      |  |        |         |   |  |         |        
|                                              | Beginning of year                      |   | $                        | (22,134 | )    |  |        | (21,957 | ) |  |         | (21,963 | )
|                                              | Restricted stock-issued                |   |                          |        |      |  |        |        |   |  |         | 29      |  
|                                              | Restricted stock-forfeiture            |   |                          |        |      |  |        | (45     | ) |  |         | (23     | )
|                                              | Shares repurchased                     |   |                          | (163    | )    |  |        | (132    | ) |  |         |        |  
|                                              |                                        |   |                          |         |      |  |        |         |   |  |         |         |  
|                                              | End of year                            |   | $                        | (22,297 | )    |  |        | (22,134 | ) |  |         | (21,957 | )
|                                              |                                        |   |                          |         |      |  |        |         |   |  |         |         |  
|Comprehensive income (loss)                   |                                        |   |                          |         |      |  |        |         |   |  |         |        
|                                              | Net earnings (loss)                    |   | $                        | 22,546  |      |  |        | (9,359  | ) |  |         | (15,610 | )
|                                              | Translation adjustment                 |   |                          | 4,077   |      |  |        | 1,428   |   |  |         | (582    | )
|                                              | Unrealized loss on investment          |   |                          |        |      |  |        |        |   |  |         | 543     |  
|                                              |                                        |   |                          |         |      |  |        |         |   |  |         |         |  
|                                              |                                        | $ | 26,623                   |         |      |  | (7,931 | )       |   |  | (15,649 | )      
|                                              |                                        |   |                          |         |      |  |        |         |   |  |         |         |  

See accompanying notes to consolidated financial statements.





---



##### 



CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)

|                                                                               |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |         |         |         |  
|------------------------------------------------------------------------------ | ------------------------------------------------------------------ | ---------------------------------------------- | ------------------------------------------------- | ------- | ------------------------ | ------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | -
|                                                                               |                                                                    |                                                |                                                   |         | Years ended December 31,
|                                                                               |                                                                    |                                                |                                                   |         |                         
|                                                                               |                                                                    |                                                |                                                   |         | 2003                     |         | 2002   |         | 2001   
|                                                                               |                                                                    |                                                |                                                   |         |                          |         |        |         |        
|Continuing Operations                                                          |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |        
|Operating activities:                                                          |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |        
|                                                                               | Net earnings (loss)                                                |                                                | $                                                 | 22,546  |                          |         |        | (9,359  | )       |         |        | (15,610 | )      
|                                                                               | Net income from discontinued operations                            |                                                |                                                   |        |                          |         |        | (527    | )       |         |        | (1,094  | )      
|                                                                               | Cumulative effect of change in accounting
for goodwill, net of tax |                                                |                                                   |        |                          |         |        | 13,968  |         |         |        |        |        
|                                                                               |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |         |        
|                                                                               | Earnings (loss) from continuing operations                         |                                                |                                                   | 22,546  |                          |         |        | 4,082   |         |         |        | (16,704 | )      
|                                                                               | Minority interests                                                 |                                                |                                                   |        |                          |         |        | 135     |         |         |        | 406     |        
|                                                                               | Depreciation                                                       |                                                |                                                   | 11,863  |                          |         |        | 24,457  |         |         |        | 21,926  |        
|                                                                               | Amortization of goodwill                                           |                                                |                                                   |        |                          |         |        |        |         |         |        | 5,706   |        
|                                                                               | Non-cash provision for restructure expenses                        |                                                |                                                   | (143    | )                        |         |        | 8,530   |         |         |        | 21,409  |        
|                                                                               | Loss on sale of assets                                             |                                                |                                                   |        |                          |         |        | 1,259   |         |         |        |        |        
|                                                                               | Deferred income taxes                                              |                                                |                                                   | 9,328   |                          |         |        | 6,383   |         |         |        | (24,433 | )      
|Changes in operating assets and liabilities,
net of effects from acquisitions: |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |        
|                                                                               |                                                                    | Accounts receivable, net                       |                                                   |         | (7,319                   | )       |        |         | 62,233  |         |        |         | 103,479 |        
|                                                                               |                                                                    | Prepaid and other current assets               |                                                   |         | 3,812                    |         |        |         | (6,821  | )       |        |         |        |        
|                                                                               |                                                                    | Accounts payable                               |                                                   |         | (1,045                   | )       |        |         | (4,676  | )       |        |         | (4,676  | )      
|                                                                               |                                                                    | Accrued expenses and other current liabilities |                                                   |         | (19,106                  | )       |        |         | (13,584 | )       |        |         | (11,422 | )      
|                                                                               |                                                                    | Non-current assets and liabilities and other   |                                                   |         | 3,043                    |         |        |         | 1,852   |         |        |         | 3,145   |        
|                                                                               |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |         |        
|                                                                               |                                                                    |                                                | Net cash flow from operating activities           |         |                          | 22,979  |        |         |         | 83,850  |        |         |         | 98,836  |  
|                                                                               |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |         |        
|Investing activities:                                                          |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |        
|                                                                               | Purchases of property and equipment                                |                                                |                                                   | (13,657 | )                        |         |        | (10,144 | )       |         |        | (19,112 | )      
|                                                                               | Sales/(purchases) of short-term investments, net                   |                                                |                                                   | 35,871  |                          |         |        | (58,477 | )       |         |        |        |        
|                                                                               | Acquisitions, net of cash acquired                                 |                                                |                                                   | (1,100  | )                        |         |        | (4,146  | )       |         |        | (11,806 | )      
|                                                                               | Other                                                              |                                                |                                                   | 4,001   |                          |         |        | 2,415   |         |         |        | 1,742   |        
|                                                                               |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |         |        
|                                                                               |                                                                    |                                                | Net cash flow from (used in) investing activities |         |                          | 25,115  |        |         |         | (70,352 | )      |         |         | (29,176 | )
|                                                                               |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |         |        
|Financing activities:                                                          |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |        
|                                                                               | Borrowings on long-term debt                                       |                                                |                                                   |        |                          |         |        |        |         |         |        | 10,581  |        
|                                                                               | Dividends paid to shareholders                                     |                                                |                                                   | (42,419 | )                        |         |        |        |         |         |        |        |        
|                                                                               | Payments on long-term debt                                         |                                                |                                                   |        |                          |         |        | (7,433  | )       |         |        | (55,530 | )      
|                                                                               | Obligations not liquidated because
outstanding checks              |                                                |                                                   | (130    | )                        |         |        | (4,326  | )       |         |        | (12,264 | )      
|                                                                               | Proceeds from stock plans                                          |                                                |                                                   | 3,537   |                          |         |        | 4,476   |         |         |        |        |        
|                                                                               | Other                                                              |                                                |                                                   |        |                          |         |        | (158    | )       |         |        | 4       |        
|                                                                               |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |         |        
|                                                                               |                                                                    |                                                | Net cash flow used in financing activities        |         |                          | (39,012 | )      |         |         | (7,441  | )      |         |         | (57,209 | )
|                                                                               |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |         |        
|Net cash flows from continuing operations                                      |                                                                    |                                                | 9,082                                             |         |                          |         | 6,057  |         |         |         | 12,451 |        
|Net cash flows from discontinued operations                                    |                                                                    |                                                |                                                  |         |                          |         | 8,836  |         |         |         | 2,372  |        
|                                                                               |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |         |        
|Increase in cash and cash equivalents                                          |                                                                    |                                                | 9,082                                             |         |                          |         | 14,893 |         |         |         | 14,823 |        
|Cash and cash equivalents at beginning of period                               |                                                                    |                                                | 41,148                                            |         |                          |         | 26,255 |         |         |         | 11,432 |        
|                                                                               |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |         |        
|Cash and cash equivalents at end of period                                     |                                                                    | $                                              | 50,230                                            |         |                          |         | 41,148 |         |         |         | 26,255 |        
|                                                                               |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |         |        
|Supplemental disclosures of cash flow information:                             |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |        
|Cash paid during the period for:                                               |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |        
|Income taxes (net of refunds)                                                  |                                                                    | $                                              | (5,225                                            | )       |                          |         | 3,228  |         |         |         | 15,533 |        
|                                                                               |                                                                    |                                                |                                                   |         |                          |         |        |         |         |         |        |         |        

See accompanying notes to consolidated financial statements.





---



##### 



CDI CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share and per share amount, unless otherwise indicated)

Note 1  Significant Accounting Policies

Principles of Consolidation- The consolidated financial statements include the
accounts of CDI Corp. (CDI or the Company) and all wholly-owned and
majority-owned subsidiaries after elimination of intercompany balances and
transactions. For comparative purposes, certain amounts have been reclassified
to conform to the 2003 presentation.

Use 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 amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.

Cash and Cash Equivalents and Short-Term Investments- Cash equivalents include
investments in highly liquid securities that mature within 90 days from their
date of acquisition. Short-term investments include investments with an
original maturity date greater than 90 days. All the Companys cash equivalents
and short-term investments represent investments in money market instruments or
debt securities. Short-term investments include securities classified as
available-for-sale, as well as a security classified as held-to-maturity in
accordance with Statement of Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Instruments".

Available-for-sale securities are carried at fair value based on quoted prices.
Cost of securities held-to-maturity is adjusted for amortization of premiums or
discounts to maturity. Interest income and amortization of premiums and
discounts are included in interest (income) expense. Cost of securities sold is
based on the specific identification method. Gains and losses related to
available-for-sale securities have been immaterial.

Fair Value of Financial Instruments -The Companys carrying value of financial
instruments approximates fair value because of the nature and characteristics
of its financial instruments.

The Company does not have off-balance sheet financial instruments except for
letters of credit issued by the Company through major domestic banks as
required by certain insurance carriers in connection with its workers
compensation plan. As of December 31, 2003 and 2002 the Company had
outstanding letters of credit of $8.5 million and $12.1 million, respectively.
The Company does not generally have derivative products in place to manage
risks related to foreign currency fluctuations for its foreign operations.

Allowance for Doubtful Accounts An allowance is provided against accounts
receivable that are not expected to be collected. This reserve is based upon
historical experience, as well as estimates based on managements judgments in
specific matters.

Property and equipment Property and equipment are recorded at cost.
Depreciation expense is computed using the straight-line method over the
following useful lives:

|                        |  |              
|----------------------- |  | -------------
|Computer and systems    |  | 4  7 years  
|Equipment and furniture |  | 5  7 years  
|Leasehold improvements  |  | Term of lease

The Company capitalizes direct costs incurred in the development of
internal-use software. Amounts capitalized are reported as a component of
computer and systems within property and equipment.

29



---



##### 



Goodwill Goodwill represents the excess of the cost of businesses acquired
over the fair market value of identifiable net assets at the dates of
acquisition. Goodwill was being amortized on a straight-line basis over
periods ranging from 12 to 20 years through December 31, 2001. The Company
adopted SFAS No. 142  Goodwill and Other Intangible Assetson January 1,
2002, under which goodwill is no longer subject to amortization.

In accordance with SFAS 142, the Company performs annual testing in the third
quarter to evaluate the recoverability of goodwill carried in its balance
sheet. Current and projected earnings, cash flows and comparable market data
are used to determine the fair-value of each reporting unit. This fair-value
is then compared to the carrying value of the underlying assets to determine if
any impairment has occurred.

Long-Lived Assets The Company evaluates long-lived assets and intangible
assets with definite lives for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. When it is probable that undiscounted future cash flows will not
be sufficient to recover an assets carrying amount, the asset is written down
to its fair value. Assets to be disposed of by sale, if any, are reported at
the lower of the carrying amount or fair value less cost to sell. See Note 11
to the Consolidated Financial Statements for additional disclosures related to
the disposal of long-lived assets reflected as discontinued operations in the
accompanying financial statements.

Obligations Not Liquidated Because of Outstanding Checks- The Company manages
the level of cash in banks to minimize its cash balances. Cash balances as
reflected by banks are higher than the Companys book balances because of
checks that are outstanding throughout the banking system. Cash is generally
not provided to bank accounts until checks are presented for payment. The
differences in balances created by the outstanding checks result in negative
cash balances in the Companys records. These negative balances are reflected
in current liabilities as Obligations not liquidated because of outstanding
checks when the right of offset is not available.

Revenue Recognition- The Company derives its revenues from several sources.
All of the Companys segments perform staffing services. The Companys Project
Management segment also performs project and outsourcing services, which may
involve fixed-price contracts. Management Recruiters International derives the
majority of its revenue from initial franchise fees, and ongoing franchise
royalties.



| |  | Staffing Services- Revenues derived from staffing services are recorded on a
gross basis as services are performed and associated costs have been incurred
using employees of the Company. In these circumstances, the Company assumes
the risk of acceptability of its employees to its customers. An inherent
element of the Companys staffing business is the use of unaffiliated
companies (supplier associates) and their employees to fulfill a customers
staffing requirements. Under these arrangements, these firms serve as
subcontractors. Customers typically require a single consolidated billing,
which reflects services performed by the Companys employees, as well as
staffing supplied by supplier associates.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | When supplier associates are utilized, the Company records the difference
between its gross billings and the amount paid to the supplier associate as
revenue, which is generally referred to as an administrative fee.
Administrative and clerical costs related to time accumulation, invoicing and
other activities are recorded and included in operating and administrative
expenses as incurred.                                                                                                                                                                                                                                                                                                                                 
|
| |  | Project and Outsourcing Services- The Company provides two types of
fixed-priced service contracts: engineering contracts and outsourcing
services. Fixed-price engineering contracts typically include development of
conceptual design drawings and detailed design drawings in support of a
customers construction of tangible property and are accounted for using the
percentage-of-completion method relying on direct hours as the primary input
measure to recognize revenue. Periodically, these contracts are evaluated to
ensure that any potential losses have been identified and recorded in the
financial statements.                                                                                                  
|
| |  | Outsourcing service contracts generally include the performance of certain
computer or network operations or help-desk support on behalf of customers.
Service contracts typically contain an invoicing schedule covering the
contractual period. Accordingly, revenue is recognized on a pro-rata basis
using elapsed                                                                                                                                                                                                                                                                                                                                                                                                                 

30



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##### 





| |  | time as the measure of performance under these contracts. Related costs are
charged to earnings as they are incurred. As with fixed-price engineering
contracts, the Company periodically evaluates the need to provide for any
loses on such contracts.                                                                                                                                                                                                                    
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Initial Franchise Fees Fees related to sales of new MRI franchises are
recognized when the Company has substantially fulfilled its requirements
under the franchise agreement.                                                                                                                                                                                                                                                                                             
|
| |  | Ongoing Franchise Royalties MRIs right to franchise royalties are governed
by the provisions of the franchise contracts. Under the franchise contracts,
the franchisees remit to the Company a contractual percentage of fees
collected from their customers. The Company records franchise royalty
revenue as fees are collected by the franchisee and they become a receivable
from the franchisee, in accordance with SFAS 45  Accounting for Franchise
Fee Revenue".

Stock-Based Compensation- The Company uses the intrinsic value method of
accounting for stock options and other forms of stock-based compensation
granted to employees and directors, in accordance with Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees. No
compensation cost has been recognized for grants of stock options because
option exercise prices are not less than the fair market value of the
underlying common stock at dates of grant. Compensation cost has been
recognized for restricted stock issued and for units granted under the Stock
Purchase Plan and Stock Unit Plan. Note 9 to the Consolidated Financial
Statements sets forth calculations of pro-forma net income and net income per
share derived by expensing stock options in accordance with the guidance
prescribed by SFAS No. 123, Accounting for Stock Based Compensation".

Per Share Data- Earnings (loss) used to calculate both basic and diluted
earnings (loss) per share for all periods are the reported earnings (loss) in
the Companys consolidated statement of earnings. Because of the Companys
capital structure, all reported earnings (loss) pertain to common shareholders
and no assumed adjustments are necessary.

The number of common shares used to calculate basic and diluted earnings per
share for 2003, 2002 and 2001 was determined as follows:

|         |                                                         |  |            |            |      |  |            |            |   |  |            |            |  
|-------- | ------------------------------------------------------- |  | ---------- | ---------- | ---- |  | ---------- | ---------- | - |  | ---------- | ---------- | -
|         |                                                         |  | 2003       |            | 2002 |  | 2001      
|         |                                                         |  |            |            |      |  |           
|Basic:   |                                                         |  |            |            |      |  |            |            |   |  |            |           
|         | Average shares outstanding                              |  |            | 19,439,405 |      |  |            | 19,254,504 |   |  |            | 19,086,755 |  
|         | Restricted shares issued not vested                     |  |            | (42,582    | )    |  |            | (46,031    | ) |  |            | (10,000    | )
|         |                                                         |  |            |            |      |  |            |            |   |  |            |           
|         |                                                         |  | 19,396,823 |            |      |  | 19,208,473 |            |   |  | 19,076,755 |           
|         |                                                         |  |            |            |      |  |            |            |   |  |            |           
|Diluted: |                                                         |  |            |            |      |  |            |            |   |  |            |           
|         | Shares used for basic                                   |  |            | 19,396,823 |      |  |            | 19,208,473 |   |  |            | 19,076,755 |  
|         | Dilutive effect of stock options                        |  |            | 253,132    |      |  |            | 264,636    |   |  |            |           |  
|         | Dilutive effect of units under the Stock
Purchase Plans |  |            | 109,014    |      |  |            | 91,183     |   |  |            |           |  
|         | Dilutive effect of restricted shares
issued not vested  |  |            | 12,250     |      |  |            | 14,586     |   |  |            |           |  
|         |                                                         |  |            |            |      |  |            |            |   |  |            |           
|         |                                                         |  | 19,771,219 |            |      |  | 19,578,878 |            |   |  | 19,076,755 |           
|         |                                                         |  |            |            |      |  |            |            |   |  |            |           

In 2001, basic and diluted shares are the same because including the effect of
common stock equivalents such as stock options, units under the Companys Stock
Purchase Plans and restricted shares issued but not yet vested would have been
antidilutive.

Income Taxes The Company accounts for income taxes using the asset and
liability method. Under this method, income taxes are provided for amounts
currently payable and for amounts deferred as tax assets and liabilities based
on differences between the financial statement carrying amounts and tax basis
of existing assets and liabilities. In establishing its deferred income tax
assets and liabilities, the Company makes judgments and interpretations based
on the enacted tax laws and published tax guidance that are applicable to its
operations. The Company records deferred tax assets and liabilities, and
evaluates the need for valuation allowances to reduce the deferred tax assets
to realizable amounts. The likelihood of a material change in the Companys
expected realization of these assets is dependent on future taxable income, its
ability to use tax

31



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##### 



credit carryforwards and carrybacks, final tax settlements and the
effectiveness of its tax planning strategies in the various relevant
jurisdictions.

Foreign Currency Translation- Foreign subsidiaries of the Company use local
currency as the functional currency. Net assets are translated at year-end
rates while revenues and expenses are translated at average exchange rates.
Adjustments resulting from these translations are reflected in accumulated
other comprehensive income (loss) in shareholders equity. Gains and losses
arising from foreign currency transactions are reflected in the Consolidated
Statements of Earnings.

Comprehensive Income (Loss)- Comprehensive income (loss) consists of net
earnings, foreign currency translation adjustments and adjustments related to
an equity investment which was classified as an available-for-sale security.

New Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46, Consolidation of Variable Interest Entities(FIN
46). FIN 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entitys activities or entitled to receive a majority of the
entitys residual returns or both. FIN 46 also requires disclosures about
variable interest entities that a company is not required to consolidate but in
which it has a significant variable interest. The consolidation requirements of
FIN 46 apply immediately to variable interest entities created after January
31, 2003 and to all entities in the first fiscal year beginning after December
15, 2003. Certain of the disclosure requirements apply to all financial
statements issued after January 31, 2003, regardless of when the variable
interest entity was established. Based on its assessment of FIN 46, the Company
has concluded that there are currently no variable interest entities requiring
consolidation by the Company.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". SFAS 149 amends and clarifies
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities under SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities". SFAS 149 is
generally effective for contracts entered into or modified after June 30, 2003
and for hedging relationships designated after June 30, 2003. The Company does
not have any derivative instruments; therefore SFAS 149 will not have a
material impact on the Companys consolidated results of operations, cash flows
or financial condition.

In May 2003, the FASB issued SFAS No.150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS 150
establishes standards for how an issuer classifies and measures three classes
of freestanding financial instruments with characteristics of both liabilities
and equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). SFAS 150
was effective for financial instruments entered into or modified after May 31,
2003, and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. The Company has not entered into any financial
instruments within the scope of SFAS 150.

Note 2  Cash, Cash Equivalents and Short-Term Investments

Cash, cash equivalents and short-term investments as of December 31, 2003 and
2002 were comprised of the following:

|                        |                    |   |        |        |      |  |        |        | 
|----------------------- | ------------------ | - | ------ | ------ | ---- |  | ------ | ------ | 
|                        |                    |   | 2003   |        | 2002
|                        |                    |   |        |        |     
|Cash                    |                    | $ | 5,139  |        |      |  | 12,659 |       
|Cash equivalents        |                    |   | 45,091 |        |      |  | 28,489 |       
|                        |                    |   |        |        |      |  |        |       
|                        |                    | $ | 50,230 |        |      |  | 41,148 |       
|                        |                    |   |        |        |      |  |        |       
|Short-term investments: |                    |   |        |        |      |  |        |       
|                        | Available-for-sale |   | $      | 22,606 |      |  |        | 43,252 | 
|                        | Held-to-maturity   |   |        |       |      |  |        | 15,225 | 
|                        |                    |   |        |        |      |  |        |       
|                        |                    | $ | 22,606 |        |      |  | 58,477 |       
|                        |                    |   |        |        |      |  |        |       

32



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##### 



Cash equivalents are in very liquid, high quality debt securities with
diversification among the investments based upon Company established
guidelines. Amortized cost approximates fair value. Gains and losses during
2003 and 2002 were immaterial and there were no transfers of investments
between classifications of short-term investments.

All of the Companys available-for-sale securities reflect investments in
corporate bonds, various government agencies and commercial paper that are
readably convertible to cash. The Companys held-to-maturity investment was a
certificate of deposit, which had a one-year maturity when purchased and
matured in May 2003.

Contractual maturities of available-for-sale securities as of December 31, 2003
were $10.4 million for securities maturing in one year or less and $12.2
million for securities maturing in one to four years.

Note 3  Accounts Receivable

The Companys principal asset is accounts receivable. Substantially all of the
Companys customers are provided trade credit. The primary users of the
Companys services are large industrial organizations, many of which are
Fortune 1000 companies. The Company performs ongoing credit evaluations of its
customers and maintains allowances for potential credit losses.

Significant portions of the Companys revenue base and receivables are
concentrated in certain industries. At December 31, 2003 and 2002, receivables
from customers in the electronics/information processing industries comprised
approximately 17% and 15%, respectively, of consolidated receivables,
receivables from customers in the aircraft/aerospace industries comprised
approximately 9% and 10%, respectively, of consolidated receivables and
customers in the chemicals/pharmaceuticals industry comprised approximately 14%
and 15%, respectively, of consolidated receivables. There was no single
customer from whom the Company derived 10% or more of its consolidated revenues
during 2003, 2002 or 2001.

Note 4  Acquisitions

Investments in new businesses acquired totaled $1,100, $4,146, and $6,333 for
the years ended December 31, 2003, 2002 and 2001, respectively. All
acquisitions were accounted for using the purchase method. During 2003, the
Company acquired the remaining interest of an affiliated company for $1,100,
all of which was allocated to the fair value of property and equipment (i.e.
computers and systems). For 2002, assets of $2,636 were acquired, all of
which was goodwill. The remaining $1,510 paid in 2002, was to acquire the
interest of all remaining minority shareholders. For 2001, assets of $4,451
were acquired (including goodwill of $4,180) along with liabilities of $293. A
portion of the investment in 2001 reduced minority interest by $2,175.

Certain payments for investments in businesses in earlier years were made in a
year following the year in which the acquisition occurred. There was such a
payment of $5,473 made in 2001. Cash used in investing activities in the
Consolidated Statements of Cash Flows reflects the year in which the cash
outlay occurred.

Financial results of the acquired operations are reflected in the accompanying
Consolidated Statements of Earnings from dates of acquisition. The
acquisitions did not have a significant effect on reported earnings in the year
of acquisition, and earnings would not have been significantly different from
reported earnings had the acquisitions occurred at the beginning of the
respective years.

33



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##### 



Note 5  Property and Equipment

Property and equipment at December 31, 2003 and 2002 were comprised of the
following:

|                         |  |      |         |      |  |  |         |  
|------------------------ |  | ---- | ------- | ---- |  |  | ------- | -
|                         |  | 2003 |         | 2002
|                         |  |      |         |     
|Computers and systems    |  | $    | 85,426  |      |  |  | 75,815  |  
|Equipment and furniture  |  |      | 26,256  |      |  |  | 27,213  |  
|Leasehold improvements   |  |      | 13,297  |      |  |  | 12,082  |  
|                         |  |      |         |      |  |  |         |  
|                         |  |      | 124,979 |      |  |  | 115,110 |  
|Accumulated depreciation |  |      | (93,858 | )    |  |  | (85,976 | )
|                         |  |      |         |      |  |  |         |  
|                         |  | $    | 31,121  |      |  |  | 29,134  |  
|                         |  |      |         |      |  |  |         |  

During the years ended December 31, 2003 and 2002, the Company capitalized
approximately $8.7 million and $3.8 million, respectively, of internal-use
software acquisition and development costs. During the third quarter of 2003,
the Company implemented a new replacement policy for personal computers, which
extended the useful life of these assets from three to four years.

Note 6  Goodwill

In connection with the Companys adoption of SFAS 142, during 2002, the Company
recorded an impairment charge to earnings of $21,401 or $13,968 after tax (PS -
$15,007; PM  $164; MRI  $6,230). This charge is presented in the Companys
Consolidated Statement of Earnings as a cumulative effect of a change in
accounting as of January 1, 2002. Prospectively, the Company performs annual
testing to evaluate the recoverability of goodwill carried in its balance
sheet. The most recent testing was conducted as of July 1, 2003 and indicated
no further impairment to goodwill.

Under SFAS 142, amortization of goodwill ceased January 1, 2002. The following
table computes pro-forma net loss and net loss per share for 2001 had the
provisions of SFAS 142 been applied during that year:

|                                      |                                      |      |   |         |  
|------------------------------------- | ------------------------------------ | ---- | - | ------- | -
|(in thousands, except per share data) |                                      | 2001
|                                      |                                      |     
|Net (loss):                           |                                      |      |   |        
|                                      | Reported                             |      | $ | (15,610 | )
|                                      | Add goodwill amortization, after-tax |      |   | 4,408   |  
|                                      |                                      |      |   |        
|                                      | Net (loss) as adjusted               |      | $ | (11,202 | )
|                                      |                                      |      |   |        
|Basic (loss) per share:               |                                      |      |   |        
|                                      | Net (loss)  Reported                |      | $ | (0.82   | )
|                                      | Net (loss)  As adjusted             |      | $ | (0.59   | )
|Diluted (loss) per share:             |                                      |      |   |        
|                                      | Net (loss)  Reported                |      | $ | (0.82   | )
|                                      | Net (loss)  As adjusted             |      | $ | (0.59   | )

Note 7  Restructuring

In December 2001, the Company began a multi-phased Plan of Restructure that has
been implemented over 2002 and 2003. The implementation of the Plan of
Restructure resulted in pre-tax charges of $21,958 in 2001 and $12,551 in 2002.
In 2001, the charges related to the decommissioning of the Companys former
enterprise resource planning system, the closing of 25 regional offices and
termination of approximately 350 employees. The 2002 charges related to the
closing of approximately 75 field offices and the termination of approximately
220 employees

34



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##### 



The table below presents a summary of the restructure charges:

|                                              |  |                          |        |      |  |  |        | 
|--------------------------------------------- |  | ------------------------ | ------ | ---- |  |  | ------ | 
|                                              |  | Years ended December 31,
|                                              |  |                         
|                                              |  | 2002                     |        | 2001
|                                              |  |                          |        |     
|Asset impairments                             |  | $                        | 3,217  |      |  |  | 13,763 | 
|Provision for severance                       |  |                          | 3,479  |      |  |  | 4,716  | 
|Provision for termination of operating leases |  |                          | 5,855  |      |  |  | 3,479  | 
|                                              |  |                          |        |      |  |  |        | 
|                                              |  | $                        | 12,551 |      |  |  | 21,958 | 
|                                              |  |                          |        |      |  |  |        | 

The breakdown of the restructuring charges among operating segments is as
follows:

|                      |  |      |        |      |  |   |        | 
|--------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                      |  | 2002 |        | 2001
|                      |  |      |        |     
|Professional Services |  | $    | 2,492  |      |  | $ | 11,567 | 
|Project Management    |  |      | 3,978  |      |  |   | 7,069  | 
|Todays Staffing       |  |      | 3,861  |      |  |   | 596    | 
|Management Recruiters |  |      | 1,595  |      |  |   | 1,936  | 
|Corporate             |  |      | 625    |      |  |   | 790    | 
|                      |  |      |        |      |  |   |        | 
|                      |  | $    | 12,551 |      |  | $ | 21,958 | 
|                      |  |      |        |      |  |   |        | 

During 2003, the Company reduced by $279 some of its reserves in connection
with the Companys implementation of its Plan of Restructure. This reduction
related primarily to better than expected sublease and lease exit experience.

In addition, during 2003, the Company recorded $136 of restructuring charges in
connection with the Companys new growth and business integration plan. This
expense relates to employee severance costs.

The tables below present the restructuring activity from a balance sheet
perspective:

|                                               |  |             |       |           |  |           |        |              |  |          |        |          |  |  |        |             |  |  |       | 
|---------------------------------------------- |  | ----------- | ----- | --------- |  | --------- | ------ | ------------ |  | -------- | ------ | -------- |  |  | ------ | ----------- |  |  | ----- | 
|                                               |  | Net Accrual |       |           |  |           |        |              |  |          |        |          |  |  |        | Net Accrual
|                                               |  | at          |       |           |  |           |        |              |  |          |        |          |  |  |        | at         
|                                               |  | December    |       |           |  |           |        | Reduction    |  | Cash     |        | December
|                                               |  | 31, 2001    |       | Provision |  | of Assets |        | Expenditures |  | 31, 2002
|                                               |  |             |       |           |  |           |        |              |  |         
|Asset impairments                              |  | $           |      |           |  |           | 3,217  |              |  |          | (3,217 | )        |  |  |       |             |  |  |      | 
|Provision for severance                        |  |             | 3,999 |           |  |           | 3,479  |              |  |          |       |          |  |  | (4,118 | )           |  |  | 3,360 | 
|Provisions for
termination of
operating leases |  |             | 3,479 |           |  |           | 5,855  |              |  |          |       |          |  |  | (3,795 | )           |  |  | 5,539 | 
|                                               |  |             |       |           |  |           |        |              |  |          |        |          |  |  |        |             |  |  |       | 
|                                               |  | $           | 7,478 |           |  |           | 12,551 |              |  |          | (3,217 | )        |  |  | (7,913 | )           |  |  | 8,899 | 
|                                               |  |             |       |           |  |           |        |              |  |          |        |          |  |  |        |             |  |  |       | 

|                                               |  |             |       |           |  |              |      |          |  |  |        |            |  |  |       | 
|---------------------------------------------- |  | ----------- | ----- | --------- |  | ------------ | ---- | -------- |  |  | ------ | ---------- |  |  | ----- | 
|                                               |  | Net Accrual |       |           |  |              |      |          |  |  |        | Net       
|                                               |  | at          |       |           |  |              |      |          |  |  |        | Accrual at
|                                               |  | December    |       | Provision |  | Cash         |      | December
|                                               |  | 31, 2002    |       | (Credit)  |  | Expenditures |      | 31, 2003
|                                               |  |             |       |           |  |              |      |         
|Provision for severance                        |  | $           | 3,360 |           |  |              | 136  |          |  |  | (2,863 | )          |  |  | 633   | 
|Provisions for
termination
of operating leases |  |             | 5,539 |           |  |              | (279 | )        |  |  | (2,326 | )          |  |  | 2,934 | 
|                                               |  |             |       |           |  |              |      |          |  |  |        |            |  |  |       | 
|                                               |  | $           | 8,899 |           |  |              | (143 | )        |  |  | (5,189 | )          |  |  | 3,567 | 
|                                               |  |             |       |           |  |              |      |          |  |  |        |            |  |  |       | 

The Company anticipates that the remaining liability for severance will be paid
in 2004. The remaining liability for operating leases will be substantially
paid by December 31, 2005. It is managements intent to liquidate its

35



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remaining lease obligations as soon as possible. The liability for the
provision for restructure is included in other accrued expenses in the
accompanying consolidated balance sheets.

Note 8  Capital Stock

Stock Classification Common stock and Class B common stock have equal rights
except that dividends (other than stock dividends) may be declared and paid on
common stock in excess of amounts declared and paid on Class B common stock.
Class B common stock is convertible on a share-for-share basis into common
stock. Class B shares so converted are then cancelled. At December 31, 2003 and
2002 no Class B common shares were issued.

Restricted Common Stock- The Company issued shares of restricted common stock
that vest with the passage of time (ranging from two to five years) and based
on the percentage achievement of pre-determined goals (covering a period of
five years). Shares that do not vest are forfeited.

Restricted common shares that vest over time have a fixed value when issued.
The value of restricted shares that vest based on performance will fluctuate
with changes in the fair market value of the common shares until there is a
determination as to their vesting. Over the period of time that these shares
may become vested, there will be charges to earnings based upon the associated
fair value of the shares. As such charges occur, unamortized value of
restricted stock issued will be reduced. To the extent that restricted shares
are forfeited, unamortized value will also be reduced and the forfeited shares
will be placed in treasury stock.

Changes in common shares issued and treasury shares for the years ended
December 31, 2003, 2002 and 2001 follow:

|                |                             |  |      |            |      |  |      |            |  |  |  |            |  
|--------------- | --------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- |  |  |  | ---------- | -
|                |                             |  | 2003 |            | 2002 |  | 2001
|                |                             |  |      |            |      |  |     
|Shares issued   |                             |  |      |            |      |  |      |            |  |  |  |           
|                | Beginning of year           |  |      | 20,313,915 |      |  |      | 20,078,972 |  |  |  | 20,015,561 |  
|                | Exercise of stock options   |  |      | 176,896    |      |  |      | 178,548    |  |  |  | 4,000      |  
|                | Restricted stock issued     |  |      |           |      |  |      | 13,000     |  |  |  | 45,000     |  
|                | Stock purchase plans        |  |      | 45,024     |      |  |      | 43,395     |  |  |  | 14,411     |  
|                |                             |  |      |            |      |  |      |            |  |  |  |           
|                | End of year                 |  |      | 20,535,835 |      |  |      | 20,313,915 |  |  |  | 20,078,972 |  
|                |                             |  |      |            |      |  |      |            |  |  |  |           
|Treasury shares |                             |  |      |            |      |  |      |            |  |  |  |           
|                | Beginning of year           |  |      | 958,465    |      |  |      | 950,502    |  |  |  | 950,135    |  
|                | Exercise of stock options   |  |      |           |      |  |      |           |  |  |  |           |  
|                | Restricted stock issued     |  |      |           |      |  |      |           |  |  |  | (1,250     | )
|                | Restricted stock forfeiture |  |      |           |      |  |      | 2,963      |  |  |  | 1,617      |  
|                | Shares repurchased          |  |      | 5,000      |      |  |      | 5,000      |  |  |  |           |  
|                |                             |  |      |            |      |  |      |            |  |  |  |           
|                | End of year                 |  |      | 963,465    |      |  |      | 958,465    |  |  |  | 950,502    |  
|                |                             |  |      |            |      |  |      |            |  |  |  |           

Note 9  Stock Based Plans

As of December 31, 2003 the Company had issued non-qualified stock options to
purchase shares of the Companys common stock under two plans, the most recent
of which was adopted in 1998 (the 1998 Plan). Since the adoption of the 1998
Plan, no options have been granted under the other plan.

Non-qualified stock options under the 1998 Plan may be granted to employees,
directors and consultants. No options have been granted to consultants.
Grants under the 1998 Plan, except for certain non-employee directors whose
retainer fees may be paid in whole or in part via stock options, are determined
by the Compensation Committee of the Board of Directors. The option price at
which options are to be exercised may not be less than 100% of the fair market
value per share of the Companys common stock on the last trading
day preceding the date of grant. The terms for which options are granted are
also determined by the Committee and have generally been for seven and ten
years.

36



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##### 



As of December 31, 2003,704,509 shares of common stock were reserved for
future issuances of options under the Companys stock option plans. Activity
under the plans for each of the years ended December 31, 2001, 2002, and 2003
was as follows:

|                  |  |                   |           |                  |  |   |       | 
|----------------- |  | ----------------- | --------- | ---------------- |  | - | ----- | 
|                  |  | Shares subject to |           | Weighted average
|                  |  | options           |           | exercise price  
|                  |  |                   |           |                 
|December 31, 2000 |  |                   | 1,272,641 |                  |  | $ | 25.72 | 
|Granted           |  |                   | 869,730   |                  |  | $ | 15.40 | 
|Exercised         |  |                   | (4,000    | )                |  | $ | 14.23 | 
|Cancelled         |  |                   | (414,658  | )                |  | $ | 25.49 | 
|                  |  |                   |           |                  |  |   |       | 
|December 31, 2001 |  |                   | 1,723,713 |                  |  | $ | 20.59 | 
|Granted           |  |                   | 345,435   |                  |  | $ | 22.49 | 
|Exercised         |  |                   | (178,548  | )                |  | $ | 20.52 | 
|Cancelled         |  |                   | (345,268  | )                |  | $ | 23.36 | 
|                  |  |                   |           |                  |  |   |       | 
|December 31, 2002 |  |                   | 1,545,332 |                  |  | $ | 20.42 | 
|Granted           |  |                   | 296,245   |                  |  | $ | 24.09 | 
|Exercised         |  |                   | (176,896  | )                |  | $ | 20.00 | 
|Cancelled         |  |                   | (233,173  | )                |  | $ | 24.15 | 
|                  |  |                   |           |                  |  |   |       | 
|December 31, 2003 |  |                   | 1,431,508 |                  |  | $ | 20.64 | 
|                  |  |                   |           |                  |  |   |       | 

Additional information regarding stock options outstanding as of December 31,
2003, 2002 and 2001 is as follows:

|                                |                                 |           |      |           |      |           |      |         |  |  |  |         | 
|------------------------------- | ------------------------------- | --------- | ---- | --------- | ---- | --------- | ---- | ------- |  |  |  | ------- | 
|                                |                                 |           | 2003 |           | 2002 |           | 2001
|                                |                                 |           |      |           |      |           |     
|Range of exercise prices:       |                                 |           |      |           |      |           |      |         |  |  |  |        
|                                | Lowest                          |           | $    | 14.23     |      |           |      | 14.23   |  |  |  | 14.23   | 
|                                | Highest                         |           | $    | 46.50     |      |           |      | 46.50   |  |  |  | 46.50   | 
|Weighted average remaining life |                                 | 6.9 years |      | 6.6 years |      | 7.8 years
|Options exercisable:            |                                 |           |      |           |      |           |      |         |  |  |  |        
|                                | Number of shares                |           |      | 426,708   |      |           |      | 422,950 |  |  |  | 439,886 | 
|                                | Weighted average exercise price |           | $    | 22.47     |      |           |      | 24.15   |  |  |  | 30.71   | 

Under the terms of a stock purchase plan (SPP), designated employees and
non-employee directors have the opportunity to purchase shares of the Companys
common stock on a pre-tax basis. Employee participants use a portion of their
annual bonus awards to purchase SPP units. Certain senior management personnel
are required to participate by using 25% of their annual bonus awards to
purchase SPP units and can elect participation for up to an additional 25%.
Other employee participants can elect to use up to 25% of their annual bonus
amount. Non-employee directors may participate by using some or all of their
retainer fees to purchase SPP units. The Company makes a matching contribution
of one SPP unit for every three units purchased by a participant on a voluntary
basis. The number of units is determined by dividing the annual bonus or
retainer fee used to purchase SPP units by the fair market value of a share of
the Companys common stock on the date a participants account is credited with
the SPP units. Vesting of units occurs over a period of three to ten years as
chosen by the participant. If a participants employment or service on the
Companys Board of Directors ceases for any reason after three years from the
start of the vesting period, the participant will receive shares of the
Companys common stock equal to the number of associated units. If employment
for an employee participant terminates within the first three years of the
vesting period and depending on the circumstances related to termination, the
employee could receive cash in lieu of shares that does not take into account
appreciation in value of the shares or the Companys matching contribution. If
a non-employee director does not stand for re-election to the Board, he will
receive shares of the Companys common stock for his SPP units regardless of
the vesting period chosen.

There are 130,803 SPP units (including Company matching units) outstanding as
of December 31, 2003. The units were determined using a weighted average
market price of $21.33 per share. Costs charged to earnings

37



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##### 



during 2003, 2002,
and 2001 related to these plans were $751, $1,456 and $824, respectively.
Costs charged to earnings related to employee participants include the amount
of the deferred bonus for the year used to purchase SPP units plus a portion of
the value of the Company match SPP units credited to participants accounts.
Company matched SPP units have a fixed value determined at the time
participants accounts are credited, which value is charged to earnings over a
three-year period, the minimum period over which employee participants vest in
these units. Costs charged to earnings related to non-employee directors
include the amount of the deferred retainer fees used to purchase SPP units
plus the value of the Company match SPP units credited to a directors account.
These Company match units have a fixed value that is charged to earnings over
a one-year period.

SFAS No. 123, Accounting
for Stock Based Compensation, uses a fair value
based method of accounting for stock-based compensation. The following table
reflects the pro-forma effect on net earnings (loss) and earnings (loss) per
share for the years ended December 31, 2003, 2002 and 2001 if the Company had
adopted the fair value recognition provisions of SFAS No. 123:

|                                                                                                                       |                       |   |        |      |      |  |         |       |   |  |         |       |  
|---------------------------------------------------------------------------------------------------------------------- | --------------------- | - | ------ | ---- | ---- |  | ------- | ----- | - |  | ------- | ----- | -
|                                                                                                                       |                       |   | 2003   |      | 2002 |  | 2001   
|                                                                                                                       |                       |   |        |      |      |  |        
|Net earnings (loss), as reported                                                                                       |                       | $ | 22,546 |      |      |  | (9,359  | )     |   |  | (15,610 | )    
|Stock-based employee and director
compensation cost included in
reported net earnings (loss), net
of income tax effect |                       |   | 666    |      |      |  | 1,083   |       |   |  | 647     |      
|Stock-based employee and director
compensation cost under fair
value-based method, net of income
tax effect            |                       |   | (2,125 | )    |      |  | (2,199  | )     |   |  | (2,269  | )    
|                                                                                                                       |                       |   |        |      |      |  |         |       |   |  |         |      
|Pro-forma net earnings (loss)                                                                                          |                       | $ | 21,087 |      |      |  | (10,475 | )     |   |  | (17,232 | )    
|                                                                                                                       |                       |   |        |      |      |  |         |       |   |  |         |      
|Net earnings (loss) per share:                                                                                         |                       |   |        |      |      |  |         |       |   |  |         |      
|                                                                                                                       | Basic  as reported   |   | $      | 1.16 |      |  |         | (0.49 | ) |  |         | (0.82 | )
|                                                                                                                       | Basic  pro-forma     |   | $      | 1.09 |      |  |         | (0.55 | ) |  |         | (0.90 | )
|                                                                                                                       | Diluted  as reported |   | $      | 1.14 |      |  |         | (0.48 | ) |  |         | (0.82 | )
|                                                                                                                       | Diluted  pro-forma   |   | $      | 1.07 |      |  |         | (0.54 | ) |  |         | (0.90 | )

Pro-forma net earnings (loss) for the year ended December 31, 2001 has been
revised from those previously reported to give effect to the impact that
cancellations of stock options would have had on costs if SFAS 123 had been
adopted.

The pro-forma compensation cost using the fair value-based method under SFAS
No. 123 includes valuations related to stock options granted since January 1,
1995 using the Black-Scholes Option Pricing Model. The weighted average fair
value of options granted during 2003, 2002 and 2001 has been estimated using
the following assumptions:

|                                |  |           |      |         |  |          |      |   |  |  |      |  
|------------------------------- |  | --------- | ---- | ------- |  | -------- | ---- | - |  |  | ---- | -
|                                |  | 2003      |      | 2002    |  | 2001    
|                                |  |           |      |         |  |         
|Risk-free interest rate         |  |           | 3.59 | %       |  |          | 4.72 | % |  |  | 4.84 | %
|Expected life of option         |  | 5.5 years |      | 7 years |  | 10 years
|Expected stock price volatility |  |           | 38   | %       |  |          | 36   | % |  |  | 40   | %
|Expected dividend yield         |  |           | 1.4  | %       |  |          | N/A  |   |  |  | N/A  |  

38



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##### 



Note 10  Income Taxes

Pre-tax earnings (loss) from continuing operations for the years ended December
31, 2003, 2002 and 2001 were taxed in the following jurisdictions:

|              |  |      |        |      |  |      |       |   |  |  |         |  
|------------- |  | ---- | ------ | ---- |  | ---- | ----- | - |  |  | ------- | -
|              |  | 2003 |        | 2002 |  | 2001
|              |  |      |        |      |  |     
|United States |  | $    | 23,995 |      |  |      | (214  | ) |  |  | (29,537 | )
|Foreign       |  |      | 10,251 |      |  |      | 7,030 |   |  |  | 3,445   |  
|              |  |      |        |      |  |      |       |   |  |  |         |  
|              |  | $    | 34,246 |      |  |      | 6,816 |   |  |  | (26,092 | )
|              |  |      |        |      |  |      |       |   |  |  |         |  

Income tax (expense) benefit relating to continuing operations for the years
ended December 31, 2003, 2002 and 2001 was comprised of the following:

|         |  |       |         |         |  |       |        |         |  |  |        |   |  |  |        |  
|-------- |  | ----- | ------- | ------- |  | ----- | ------ | ------- |  |  | ------ | - |  |  | ------ | -
|         |  | Total |         | Federal |  | State |        | Foreign
|         |  |       |         |         |  |       |        |        
|2003     |  |       |         |         |  |       |        |         |  |  |        |   |  |  |        |  
|Current  |  | $     | (3,413  | )       |  |       | (194   | )       |  |  | (59    | ) |  |  | (3,160 | )
|Deferred |  |       | (8,287  | )       |  |       | (7,058 | )       |  |  | (1,135 | ) |  |  | (94    | )
|         |  |       |         |         |  |       |        |         |  |  |        |   |  |  |        |  
|         |  | $     | (11,700 | )       |  |       | (7,252 | )       |  |  | (1,194 | ) |  |  | (3,254 | )
|         |  |       |         |         |  |       |        |         |  |  |        |   |  |  |        |  
|2002     |  |       |         |         |  |       |        |         |  |  |        |   |  |  |        |  
|Current  |  | $     | 2,087   |         |  |       | 5,096  |         |  |  | (538   | ) |  |  | (2,471 | )
|Deferred |  |       | (4,686  | )       |  |       | (5,580 | )       |  |  | 958    |   |  |  | (64    | )
|         |  |       |         |         |  |       |        |         |  |  |        |   |  |  |        |  
|         |  | $     | (2,599  | )       |  |       | (484   | )       |  |  | 420    |   |  |  | (2,535 | )
|         |  |       |         |         |  |       |        |         |  |  |        |   |  |  |        |  
|2001     |  |       |         |         |  |       |        |         |  |  |        |   |  |  |        |  
|Current  |  | $     | (4,246  | )       |  |       | (672   | )       |  |  | (1,554 | ) |  |  | (2,020 | )
|Deferred |  |       | 14,040  |         |  |       | 9,178  |         |  |  | 4,677  |   |  |  | 185    |  
|         |  |       |         |         |  |       |        |         |  |  |        |   |  |  |        |  
|         |  | $     | 9,794   |         |  |       | 8,506  |         |  |  | 3,123  |   |  |  | (1,835 | )
|         |  |       |         |         |  |       |        |         |  |  |        |   |  |  |        |  

The following table reconciles income tax (expense) benefit based on the U.S.
statutory rate to the Companys income tax (expense) benefit from continuing
operations:

|                                                             |  |      |         |      |  |      |        |   |  |  |       |  
|------------------------------------------------------------ |  | ---- | ------- | ---- |  | ---- | ------ | - |  |  | ----- | -
|                                                             |  | 2003 |         | 2002 |  | 2001
|                                                             |  |      |         |      |  |     
|Income tax (expense) benefit based on the U.S
statutory rate |  | $    | (11,986 | )    |  |      | (2,386 | ) |  |  | 9,132 |  
|State income taxes, net of federal tax benefit               |  |      | (219    | )    |  |      | 273    |   |  |  | 1,885 |  
|Expenses permanently nondeductible for tax purposes          |  |      | (453    | )    |  |      | (789   | ) |  |  | (978  | )
|Foreign income taxes                                         |  |      | 483     |      |  |      | 236    |   |  |  | (272  | )
|Increase in valuation allowance                              |  |      | (557    | )    |  |      | (400   | ) |  |  |      |  
|Resolution of certain prior years tax exposures             |  |      | 805     |      |  |      | 231    |   |  |  |      |  
|Other                                                        |  |      | 227     |      |  |      | 236    |   |  |  | 27    |  
|                                                             |  |      |         |      |  |      |        |   |  |  |       |  
|                                                             |  | $    | (11,700 | )    |  |      | (2,599 | ) |  |  | 9,794 |  
|                                                             |  |      |         |      |  |      |        |   |  |  |       |  

39



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##### 



The tax effects of the principal components creating net deferred income tax
assets as of December 31, 2003 and 2002 were as follows:

|                                              |                                                                                  |   |        |        |      |  |        |        |  
|--------------------------------------------- | -------------------------------------------------------------------------------- | - | ------ | ------ | ---- |  | ------ | ------ | -
|                                              |                                                                                  |   | 2003   |        | 2002
|                                              |                                                                                  |   |        |        |     
|Components creating deferred tax assets:      |                                                                                  |   |        |        |      |  |        |       
|                                              | Expenses not currently deductible (principally
compensation and payroll-related) |   | $      | 15,118 |      |  |        | 20,904 |  
|                                              | Intangible assets amortization                                                   |   |        | 1,023  |      |  |        | 2,651  |  
|                                              | Basis differences for fixed assets                                               |   |        |       |      |  |        | 1,666  |  
|                                              | Other                                                                            |   |        | 311    |      |  |        | 443    |  
|                                              | Loss carry forwards                                                              |   |        | 7,607  |      |  |        | 6,461  |  
|                                              | Credit carry forwards                                                            |   |        | 1,236  |      |  |        | 744    |  
|                                              | Valuation allowance                                                              |   |        | (1,884 | )    |  |        | (1,027 | )
|                                              |                                                                                  |   |        |        |      |  |        |       
|                                              |                                                                                  |   | 23,411 |        |      |  | 31,842 |       
|                                              |                                                                                  |   |        |        |      |  |        |       
|Components creating deferred tax liabilities: |                                                                                  |   |        |        |      |  |        |       
|                                              | Deferral of revenues and accounts receivable                                     |   |        | (2,852 | )    |  |        | (3,084 | )
|                                              | Basis differences for fixed assets                                               |   |        | (1,789 | )    |  |        |       |  
|                                              | Other                                                                            |   |        | (3,153 | )    |  |        | (3,813 | )
|                                              |                                                                                  |   |        |        |      |  |        |       
|                                              |                                                                                  | $ | 15,617 |        |      |  | 24,945 |       
|                                              |                                                                                  |   |        |        |      |  |        |       

The valuation allowance of $1,884 as of December 31, 2003 has been provided to
reduce state and federal loss carryforwards to a level which more likely than
not, will be realized. The total valuation allowance for the year ended
December 31, 2003 increased $857 ($557, net of the federal tax benefit)
primarily due to state tax carryforwards.

At December 31, 2003 for state income tax purposes, there are operating loss
carryforwards aggregating approximately $113.0 million expiring in varying
amounts from 2005 through 2019.

Note 11  Discontinued Operations

In June 2002, the Company sold the net operating assets of its Modern
Engineering, Inc. (Modern) subsidiary that operated in its Project Management
segment. Modern provided technical staffing services to the automotive
industry. The operations of Modern were a component of CDI, as that term is
defined in FASB Statement of Financial Accounting Standard No. 144, Accounting
for the Impairment or Disposal of Long Lived Assets, and accordingly, are
reflected as discontinued operations in the accompanying financial statements.
In conjunction with the implementation of SFAS 144, a pre-tax loss for disposal
of these assets of $1,160 was recognized.

The earnings from discontinued operations for the years ended December 31, 2002
and 2001 are as follows:

|                                      |  |      |        |      |  |  |        |  
|------------------------------------- |  | ---- | ------ | ---- |  |  | ------ | -
|                                      |  | 2002 |        | 2001
|                                      |  |      |        |     
|Revenues                              |  | $    | 32,674 |      |  |  | 86,055 |  
|                                      |  |      |        |      |  |  |        |  
|Gross profit                          |  | $    | 5,718  |      |  |  | 15,817 |  
|Operating and administrative expenses |  |      | 5,860  |      |  |  | 13,927 |  
|Provision for disposal of assets      |  |      | 1,160  |      |  |  |       |  
|                                      |  |      |        |      |  |  |        |  
|(Loss) earnings before income taxes   |  |      | (1,302 | )    |  |  | 1,890  |  
|Income tax benefit (expense)          |  |      | 1,829  |      |  |  | (796   | )
|                                      |  |      |        |      |  |  |        |  
|Earnings from discontinued operations |  | $    | 527    |      |  |  | 1,094  |  
|                                      |  |      |        |      |  |  |        |  

40



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##### 



Note 12  Legal Proceedings and Claims

The Company has litigation and other claims pending which have arisen in the
ordinary course of business. There are substantive defenses and/or insurance
and specific accounting reserves such that the outcome of these matters should
not have a material adverse effect on the financial condition or results of
operations of the Company.

Note 13  Retirement Plans

Trusteed contributory and non-contributory defined contribution retirement
plans have been established for the benefit of eligible employees. Costs of
the plans are charged to earnings and are based on either a formula using a
percentage of compensation or an amount determined by the Board of Directors of
the Company. Costs of the plans that are qualified for income tax purposes are
funded. Costs of plans that are not qualified are not funded. Charges to
earnings for these retirement plans for the years ended December 31, 2003, 2002
and 2001 were $1,418,$2,370, and $4,099, respectively.

The Company does not provide other post-retirement or post-employment benefits.

Note 14  Leases

Offices used for sales, recruiting and administrative functions and facilities
used for in-house engineering, design and drafting are occupied under numerous
leases that expire through 2013. In addition, there are leases for computers
and office equipment. Due primarily to the Plan of Restructure, CDI has
entered into several non-cancelable sublease arrangements whereby the Company
is now the sublessor. If a sublessee were to default, the Company would remain
liable for the prime lease obligation.

Rental expenses and sublease proceeds for the years ended December 31, 2003,
2002 and 2001 are as follows:

|                  |  |      |        |      |  |      |        |  |  |  |        | 
|----------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                  |  | 2003 |        | 2002 |  | 2001
|                  |  |      |        |      |  |     
|Rental expense    |  | $    | 14,432 |      |  |      | 16,466 |  |  |  | 28,684 | 
|Sublease proceeds |  | $    | 1,052  |      |  |      | 708    |  |  |  | 339    | 

For periods after December 31, 2003, approximate minimum annual rental payments
under non-cancelable leases and inflows under non-cancelable subleases are
presented in the table below. These amounts include accrued lease liabilities
of $2.9 million included in the liability for restructure as of December 31,
2003.

|                                                                      |  |      |        |      |  |      |        |      |  |      |       |            |  |  |       |  |  |  |       |  |  |  |       | 
|--------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ----- | ---------- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                                                      |  | 2004 |        | 2005 |  | 2006 |        | 2007 |  | 2008 |       | Thereafter
|                                                                      |  |      |        |      |  |      |        |      |  |      |       |           
|Future minimum
lease payments on
non-cancelable
leases                |  | $    | 15,367 |      |  |      | 11,200 |      |  |      | 5,022 |            |  |  | 2,213 |  |  |  | 1,667 |  |  |  | 3,567 | 
|Future minimum
proceeds to be
received under
non-cancelable
subleases |  | $    | 2,052  |      |  |      | 1,576  |      |  |      | 451   |            |  |  | 190   |  |  |  | 16    |  |  |  |      | 

41



---



##### 



Note 15  Disposition of Assets

On June 30 2003, the Company entered into an agreement to sell certain assets
and liabilities of its MRI operations for $2.7 million. Under the terms of
that agreement, the Company received a $0.5 million non-refundable payment and
a non-recourse note with a face value of $2.2 million, which the buyer
anticipates refinancing by the maturity date in June 2004.

Since a substantial portion of the sales price received is in the form of a
non-recourse note secured only by the business sold, and completion of the sale
is contingent upon the buyer obtaining independent third-party financing for
the remaining purchase price, the Company has not recorded this transaction as
a divestiture. Upon the buyers obtaining third party funding, the Company
will record the divestiture. When recorded, it is expected that the
transaction will result in a pre-tax gain, estimated to be $1.3 million.

The assets and liabilities to be disposed of in connection with this agreement
and the deferred deposit are included in prepaid expenses and other ($2.0
million) and accrued expenses and other ($1.1 million).

In 2002, the Company recorded a loss on the sale of its MRI Company-owned
permanent placement offices of $1.3 million. This transaction was completed to
focus MRI on its franchise operations and provide capital to re-deploy toward
franchise support.

Note 16  Related Party Transactions

The Company sublets office space and is provided legal services by a law firm
in which one of the members of the Companys Board of Directors is also the
Chairman and a partner of that law firm. Total expenses incurred aggregated
approximately $1.7 million, $1.5 million and $1.5 million, in 2003, 2002, and
2001, respectively.

Note 17  Reporting Segments

Throughout 2003, the Companys internal reporting structure was based upon
types of services provided and in the case of certain services having similar
characteristics, upon management responsibility. Through December 2003, the
Company was managed and operated along four reporting segments: Professional
Services (PS), Project Management (PM), Todays Staffing (Todays), and
Management Recruiters International (MRI).

PS offers information technology and engineering staffing solutions to
customers in targeted vertical markets. Also included in PS is AndersElite, a
provider of building and construction professionals on a permanent and
temporary basis in the United Kingdom.

PM provides a wide range of project management, technical outsourcing and
technical consulting services through several divisions organized by vertical
markets. In addition, PM provides information technology outsourcing services.

Todays provides temporary and permanent administrative, clerical and legal
staffing services as well as managed services.

MRI provides support services to its franchisees who engage in the search,
recruitment and employment of management personnel. It also provides temporary
management and specialty staffing services. Prior to the sale of company-owned
offices, MRI also engaged in the search, recruitment and employment of
management personnel.

42



---



##### 



Reporting segment data for the years ended December 31, 2003, 2002 and 2001
follows:

|                                                                                                                                                       |           |   |           |         |      |  |           |         |   |  |           |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------ | --------- | - | --------- | ------- | ---- |  | --------- | ------- | - |  | --------- | ------- | -
|                                                                                                                                                       |           |   | 2003      |         | 2002 |  | 2001     
|                                                                                                                                                       |           |   |           |         |      |  |          
|Revenues:                                                                                                                                              |           |   |           |         |      |  |           |         |   |  |           |        
|                                                                                                                                                       | PS        |   | $         | 564,790 |      |  |           | 622,931 |   |  |           | 809,549 |  
|                                                                                                                                                       | PM        |   |           | 302,902 |      |  |           | 311,256 |   |  |           | 352,210 |  
|                                                                                                                                                       | Todays    |   |           | 135,746 |      |  |           | 149,387 |   |  |           | 193,666 |  
|                                                                                                                                                       | MRI       |   |           | 56,876  |      |  |           | 85,901  |   |  |           | 103,167 |  
|                                                                                                                                                       |           |   |           |         |      |  |           |         |   |  |           |        
|                                                                                                                                                       |           | $ | 1,060,314 |         |      |  | 1,169,475 |         |   |  | 1,458,592 |        
|                                                                                                                                                       |           |   |           |         |      |  |           |         |   |  |           |        
|Earnings (loss) from continuing operations
before income taxes, minority interests
and cumulative effect of accounting change
Operating profit (loss): |           |   |           |         |      |  |           |         |   |  |           |        
|                                                                                                                                                       | PS        |   | $         | 19,799  |      |  |           | 6,880   |   |  |           | (3,984  | )
|                                                                                                                                                       | PM        |   |           | 16,352  |      |  |           | 9,423   |   |  |           | (10,957 | )
|                                                                                                                                                       | Todays    |   |           | 6,371   |      |  |           | 1,486   |   |  |           | 2,616   |  
|                                                                                                                                                       | MRI       |   |           | 3,622   |      |  |           | 6,902   |   |  |           | 12,746  |  
|                                                                                                                                                       | Corporate |   |           | (12,951 | )    |  |           | (17,990 | ) |  |           | (23,448 | )
|                                                                                                                                                       |           |   |           |         |      |  |           |         |   |  |           |        
|                                                                                                                                                       |           |   | 33,193    |         |      |  | 6,701     |         |   |  | (23,027   | )      
|Interest (income) expense, net                                                                                                                         |           |   | (1,053    | )       |      |  | (115      | )       |   |  | 3,065     |        
|                                                                                                                                                       |           |   |           |         |      |  |           |         |   |  |           |        
|                                                                                                                                                       |           | $ | 34,246    |         |      |  | 6,816     |         |   |  | (26,092   | )      
|                                                                                                                                                       |           |   |           |         |      |  |           |         |   |  |           |        
|Depreciation and amortization:                                                                                                                         |           |   |           |         |      |  |           |         |   |  |           |        
|                                                                                                                                                       | PS        |   | $         | 5,937   |      |  |           | 13,060  |   |  |           | 16,214  |  
|                                                                                                                                                       | PM        |   |           | 2,918   |      |  |           | 5,909   |   |  |           | 2,423   |  
|                                                                                                                                                       | Todays    |   |           | 1,133   |      |  |           | 1,490   |   |  |           | 3,401   |  
|                                                                                                                                                       | MRI       |   |           | 1,484   |      |  |           | 2,705   |   |  |           | 4,085   |  
|                                                                                                                                                       | Corporate |   |           | 391     |      |  |           | 1,293   |   |  |           | 1,509   |  
|                                                                                                                                                       |           |   |           |         |      |  |           |         |   |  |           |        
|                                                                                                                                                       |           | $ | 11,863    |         |      |  | 24,457    |         |   |  | 27,632    |        
|                                                                                                                                                       |           |   |           |         |      |  |           |         |   |  |           |        

|                                     |                                   |   |         |         |      |  |         |         |  |  |         |         | 
|------------------------------------ | --------------------------------- | - | ------- | ------- | ---- |  | ------- | ------- |  |  | ------- | ------- | 
|                                     |                                   |   | 2003    |         | 2002 |  | 2001   
|                                     |                                   |   |         |         |      |  |        
|Assets:                              |                                   |   |         |         |      |  |         |         |  |  |         |        
|                                     | PS                                |   | $       | 165,477 |      |  |         | 155,650 |  |  |         | 212,148 | 
|                                     | PM                                |   |         | 84,362  |      |  |         | 89,996  |  |  |         | 120,032 | 
|                                     | Todays                            |   |         | 40,495  |      |  |         | 44,779  |  |  |         | 50,171  | 
|                                     | MRI                               |   |         | 37,838  |      |  |         | 38,934  |  |  |         | 47,247  | 
|                                     | Corporate                         |   |         | 73,390  |      |  |         | 103,415 |  |  |         | 28,134  | 
|                                     | Assets of discontinued operations |   |         |        |      |  |         |        |  |  |         | 14,840  | 
|                                     |                                   |   |         |         |      |  |         |         |  |  |         |        
|                                     |                                   | $ | 401,562 |         |      |  | 432,774 |         |  |  | 472,572 |        
|                                     |                                   |   |         |         |      |  |         |         |  |  |         |        
|Purchases of property and equipment: |                                   |   |         |         |      |  |         |         |  |  |         |        
|                                     | PS                                |   | $       | 8,751   |      |  |         | 6,137   |  |  |         | 9,473   | 
|                                     | PM                                |   |         | 3,143   |      |  |         | 1,698   |  |  |         | 4,412   | 
|                                     | Todays                            |   |         | 1,107   |      |  |         | 558     |  |  |         | 958     | 
|                                     | MRI                               |   |         | 332     |      |  |         | 1,145   |  |  |         | 2,200   | 
|                                     | Corporate                         |   |         | 324     |      |  |         | 606     |  |  |         | 2,069   | 
|                                     |                                   |   |         |         |      |  |         |         |  |  |         |        
|                                     |                                   | $ | 13,657  |         |      |  | 10,144  |         |  |  | 19,112  |        
|                                     |                                   |   |         |         |      |  |         |         |  |  |         |        

Inter-segment activity is not significant. Therefore, revenues reported for
each operating segment are substantially all from external customers.

43



---



##### 



The Company is domiciled in the United States and its segments operate
primarily in the United States. Revenues and fixed assets by geographic area
for the years ended December 31, 2003, 2002 and 2001 are as follows:

|              |                                  |   |           |         |      |  |           |         |  |  |           |           | 
|------------- | -------------------------------- | - | --------- | ------- | ---- |  | --------- | ------- |  |  | --------- | --------- | 
|              |                                  |   | 2003      |         | 2002 |  | 2001     
|              |                                  |   |           |         |      |  |          
|Revenues:     |                                  |   |           |         |      |  |           |         |  |  |           |          
|              | United States                    |   | $         | 847,148 |      |  |           | 979,372 |  |  |           | 1,278,582 | 
|              | United Kingdom, Canada and other |   |           | 213,166 |      |  |           | 190,103 |  |  |           | 180,010   | 
|              |                                  |   |           |         |      |  |           |         |  |  |           |          
|              |                                  | $ | 1,060,314 |         |      |  | 1,169,475 |         |  |  | 1,458,592 |          
|              |                                  |   |           |         |      |  |           |         |  |  |           |          
|Fixed assets: |                                  |   |           |         |      |  |           |         |  |  |           |          
|              | United States                    |   | $         | 26,513  |      |  |           | 23,758  |  |  |           | 43,318    | 
|              | United Kingdom, Canada and other |   |           | 4,608   |      |  |           | 5,376   |  |  |           | 6,671     | 
|              |                                  |   |           |         |      |  |           |         |  |  |           |          
|              |                                  | $ | 31,121    |         |      |  | 29,134    |         |  |  | 49,989    |          
|              |                                  |   |           |         |      |  |           |         |  |  |           |          

Effective January 1, 2004, the Company implemented a new go-to-market strategy
and reorganized its segments to focus on targeted vertical markets. Refer to
Note 18 below for more information.

Note 18 - Reporting Segments Under New Management Structure

In January 2004, the Company implemented a new structure and leadership
alignment. As a result, in 2004 the Company will begin reporting new segments
as follows: Business Solutions, AndersElite, MRI and Todays Staffing. As a result of the management reorganization, the Business
Solutions segment, which includes most of the former PS and PM reporting
segments will comprise specific vertical industries. This new segment will
include aerospace, government services, information technology services, life
sciences, and process and industrial. AndersElite, which formerly was part of
PS, will be its own segment. Todays and MRI segments remain unchanged.

The Company is providing the following supplementary information to present
results of operations for the years ended December 31, 2003, 2002, and 2001 for
the new reporting structure as if that structure had been in place since 2001:

|                                                                                                                                                         |                                |   |           |         |      |  |           |         |   |  |           |           |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | - | --------- | ------- | ---- |  | --------- | ------- | - |  | --------- | --------- | -
|                                                                                                                                                         |                                |   | 2003      |         | 2002 |  | 2001     
|                                                                                                                                                         |                                |   |           |         |      |  |          
|Revenues:                                                                                                                                                |                                |   |           |         |      |  |           |         |   |  |           |          
|                                                                                                                                                         | Business Solutions             |   | $         | 717,358 |      |  |           | 811,160 |   |  |           | 1,060,325 |  
|                                                                                                                                                         | AndersElite                    |   |           | 150,334 |      |  |           | 123,027 |   |  |           | 101,434   |  
|                                                                                                                                                         | Todays                         |   |           | 135,746 |      |  |           | 149,387 |   |  |           | 193,666   |  
|                                                                                                                                                         | MRI                            |   |           | 56,876  |      |  |           | 85,901  |   |  |           | 103,167   |  
|                                                                                                                                                         |                                |   |           |         |      |  |           |         |   |  |           |          
|                                                                                                                                                         |                                | $ | 1,060,314 |         |      |  | 1,169,475 |         |   |  | 1,458,592 |          
|                                                                                                                                                         |                                |   |           |         |      |  |           |         |   |  |           |          
|Earnings (loss) from continuing
operations before income tax and
minority interests, and cumulative
effect of accounting change
Operating profit (loss): |                                |   |           |         |      |  |           |         |   |  |           |          
|                                                                                                                                                         | Business Solutions             |   | $         | 27,537  |      |  |           | 9,045   |   |  |           | (20,416   | )
|                                                                                                                                                         | AndersElite                    |   |           | 8,614   |      |  |           | 7,258   |   |  |           | 5,475     |  
|                                                                                                                                                         | Todays                         |   |           | 6,371   |      |  |           | 1,486   |   |  |           | 2,616     |  
|                                                                                                                                                         | MRI                            |   |           | 3,622   |      |  |           | 6,902   |   |  |           | 12,746    |  
|                                                                                                                                                         | Corporate expenses             |   |           | (12,951 | )    |  |           | (17,990 | ) |  |           | (23,448   | )
|                                                                                                                                                         |                                |   |           |         |      |  |           |         |   |  |           |          
|                                                                                                                                                         |                                |   | 33,193    |         |      |  | 6,701     |         |   |  | (23,027   | )        
|                                                                                                                                                         | Interest (income) expense, net |   |           | (1,053  | )    |  |           | (115    | ) |  |           | 3,065     |  
|                                                                                                                                                         |                                |   |           |         |      |  |           |         |   |  |           |          
|                                                                                                                                                         |                                | $ | 34,246    |         |      |  | 6,816     |         |   |  | (26,092   | )        
|                                                                                                                                                         |                                |   |           |         |      |  |           |         |   |  |           |          

44



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##### 



The following presents unaudited quarterly operating results for 2003 as if the
new management structure were in effect:

|                                                        |                      |   |               |         |                |  |               |         |                |  |         |         |   |  |         |         |  
|------------------------------------------------------- | -------------------- | - | ------------- | ------- | -------------- |  | ------------- | ------- | -------------- |  | ------- | ------- | - |  | ------- | ------- | -
|                                                        |                      |   | First Quarter |         | Second Quarter |  | Third Quarter |         | Fourth Quarter
|                                                        |                      |   |               |         |                |  |               |         |               
|Revenues:                                               |                      |   |               |         |                |  |               |         |                |  |         |         |   |  |         |        
|                                                        | Business Solutions   |   | $             | 185,559 |                |  |               | 182,046 |                |  |         | 177,819 |   |  |         | 171,934 |  
|                                                        | AndersElite          |   |               | 33,722  |                |  |               | 35,403  |                |  |         | 39,422  |   |  |         | 41,787  |  
|                                                        | Todays               |   |               | 34,572  |                |  |               | 36,441  |                |  |         | 34,069  |   |  |         | 30,664  |  
|                                                        | MRI                  |   |               | 15,673  |                |  |               | 16,104  |                |  |         | 13,045  |   |  |         | 12,054  |  
|                                                        |                      |   |               |         |                |  |               |         |                |  |         |         |   |  |         |        
|                                                        |                      | $ | 269,526       |         |                |  | 269,994       |         |                |  | 264,355 |         |   |  | 256,439 |        
|                                                        |                      |   |               |         |                |  |               |         |                |  |         |         |   |  |         |        
|Earnings from continuing
operations before income
taxes |                      |   |               |         |                |  |               |         |                |  |         |         |   |  |         |        
|Operating profit:                                       |                      |   |               |         |                |  |               |         |                |  |         |         |   |  |         |        
|                                                        | Business Solutions   |   | $             | 7,950   |                |  |               | 6,330   |                |  |         | 6,430   |   |  |         | 6,827   |  
|                                                        | AndersElite          |   |               | 1,766   |                |  |               | 2,064   |                |  |         | 2,685   |   |  |         | 2,099   |  
|                                                        | Todays               |   |               | 1,392   |                |  |               | 2,145   |                |  |         | 1,972   |   |  |         | 862     |  
|                                                        | MRI                  |   |               | 683     |                |  |               | 1,869   |                |  |         | 905     |   |  |         | 165     |  
|                                                        | Corporate expenses   |   |               | (3,429  | )              |  |               | (3,690  | )              |  |         | (2,872  | ) |  |         | (2,960  | )
|                                                        |                      |   |               |         |                |  |               |         |                |  |         |         |   |  |         |        
|                                                        |                      |   | 8,362         |         |                |  | 8,718         |         |                |  | 9,120   |         |   |  | 6,993   |        
|                                                        | Interest income, net |   |               | (374    | )              |  |               | (252    | )              |  |         | (170    | ) |  |         | (257    | )
|                                                        |                      |   |               |         |                |  |               |         |                |  |         |         |   |  |         |        
|                                                        |                      | $ | 8,736         |         |                |  | 8,970         |         |                |  | 9,290   |         |   |  | 7,250   |        
|                                                        |                      |   |               |         |                |  |               |         |                |  |         |         |   |  |         |        

45



---



##### 



Independent Auditors Report

The Board of Directors and Shareholders of CDI Corp.:

We have audited the accompanying consolidated balance sheets of CDI Corp. and
subsidiaries as of December 31, 2003 and 2002, and the related consolidated
statements of earnings, cash flows and shareholders equity for each of the
three years in the three year period ended December 31, 2003. In connection
with our audits of the consolidated financial statements we also have audited
the financial statement schedule. These consolidated financial statements and
the financial statement schedule are the responsibility of management. Our
responsibility is to express an opinion on these consolidated financial
statements and the financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards 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. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CDI Corp. and
subsidiaries as of December 31, 2003 and 2002, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 2003, in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.

As discussed in Note 1 to the Consolidated Financial Statements, the Company
adopted Statement of Financial Accounting Standard No. 142, Goodwill and Other
Intangible Assets on January 1, 2002.

|                           |     |         
|-------------------------- | --- | --------
|Philadelphia, Pennsylvania | /s/ | KPMG LLP
|February 24, 2004          |    

46



---



##### 



Quarterly Results (Unaudited)

|                                           |  |                          |         |                |  |               |         |                |  |      |         |   |  |  |         |   |  |  |           |  
|------------------------------------------ |  | ------------------------ | ------- | -------------- |  | ------------- | ------- | -------------- |  | ---- | ------- | - |  |  | ------- | - |  |  | --------- | -
|                                           |  | Years ended December 31,
|                                           |  |                         
|(In thousands, except per share data)      |  | First Quarter            |         | Second Quarter |  | Third Quarter |         | Fourth Quarter |  | Year
|                                           |  |                          |         |                |  |               |         |                |  |     
|2003                                       |  |                          |         |                |  |               |         |                |  |      |         |   |  |  |         |   |  |  |           |  
|Revenues                                   |  | $                        | 269,526 |                |  |               | 269,994 |                |  |      | 264,355 |   |  |  | 256,439 |   |  |  | 1,060,314 |  
|Gross profit                               |  |                          | 68,376  |                |  |               | 65,170  |                |  |      | 63,467  |   |  |  | 59,811  |   |  |  | 256,824   |  
|Operating profit                           |  |                          | 8,362   |                |  |               | 8,718   |                |  |      | 9,120   |   |  |  | 6,993   |   |  |  | 33,193    |  
|Interest income, net                       |  |                          | (374    | )              |  |               | (252    | )              |  |      | (170    | ) |  |  | (257    | ) |  |  | (1,053    | )
|Earnings from continuing operations        |  |                          | 5,460   |                |  |               | 6,103   |                |  |      | 5,973   |   |  |  | 5,010   |   |  |  | 22,546    |  
|Net earnings                               |  | $                        | 5,460   |                |  |               | 6,103   |                |  |      | 5,973   |   |  |  | 5,010   |   |  |  | 22,546    |  
|Diluted earnings per share:                |  |                          |         |                |  |               |         |                |  |      |         |   |  |  |         |   |  |  |           |  
|Continuing operations                      |  | $                        | 0.28    |                |  |               | 0.31    |                |  |      | 0.30    |   |  |  | 0.25    |   |  |  | 1.14      |  
|Net earnings                               |  | $                        | 0.28    |                |  |               | 0.31    |                |  |      | 0.30    |   |  |  | 0.25    |   |  |  | 1.14      |  
|2002                                       |  |                          |         |                |  |               |         |                |  |      |         |   |  |  |         |   |  |  |           |  
|Revenues                                   |  | $                        | 313,134 |                |  |               | 298,415 |                |  |      | 287,788 |   |  |  | 270,138 |   |  |  | 1,169,475 |  
|Gross profit                               |  |                          | 79,324  |                |  |               | 77,926  |                |  |      | 76,819  |   |  |  | 70,724  |   |  |  | 304,793   |  
|Operating (loss) profit                    |  |                          | (4,368  | )              |  |               | 2,357   |                |  |      | (1,165  | ) |  |  | 9,877   |   |  |  | 6,701     |  
|Interest (income) expense, net             |  |                          | 85      |                |  |               | 43      |                |  |      | (111    | ) |  |  | (132    | ) |  |  | (115      | )
|(Loss) earnings from continuing operations |  |                          | (2,926  | )              |  |               | 1,443   |                |  |      | (597    | ) |  |  | 6,162   |   |  |  | 4,082     |  
|Discontinued operations                    |  |                          | 468     |                |  |               | (70     | )              |  |      | 27      |   |  |  | 102     |   |  |  | 527       |  
|Cumulative effect of accounting change     |  |                          | (13,968 | )              |  |               |        |                |  |      |        |   |  |  |        |   |  |  | (13,968   | )
|Net (loss) earnings                        |  | $                        | (16,426 | )              |  |               | 1,373   |                |  |      | (570    | ) |  |  | 6,264   |   |  |  | (9,359    | )
|Diluted (loss) earnings per share:         |  |                          |         |                |  |               |         |                |  |      |         |   |  |  |         |   |  |  |           |  
|Continuing operations                      |  | $                        | (0.15   | )              |  |               | 0.07    |                |  |      | (0.03   | ) |  |  | 0.31    |   |  |  | 0.21      |  
|Discontinued operations                    |  | $                        | 0.02    |                |  |               |        |                |  |      |        |   |  |  | 0.01    |   |  |  | 0.03      |  
|Cumulative effect of accounting change     |  | $                        | (0.73   | )              |  |               |        |                |  |      |        |   |  |  |        |   |  |  | (0.71     | )
|Net (loss) earnings                        |  | $                        | (0.86   | )              |  |               | 0.07    |                |  |      | (0.03   | ) |  |  | 0.32    |   |  |  | (0.48     | )



| |  | There were $12.6 million of
pre-tax charges ($4.1 million in the first quarter and
$8.5 million
in the third quarter) in 2002 related to the Companys provision for
restructure.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

47





---



##### 



Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.

Item 9a. CONTROLS AND PROCEDURES

The Company has conducted an evaluation of the effectiveness of its disclosure
controls and procedures under the supervision of its Chief Executive Officer
and its Chief Financial Officer as of December 31, 2003. Based on this
evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that the Companys disclosure controls and procedures provide
reasonable assurance that information required to be disclosed by the Company
in reports filed under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported upon in such reports within the time periods
specified for their filing. It should be noted that the design of any system
of controls is based in part on certain assumptions about the likelihood of
future events. A control system, no matter how well designed and implemented,
can provide only reasonable, not absolute assurance, that the objectives of the
control system will be met.

There have been no significant changes in the Companys internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information related to security ownership of certain beneficial owners and
management is omitted herein as the required information will be included in a
definitive proxy statement to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A no later than 120 days after the close of
the fiscal year.

The Company has adopted a code of ethics that applies to all of the Companys
employees, including its principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing
similar functions. This code of ethics is available on the Companys website at
www.cdicorp.com or may be obtained by making a written request addressed to the
Companys Vice President of Corporate Communications. The Company intends to
disclose on its website amendments to, and, if applicable, waivers of, its code
of ethics for its principal executive officer, principal financial officer, or
principal accounting officer or controller.

Item 11. EXECUTIVE COMPENSATION

Information related to executive compensation is omitted herein as the required
information will be included in a definitive proxy statement to be filed with
the Securities and Exchange Commission pursuant to Regulation 14A no later than
120 days after the close of the fiscal year.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

Information related to security ownership of certain beneficial owners and
management is omitted herein as the required information will be included in a
definitive proxy statement to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A no later than 120 days after the close of
the fiscal year.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information related to certain relationships and related transactions is
omitted herein as the required information will be included in a definitive
proxy statement to be filed with the Securities and Exchange Commission
pursuant to Regulation 14A no later than 120 days after the close of the fiscal
year.

48



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##### 



Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information related to principal accountant fees and services is omitted herein
as the required information will be included in a definitive proxy statement to
be filed with the Securities and Exchange Commission pursuant to Regulation
14A, no later than 120 days after the close of the fiscal year.

PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) Documents filed as part of this report

Financial statements:



| |  | The consolidated balance sheets of the Registrant as of December 31, 2003
and 2002, the related consolidated statements of earnings, shareholders
equity and cash flows for each of the years ended December 31, 2003, 2002
and 2001, the footnotes thereto and the report of KPMG LLP, independent
auditors, are filed herewith.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Financial statement schedule:



| |  | Schedule II - Valuation and Qualifying Accounts for the years ended
December 31, 2003, 2002 and 2001.
| |  | -----------------------------------------------------------------------------------------------------

(b)  Registrant filed reports on Form 8-K and Form 8-K/A during the quarter
ended December 31, 2003. Both reports
were       filed under Item 12, Results
of Operations.

|             |  |                                                                                                                                                                                                                                                                                                                
|------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) Exhibits |  |                                                                                                                                                                                                                                                                                                                
|             |  |                                                                                                                                                                                                                                                                                                                
|3.a          |  | Articles of incorporation of the Registrant, incorporated herein by
reference to the Registrants report on Form 10-Q for the quarter
ended June 30, 2002 (File No. 1-5519).                                                                                                                                   
|             |  |                                                                                                                                                                                                                                                                                                                
|3.b          |  | Bylaws of the Registrant, incorporated herein by reference to the
Registrants report on Form 10-Q for the quarter ended June 30, 2002
(File No. 1-5519).                                                                                                                                                      
|             |  |                                                                                                                                                                                                                                                                                                                
|10.a         |  | CDI Corp. Non-Qualified Stock Option and Stock Appreciation Rights
Plan, incorporated herein by reference to the Registrants report on
Form 10-Q for the quarter ended March 31, 2003 (File No. 1-5519).
(Constitutes a management contract or compensatory plan or
arrangement.)                             
|             |  |                                                                                                                                                                                                                                                                                                                
|10.b         |  | Amended and Restated CDI Corp. 1998 Non-Qualified Stock Option Plan,
incorporated herein by reference to the Registrants report on Form
10-Q for the quarter ended March 31, 2003 (File No. 1-5519).
(Constitutes a management contract or compensatory plan or
arrangement)                                  
|             |  |                                                                                                                                                                                                                                                                                                                
|10.c         |  | Amended and Restated CDI Corp. Stock Purchase Plan for Management
Employees and Non-Employee Directors, incorporated herein by
reference to the Registrants report on Form 10-Q for the quarter
ended June 30, 2000 (File No. 1-5519). (Constitutes a management
contract or compensatory plan or arrangement)
|             |  |                                                                                                                                                                                                                                                                                                                
|10.d         |  | Executive Severance Arrangement Approved by the CDI Corp.
Compensation Committee on September 10, 2002, incorporated by
reference to the Registrants report on Form 10-Q for the quarter
ended September 30, 2002 (File No. 1-5519). (Constitutes a
management contract or compensatory plan or arrangement)  
|             |  |                                                                                                                                                                                                                                                                                                                
|10.e         |  | Supplemental Pension Agreement dated April 11, 1978 between CDI
Corporation and Walter R. Garrison, incorporated herein by reference
to the Registrants report on Form                                                                                                                                        

49



---



##### 



|     |  |                                                                                                                                                                                                                                                                                                                                                 
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |  | 10-Q for the quarter ended March
31, 2003 (File No. 1-5519). (Constitutes a management contract or
compensatory plan or arrangement)                                                                                                                                                                                                            
|     |  |                                                                                                                                                                                                                                                                                                                                                 
|10.f |  | Consulting Agreement dated as of April 7, 1997 by and between
Registrant and Walter R. Garrison, incorporated herein by reference
to Registrants report on Form 10-Q for the quarter ended June 30,
1997 (File No. 1-5519). (Constitutes a management contract or
compensatory plan or arrangement)                                            
|     |  |                                                                                                                                                                                                                                                                                                                                                 
|10.g |  | Amendment dated as of April 12, 2000 to Consulting Agreement dated
as of April 7, 1997 by and between Registrant and Walter R.
Garrison, incorporated herein by reference to the Registrants
report on Form 10-Q for the quarter ended June 30, 2000 (File No.
1-5519). (Constitutes a management contract or compensatory plan or
arrangement)
|     |  |                                                                                                                                                                                                                                                                                                                                                 
|10.h |  | Employment Agreement dated October 1, 2001, between Registrant and
Roger H. Ballou, incorporated by reference to the Registrants
report on Form 10-K for the year ended December 31, 2001. (File No.
1-5519). (Constitutes a management contract or compensatory plan or
arrangement)                                                          
|     |  |                                                                                                                                                                                                                                                                                                                                                 
|10.i |  | Non-Qualified Stock Option Agreement dated October 14, 2002 between
Registrant and Jay G. Stuart, incorporated herein by reference to
the Registrants report on Form 10-Q for the quarter ended March 31,
2003 (File No. 1-5519). (Constitutes a management contract or
compensatory plan or agreement)                                        
|     |  |                                                                                                                                                                                                                                                                                                                                                 
|10.j |  | Restricted Stock Agreement dated October 14, 2002 between Registrant
and Jay G. Stuart, incorporated herein by reference to the
Registrants report on Form 10-Q for the quarter ended March 31,
2003 (File No. 1-5519). (Constitutes a management contract or
compensatory plan or agreement)                                                  
|     |  |                                                                                                                                                                                                                                                                                                                                                 
|10.k |  | Restricted Stock Agreement dated as of October 25, 1999 between
Registrant and Gregory L. Cowan, incorporated herein by reference to
the Registrants report on Form 10-K for the year ended December 31,
1999 (File No. 1-5519). (Constitutes a management contract or
compensatory plan or arrangement)                                       
|     |  |                                                                                                                                                                                                                                                                                                                                                 
|10.l |  | Agreement Regarding Severance between Registrant and Gregory L.
Cowan effective November 15, 2002, incorporated herein by reference
to the Registrants report on Form 10-Q for the quarter ended March
31, 2003 (File No. 1-5519). (Constitutes a management contract or
compensatory plan or arrangement)                                     
|     |  |                                                                                                                                                                                                                                                                                                                                                 
|10.m |  | Amendment to Agreement Regarding Severance with Gregory L. Cowan,
executed as of July 23, 2003, incorporated herein by reference to
the Registrants report on Form 10-Q for the quarter ended September
30, 2003 (File No. 1-5519). (Constitutes a management contract or
compensatory plan or arrangement)                                    
|     |  |                                                                                                                                                                                                                                                                                                                                                 
|21.  |  | List of Subsidiaries of the Registrant                                                                                                                                                                                                                                                                                                          
|     |  |                                                                                                                                                                                                                                                                                                                                                 
|23.  |  | Consent of Independent Certified Public Accountants                                                                                                                                                                                                                                                                                             
|     |  |                                                                                                                                                                                                                                                                                                                                                 
|31.a |  | Certification of Chief Executive Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                             
|     |  |                                                                                                                                                                                                                                                                                                                                                 
|31.b |  | Certification of Chief Financial Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                             
|     |  |                                                                                                                                                                                                                                                                                                                                                 
|32.  |  | Certification of Chief Executive Officer and Chief Financial
Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                 

50



---



##### 



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.

CDI Corp.

By: /s/ Roger H. Ballou
President and Chief Executive Officer
Date: March 12, 2004

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

By: /s/ Roger H. Ballou
Roger H. Ballou
President, Chief Executive Officer
and Director
(Principal Executive Officer)

Date:
March 12, 2004

By: /s/ Jay G. Stuart
Jay G. Stuart
Executive Vice President
and Chief Financial Officer
(Principal Financial and Accounting Officer)

Date: March 12, 2004

By: /s/ Walter E. Blankley
Walter E. Blankley
Director

Date:
March 9, 2004

By: /s/ Michael J. Emmi
Michael J. Emmi
Director

51



---



##### 



Date:
March 9, 2004

By: /s/ Walter R. Garrison
Walter R. Garrison
Director

Date: March 9, 2004

By: /s/ Kay Hahn Harrell
Kay Hahn Harrell
Director

Date: March 9, 2004

By: /s/ Lawrence C. Karlson
Lawrence C. Karlson
Director

Date: March 9, 2004

By: /s/ Ronald J. Kozich
Ronald J. Kozich
Director

Date:
March 9, 2004

By: /s/ Alan B. Miller
Alan B. Miller
Director

Date:
March 9, 2004

By: /s/ Barton J. Winokur
Barton J. Winokur
Director

Date: March 9, 2004

52



---



##### 



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

CDI CORP.

EXHIBITS

to

Annual Report

FORM 10-K

Year ended December 31, 2003

Under

SECURITIES EXCHANGE ACT OF 1934

53



---



##### 



INDEX TO EXHIBITS

|       |  |                                                                                                                                                                                                                                                                                                                                                 |  |      |  | 
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | 
|Number |  | Exhibit                                                                                                                                                                                                                                                                                                                                         |  | Page
|       |  |                                                                                                                                                                                                                                                                                                                                                 |  |     
|3.a    |  | Articles of incorporation of the Registrant, incorporated
herein by reference to the Registrants report on Form
10-Q for the quarter ended June 30, 2002 (File No.
1-5519).                                                                                                                                                                   
|       |  |                                                                                                                                                                                                                                                                                                                                                
|3.b    |  | Bylaws of the Registrant, incorporated herein by reference
to the Registrants report on Form 10-Q for the quarter
ended June 30, 2002 (File No. 1-5519).                                                                                                                                                                                      
|       |  |                                                                                                                                                                                                                                                                                                                                                
|10.a   |  | CDI Corp. Non-Qualified Stock Option and Stock
Appreciation Rights Plan, incorporated herein by reference
to the Registrants report on Form 10-Q for the quarter
ended March 31, 2003 (File No. 1-5519). (Constitutes a
management contract or compensatory plan or arrangement.)                                                             
|       |  |                                                                                                                                                                                                                                                                                                                                                
|10.b   |  | Amended and Restated CDI Corp. 1998 Non-Qualified Stock
Option Plan, incorporated herein by reference to the
Registrants report on Form 10-Q for the quarter ended
March 31, 2003 (File No. 1-5519). (Constitutes a
management contract or compensatory plan or arrangement)                                                                  
|       |  |                                                                                                                                                                                                                                                                                                                                                
|10.c   |  | Amended and Restated CDI Corp. Stock Purchase Plan for
Management Employees and Non-Employee Directors,
incorporated herein by reference to the Registrants
report on Form 10-Q for the quarter ended June 30, 2000
(File No. 1-5519). (Constitutes a management contract or
compensatory plan or arrangement)                                
|       |  |                                                                                                                                                                                                                                                                                                                                                
|10.d   |  | Executive Severance Arrangement Approved by the CDI Corp.
Compensation Committee on September 10, 2002, incorporated
by reference to the Registrants report on Form 10-Q for
the quarter ended September 30, 2002 (File No. 1-5519).
(Constitutes a management contract or compensatory plan or
arrangement)                                  
|       |  |                                                                                                                                                                                                                                                                                                                                                
|10.e   |  | Supplemental Pension Agreement dated April 11, 1978
between CDI Corporation and Walter R. Garrison,
incorporated herein by reference to the Registrants
report on Form 10-Q for the quarter ended March 31, 2003
(File No. 1-5519). (Constitutes a management contract or
compensatory plan or arrangement)                                   
|       |  |                                                                                                                                                                                                                                                                                                                                                
|10.f   |  | Consulting Agreement dated as of April 7, 1997 by and
between Registrant and Walter R. Garrison, incorporated
herein by reference to Registrants report on Form 10-Q
for the quarter ended June 30, 1997 (File No. 1-5519).
(Constitutes a management contract or compensatory plan or
arrangement)                                           
|       |  |                                                                                                                                                                                                                                                                                                                                                
|10.g   |  | Amendment dated as of April 12, 2000 to Consulting
Agreement dated as of April 7, 1997 by and between
Registrant and Walter R. Garrison, incorporated herein by
reference to the Registrants report on Form 10-Q for the
quarter ended June 30, 2000 (File No. 1-5519).(Constitutes
a management contract or compensatory plan or arrangement)
|       |  |                                                                                                                                                                                                                                                                                                                                                
|10.h   |  | Employment Agreement dated October 1, 2001, between
Registrant and Roger H. Ballou, incorporated by reference
to the Registrants report on Form 10-K for the year ended
December 31, 2001. (File No. 1-5519). (Constitutes a
management contract or compensatory plan or arrangement)                                                         

54



---



##### 



|       |  |                                                                                                                                                                                                                                                                                                              |  |      |  | 
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- |  | 
|Number |  | Exhibit                                                                                                                                                                                                                                                                                                      |  | Page
|       |  |                                                                                                                                                                                                                                                                                                              |  |     
|10.i   |  | Non-Qualified Stock Option Agreement dated October 14, 2002 between
Registrant and Jay G. Stuart, incorporated herein by reference to
the Registrants report on Form 10-Q for the quarter ended March 31,
2003 (File No. 1-5519). (Constitutes a management contract or
compensatory plan or agreement)    
|       |  |                                                                                                                                                                                                                                                                                                             
|10.j   |  | Restricted Stock Agreement dated October 14, 2002 between Registrant
and Jay G. Stuart, incorporated herein by reference to the
Registrants report on Form 10-Q for the quarter ended March 31,
2003 (File No. 1-5519). (Constitutes a management contract or
compensatory plan or agreement)              
|       |  |                                                                                                                                                                                                                                                                                                             
|10.k   |  | Restricted Stock Agreement dated as of October 25, 1999 between
Registrant and Gregory L. Cowan, incorporated herein by reference to
the Registrants report on Form 10-K for the year ended December 31,
1999 (File No. 1-5519). (Constitutes a management contract or
compensatory plan or arrangement)   
|       |  |                                                                                                                                                                                                                                                                                                             
|10.l   |  | Agreement Regarding Severance between Registrant and Gregory L.
Cowan effective November 15, 2002, incorporated herein by reference
to the Registrants report on Form 10-Q for the quarter ended March
31, 2003 (File No. 1-5519). (Constitutes a management contract or
compensatory plan or arrangement) 
|       |  |                                                                                                                                                                                                                                                                                                             
|10.m   |  | Amendment to Agreement Regarding Severance with Gregory L. Cowan,
executed as of July 23, 2003, incorporated herein by reference to
the Registrants report on Form 10-Q for the quarter ended September
30, 2003 (File No. 1-5519). (Constitutes a management contract or
compensatory plan or arrangement)
|       |  |                                                                                                                                                                                                                                                                                                             
|21.    |  | List of Subsidiaries of the Registrant                                                                                                                                                                                                                                                                      
|       |  |                                                                                                                                                                                                                                                                                                             
|23.    |  | Consent of Independent Certified Public Accountants                                                                                                                                                                                                                                                         
|       |  |                                                                                                                                                                                                                                                                                                             
|31.a   |  | Certification of Chief Executive Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                         
|       |  |                                                                                                                                                                                                                                                                                                             
|31.b   |  | Certification of Chief Financial Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                         
|       |  |                                                                                                                                                                                                                                                                                                             
|32.    |  | Certification of Chief Executive Officer and Chief Financial
Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                             

55



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##### 



Schedule II



CDI CORP. AND SUBSIDIARIES
Valuation and Qualifying Accounts
(Allowance for Uncollectible Receivables)




Years ended December 31, 2003, 2002 and 2001


| |                   |            |   |            |  |                  |   |           |  |  |   |           |  |  |   |           | 
| | ----------------- | ---------- | - | ---------- |  | ---------------- | - | --------- |  |  | - | --------- |  |  | - | --------- | 
| |                   |            |   |            |  | Uncollectible    |   |          
| |                   | Balance at |   | Additions  |  | receivables      |   | Balance  
| |                   | beginning  |   | charged to |  | written off, net |   | at end   
| |                   | of year    |   | earnings   |  | of recoveries    |   | of year  
| |                   |            |   |            |  |                  |   |          
| |                   |           
| | December 31, 2003 |            | $ | 7,683,000  |  |                  | $ | 1,843,000 |  |  | $ | 4,030,000 |  |  | $ | 5,496,000 | 
| | December 31, 2002 |            |   | 8,162,000  |  |                  |   | 3,246,000 |  |  |   | 3,725,000 |  |  |   | 7,683,000 | 
| | December 31, 2001 |            |   | 3,480,000  |  |                  |   | 9,436,000 |  |  |   | 4,754,000 |  |  |   | 8,162,000 |