<PAGE>
 
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                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                               ---------------
                                   FORM 10-K
 
             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
 
                 FOR THE FISCAL YEAR ENDED: DECEMBER 26, 1998
 
                        Commission file number 0-28192
 
                          Renaissance Worldwide, Inc.
            (Exact Name of Registrant as Specified in its Charter)
 
                                 Massachusetts
                         (State or other jurisdiction
                       of incorporation or organization)
 
                                  04-2920563
                               (I.R.S. Employer
                              Identification No.)
 
                               189 Wells Avenue
                          Newton, Massachusetts 02459
                                (617) 527-6886
   (Address, including ZIP Code, and Telephone Number, including Area Code,
                 of Registrant's Principal Executive Offices)
 
          Securities Registered Pursuant to Section 12(b) of the Act:
                                     None
 
          Securities Registered Pursuant to Section 12(g) of the Act:
                          Common Stock, No Par Value
                             (Title of each class)
 
                            NASDAQ NATIONAL MARKET
                  (Name of each exchange on which registered)
 
  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
[X] YES [_] NO
 
  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to
the best of the 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. [_]
 
  Based on the closing sales price of the registrant's Common Stock on the
Nasdaq National Market on March 25, 1999, the aggregate market value of the
Common Stock held by non-affiliates of the registrant was approximately
$183,215,000.
 
  The number of shares of the registrant's Common Stock outstanding on March
25, 1999 was 56,236,319.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
 PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT FOR USE IN CONNECTION
    WITH ITS ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 27, 1999 ARE
                   INCORPORATED BY REFERENCE INTO PART III.
 
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<PAGE>
 
                                    PART I
 
ITEM 1: BUSINESS
 
Forward-Looking Statements
 
  This Annual Report on Form 10-K contains forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," and
similar expressions are intended to identify forward-looking statements. The
important factors discussed in Item 7--"Management's Discussion and Analysis
of Financial Condition and Results of Operations" under the caption "Factors
That May Affect Future Results" among others, could cause actual results to
differ materially from those indicated by forward-looking statements made
herein and presented elsewhere by management from time to time.
 
Overview
 
  Renaissance Worldwide, Inc. ("Renaissance" or the "Company") is a global
provider of business and technology consulting services in the areas of
business strategy, enterprise solutions, government solutions, and IT
consulting services. The Company has rapidly evolved since its initial public
offering in June 1996, primarily through strategic acquisitions. In connection
with this rapid growth and evolution, in January 1998 the Company changed its
name from The Registry, Inc. to Renaissance Worldwide, Inc. to reflect its
broader scope of services, and its increasing international presence.
 
  From June 1996 through December 1998, the Company acquired twenty-three
companies. During fiscal 1998, the Company restructured its operations into
four redefined business units to better align these acquisitions. Additional
senior management was appointed to operate these units and the back office
support operations were reorganized to better meet individual business unit
needs. The four business units currently operating are Business Strategy
Group, Enterprise Solutions Group, Government Solutions Group and Information
Technology Consulting Services Group.
 
The Company
 
  Renaissance provides business and technology consulting services primarily
to Global 2000 companies and to a lesser extent other businesses around the
world. The Company maintains offices in North America, Europe, and the Asia-
Pacific region.
 
 Business Strategy Group
 
  The Business Strategy Group ("BSG") provides strategy development and
implementation consulting services to large organizations primarily in the
global telecommunications, computing, and energy industries. The group offers
services in three principal categories: strategic destination, strategic
navigation and strategic mobilization consulting.
 
 Enterprise Solutions Group
 
  The Enterprise Solutions Group ("ES") provides business and technology
solutions designed to integrate leading edge processes and technologies. In
1998 the Company added to the Enterprise Solutions Group through the
acquisitions of Neoglyphics Media, Inc. in Chicago, Exad Galons in France, and
Hackenberg & Partner in Germany. The Enterprise Solutions Group's principal
offerings fall into five categories: enterprise performance management;
enterprise applications; E-Business; technology integration; and outsourced
enterprise systems.
 
 Government Solutions Group
 
  The Government Solutions Group ("GOVT") provides technology solutions to the
public sector, primarily in the areas of strategy, systems integration and
electronic solutions. In June 1998, the Company acquired
 
                                       1
<PAGE>
 
International Public Access Technologies ("IPAT") which added significant
resources and competencies to the Government Solutions Group. Technology
solution competencies are focused around Public Assistance, Child Support
Enforcement, Child Welfare, Managed Care, Employment and Training,
Administration, Tax and Revenue Processing, and Courts and Judicial Systems
Automation.
 
 Information Technology Consulting Services Group
 
  The Information Technology Consulting Services Group ("ITCS") provides
services designed to assist clients in design, implementation and/or support
of IT applications. The ITCS was expanded in 1998 through the acquisition of
Triad Data, Inc. in April. ITCS focuses principally on 3 service areas: IT
staffing and project management; network systems strategy, planning and
infrastructure design and support; and IT Transformation, including strategy,
planning and architecture, as well as Y2K oriented initiatives. ITCS services
are built around five technology sectors: workgroup/desktop; legacy systems;
network and communications; database design and development; and Internet/www.
 
Business Strategy Group
 
  The Business Strategy Group provides strategy development and implementation
consulting services to large organizations primarily in the global
telecommunications, computing and energy industries. During the twelve months
ending December 26, 1998, the BSG accounted for approximately 8% of the
Company's revenue.
 
 Service Offerings
 
  The BSG's emphasis is helping clients reshape their enterprise and the
industries in which they compete. The Group offers three classes of services:
 
  . Strategic Destination.  Strategic destination consulting services are
    designed to formulate competitive, market, customer, and product
    strategies for the client. The BSG's capabilities include determining the
    future dynamics of a client's industry and the transformation required in
    the client's business, economic, and organizational models to succeed as
    the industry evolves. BSG also helps clients identify and exploit growth
    opportunities and enhance performance through competitive benchmarking.
 
  . Strategic Navigation. Strategic navigation consulting services are
    designed to help clients navigate to new strategic destinations. The key
    service offering is the Renaissance Balanced Scorecard.TM This is a
    defined methodology designed to align the client's strategy with its
    organization, leverage enterprise knowledge, connect people and processes
    for rapid strategy implementation, and allow continuous organizational
    learning.
 
  . Strategic Mobilization. Strategic mobilization consulting services are
    designed to enhance client competitiveness by harnessing individual and
    enterprise knowledge about processes, products, and customers. Through
    performance modeling around the behavior of high performers, BSG helps
    clients reengineer their processes to translate strategy into action.
 
Enterprise Solutions Group
 
  The Enterprise Solutions Group includes the services and operations of The
Hunter Group, Inc., Neoglyphics Media, Inc., and other solutions services
developed under the Renaissance brand. During the twelve month period ending
December 26, 1998, The ES accounted for approximately 21% of the Company's
revenue.
 
                                       2
<PAGE>
 
 Service Offerings
 
  ES provides business and technology solutions that integrate leading edge
processes and technologies. Its principal offerings fall into five categories:
enterprise performance management; enterprise applications; E-Business;
technology integration; and outsourced enterprise systems.
 
  . Enterprise Performance Management: ES provides focused expertise designed
    to enhance enterprise performance in four key ways: align and implement
    strategies; innovate business processes; deploy key technologies; and
    mobilize people. Services include Business Transformation, the
    Renaissance Balanced ScorecardTM, Knowledge Management, and IT
    Strategies. Each emphasizes the effective integration of strategy,
    technology, knowledge, and people as essential to the clients' success.
 
  . Enterprise Applications. These services include planning, selecting,
    implementing, supporting and managing our clients' front-office and back-
    office environments. ES provides comprehensive implementation services
    for complex software packages, including back office systems for human
    resources, financials, manufacturing and supply chain; front-office
    systems for customer management, sales, marketing and call centers; and
    student administration systems for higher education institutions.
 
  . E-Business. ES provides strategic Internet services for clients,
    including Internet/Intranet development, custom application development,
    web-enabling legacy systems, and web-site interface design. ES focuses on
    E-Business strategy and implementation, E-Marketing, and enterprise self
    services systems.
 
  . Technology Integration. ES links disparate enterprise application systems
    thereby providing an integrated information flow and data warehouse to
    support enterprise performance goals. ES technology specialists support
    the system's life cycle with consulting services that span strategy,
    architecture and design, implementation and post-implementation
    activities.
 
  . Outsourced Enterprise Systems. ES provides a comprehensive set of
    services designed to support client enterprise systems. These services
    include help desk and application support, software upgrades and
    modifications, and IT infrastructure outsourcing. These services are
    designed to enable clients to maintain IT operations that keep pace with
    rapid technological change.
 
Government Solutions Group
 
  The Government Solutions Group provides specialized management and IT
consulting services to federal, state and municipal government clients. During
the twelve month period ending December 26, 1998, The GOVT group accounted for
3% of the Company's revenue.
 
 Service Offerings
 
  Renaissance GOVT professionals address the requirements particular to the
public sector with management and technology consulting and systems
integration and electronic solutions in the following areas:
 
 Core Competencies:
 
  . Public Assistance (TANF, Welfare Reform, Medicaid, Child Care)
 
  . Child Support Enforcement
 
  . Child Welfare
 
  . Managed Care (Health Care)
 
  . Employment and Training (Labor)
 
  . Administration (Payroll, HR, Retirement)
 
  . Tax and Revenue Processing
 
  . Courts and Judicial Systems Automation
 
                                       3
<PAGE>
 
IT Consulting Services Group
 
  The ITCS provides consulting services to assist clients in the design,
implementation, and support of IT applications. During the fiscal year ended
December 26, 1998, the ITCS group accounted for approximately 68% of the
Company's revenue.
 
 Service Offerings
 
  . IT Staffing and Project Management. The ITCS provides IT supplemental
    staffing and project management services on a contract basis for
    application development and software engineering. The ITCS technology
    professionals, billed primarily on an hourly basis, typically work on
    implementation, integration and development engagements lasting from six
    to twelve months under the direction of the client.
 
  . Network Solutions. The network solutions area provides a range of full
    life cycle services including Infrastructure Readiness, Implementation,
    and Management and Operations. Infrastructure Readiness services are
    designed to ensure that a client's network and systems infrastructures
    are capable of supporting their key business initiatives. Implementation
    services provide clients with project teams of certified implementation
    resources and project managers to help compress implementation time
    frames and improve the quality of key infrastructure project
    deliverables. Management and Operations services provide clients with the
    tools and resources to improve and manage their existing network and
    systems infrastructures.
 
  . IT Transformation. These services include: IT Strategy and Management; IT
    Architecture, including outsourcing analyses and architecture and
    migration strategies; Year 2000 Strategy and Implementation, focused on
    obtaining year 2000 compliance and certification; and Program Management,
    designed to promote on-time, on-budget project delivery.
 
  See Note 18 to the Company's Consolidated Financial Statements for further
information about these business units and geographic regions.
 
Competition
 
  The market for the Company's consulting services is intensely competitive on
local, national, and international levels. The market is fragmented and
subject to rapid change. The market is served by numerous management
consulting companies, technology consultants, temporary personnel agencies and
outsourcing companies, solutions providers, implementers, systems integrators,
diversified technology companies (including hardware and software companies),
and other service companies, many of which have greater financial, technical,
marketing, and other resources and have greater name recognition than the
Company. Some of these competitors have a nationwide and/or worldwide presence
equivalent to, or greater than, that of the Company. Within any given market,
the Company and its competitors frequently compete for the same highly-skilled
consultants.
 
  The Enterprise Solutions and Government Solutions Groups and the IT
Consulting Services Group compete for IT professionals. IT professionals,
including those who are currently on assignment with the Company, often seek
engagements from more than one company. Primary competitive factors for
recruiting and retaining such professionals include: compensation, including
timeliness of payment; availability of benefits; consistent flow of high
quality, varied assignments; schedule flexibility; and an understanding of
consultant skills and work preferences. The Business Strategy, Enterprise
Solutions and Government Solutions Groups compete for management consultants.
Management consultants, who often hold advanced degrees, are in high demand
across many business sectors. Primary competitive factors for recruiting and
retaining such professionals include: compensation; quality of benefits;
quality, variety and complexity of assignments; opportunity for advancement;
and opportunity for professional development.
 
  The Company competes for clients with a wide array of service providers. The
Company considers large organizations with complex business and technology
needs to be among its prime clients. Within a given market,
 
                                       4
<PAGE>
 
there are a limited number of such potential clients, some of which have
designated only certain companies as approved providers of the type of
services provided by Renaissance. Primary competitive factors for obtaining
and retaining clients include: comprehensive service offerings; careful
matching of consultant skills with the client's requirements; nationwide and
worldwide presence; organizational expertise and expertise of individual
consultants; price of services; monitoring of client satisfaction during and
after an engagement; and general responsiveness to client needs.
 
  Although the Company believes that it competes favorably in recruiting IT
professionals and management consultants as well as in obtaining clients,
there is no assurance that it will continue to be successful in doing so.
 
Growth Strategy
 
  The Company believes that a balance of internal growth and selective
acquisitions will best position Renaissance to capitalize on opportunities in
the integrated consulting services marketplace. In view of the number of
acquisitions completed in the last two years, the Company is currently focused
on further developing and integrating those acquisitions. The Company's growth
strategy consists of the following primary components:
 
  . Focus on Profitability. Renaissance management understands that growth is
    not enough to enhance shareholder value. To increase shareholder value,
    growth must be managed and controlled to ensure that the growth is
    profitable. In the second half of 1998 the Company realigned its
    organization to address this specific issue through four predominant
    initiatives: incorporation of operational groups (HR, Accounting,
    Marketing, etc.) within business units to assure accountability; an
    expense level discipline program; major vendor contract re-negotiation to
    more fully realize benefits of scale; and tighter utilization management.
    The 1999 PeopleSoft roll-out is anticipated to provide the Company with
    vital real-time visibility into financial results.
 
  . Expand Solutions Business and Increase Scalability. Renaissance
    management believes that opportunity exists in the Solutions Groups'
    markets. The Company continues to develop a broad range of services
    intended to offer considerable value to clients.
 
  . Leverage Existing Relationships. Renaissance management believes that the
    combined organization offers a unique value proposition to clients.
    Through firmly established existing client relationships, the Company
    believes it can increase market share by offering the expanded array of
    client services to clients already familiar with the organization.
 
  . Aggressively Build Sales and Marketing Capabilities. Through an expanded,
    dedicated sales force and strategic partnerships with technology industry
    leaders, management expects to aggressively build market share in the
    solutions business and throughout the Company.
 
  . Support, Develop and Continue to Offer Increasing Opportunity to
    Professional Staff. Management believes that Renaissance has assembled a
    world-class professional staff. A strategic part of growing the
    organization is the retention of best-in-class individuals and the
    advancement of leadership at all levels. The expanded organization and
    history of continued rapid growth have provided professional staff with
    an array of opportunities and challenges. Management believes that this
    trend will continue to enhance the Company's efforts to attract and
    retain top professional talent.
 
  . Offer Additional Services to Existing Client Base through Current Sales
    Structure. Renaissance intends to continue its practice of developing
    complementary services. Some of the key initiatives in this area include
    further development of E-business offerings, expansion of Business
    Strategy group's industry expertise in the areas of financial services
    and chemicals, and expansion of international recruiting capabilities.
 
Client Base
 
  Renaissance focuses its sales efforts primarily on large organizations with
complex business and technology needs. In the year ended December 26, 1998,
approximately 18% of the Company's revenue was derived from its top 10
customers, none of which accounted for more than 10% of revenue. The primary
industries served by Renaissance are communications, financial services,
computing, manufacturing and the public sector.
 
                                       5
<PAGE>
 
Employees
 
  As of December 26, 1998, Renaissance had approximately 6,000 employees,
consisting of 2,900 salaried consultants, 2,000 hourly consultants and 1,100
branch, corporate and administrative staff. In addition, the Company had
approximately 500 consultants working on an independent contractor basis as of
such date. Renaissance is not a party to any collective bargaining agreements
and considers its relationships with its employees to be satisfactory.
 
Executive Officers of the Registrant
 
  The executive officers of Renaissance are as follows:
 
<TABLE>
<CAPTION>
          Name            Age                      Position
          ----            ---                      --------
<S>                       <C> <C>
G. Drew Conway...........  41 President, Chief Executive Officer and Director
Richard L. Bugley........  55 Vice President, General Counsel and Clerk
Mark W. Biscoe...........  38 Co-President, IT Consulting Services Group
Christopher B. Egizi.....  42 Co-President, IT Consulting Services Group
Mark R. Bruneau..........  37 President, Business Strategy Group
Terry L. Hunter..........  51 President, Enterprise Solutions Group and Director
Bradford S. Everett......  48 President, Enterprise Applications
Gene A. DeLucia..........  47 President, Government Solutions Group
</TABLE>
 
  Mr. Conway is the founder of Renaissance, and has served as President, Chief
Executive Officer and Director of the Company since its incorporation in May
1986 and as Treasurer from such date until March 1996.
 
  Mr. Bugley has served as General Counsel of Renaissance since May 1996 and
as Vice President since December 1997. From September 1993 until May 1996 he
was General Counsel and Secretary of Banyan Systems, Inc., a manufacturer and
supplier of network operating systems and services. From September 1992 until
May 1993 he was Vice President and General Counsel of Loyalty Management
Group, Inc., a consumer marketing company. Mr. Bugley has been a member of the
Massachusetts Bar since 1979.
 
  Mr. Biscoe has served as Co-President, IT Consulting Service Group, since
October 1998, Vice President, Northeast Region, since July 1996, and Vice
President, New England, from November 1995 to July 1996. Mr. Biscoe joined the
Company in March 1992 and has served as Branch Manager of the Newton office
and Manager of the national resource delivery team division of the ITCS Group.
From 1990 until 1992, Mr. Biscoe served as Branch Manager of Triple T, Inc., a
technical staffing company.
 
  Mr. Egizi has served as Co-President, IT Consulting Services Group, since
October 1998, and Vice President, Midwest Region, since January 1994. Mr.
Egizi was a founding staff member of the Company in 1986 and has served as
Vice President, Strategic Corporate Services, Branch Manager of the Newton
office and Manager of the national resource delivery team division of the ITCS
Group.
 
  Mr. Hunter has served as President of the Enterprise Solutions Group since
the acquisition of The Hunter Group, Inc. in November of 1997. Mr. Hunter
served as President, Chief Executive Officer and a Director of The Hunter
Group, Inc. since its formation in 1983. Prior to founding The Hunter Group,
Inc., Mr. Hunter consulted with various companies and software vendors on the
design and development of human resources systems.
 
  Mr. Bruneau has served as President of the Business Strategy Group since
October 1998. Prior to October, Mr. Bruneau served as head of the Global
Communication and Computing Sector of the Strategy Group. Prior to founding
the COBA-Boston subsidiary in 1991, Mr. Bruneau was with Mercer Management
Consulting, focusing on industry analysis and competitive strategy development
in the computer and telecommunications industries. Before joining Mercer, he
was assistant to the President at Bell Canada International, Inc.
 
                                       6
<PAGE>
 
  Mr. Everett has served as President of Enterprise Applications since January
1999 and Senior VP and COO for The Hunter Group from 1996 to 1998. He joined
The Hunter Group as Vice President for the Western Region and Asia Pacific in
1995. Mr. Everett brings over 24 years of organizational and project
management experience to Renaissance in addition to an extensive systems
implementation track record. From 1990 to 1995 Mr. Everett served as Vice
President of Professional Services for Walker Interactive Systems and from
1988 to 1990 as Senior Manager for Price Waterhouse LLP.
 
  Mr. DeLucia has served as President and Managing Partner of the Government
Solutions Group since 1996. Prior to joining Renaissance, Mr. DeLucia was
President of Strategic Visions, Inc. from 1996 to 1998, and President of the
Information Technology Division for Maximus, Inc. from 1987 to 1996.
 
  Each officer serves at the discretion of the Board of Directors. There are
no family relationships among any of the directors and executive officers of
Renaissance.
 
ITEM 2. PROPERTIES
 
  Renaissance's principal executive offices are located in Newton,
Massachusetts, in approximately 30,000 square feet of leased office space,
under leases that expire on September 30, 2010, from the 189 Wells Avenue
Realty Trust (the "Realty Trust"), of which G. Drew Conway is the sole
beneficiary and an officer of the Company is the sole trustee. See Note 5 to
Item 6, "Selected Consolidated Financial Data," and Note 16 to Consolidated
Financial Statements. Additional executive office space is located in
approximately 40,000 square feet of leased space in Lincoln, Massachusetts.
Renaissance occupies these premises under a lease expiring in August 1999.
 
  In June 1998, the Company entered into a ten year agreement to lease 200,000
square feet in Waltham, Massachusetts in a building currently under
construction, which is to be the site of the Company's new headquarters. The
Company expects to consolidate six offices located around Massachusetts
(including the Lincoln and Newton locations) into this new location and to
sublet approximately 45,000 square feet of this space. The construction is
scheduled for completion in September of 1999.
 
  In August 1998, the Company entered into a twenty year agreement to lease
30,000 square feet in London, England to consolidate multiple branch locations
operating in the city.
 
  The Company also maintains offices and leases office space in the various
locations throughout the world in which it maintains branch offices.
Renaissance believes that its facilities are adequate for its current
operations, but there can be no assurance that the Company will be able to
lease space on acceptable terms to accommodate future growth.
 
ITEM 3. LEGAL PROCEEDINGS
 
  From time to time, Renaissance is involved in litigation relating to claims
arising out of its operations in the normal course of business. The Company is
not currently involved in any legal proceedings the resolution of which, in
management's opinion, would have a material adverse effect on the Company's
business, financial condition or results of operations.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
  None.
 
                                       7
<PAGE>
 
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
  The Company's common stock is traded on the Nasdaq National Market under the
symbol "REGI". The following table sets forth the high and low sales prices of
The Company's common stock for the periods indicated:
 
<TABLE>
<CAPTION>
              Quarter                  High     Low
              -------                 ------- -------
<S>                                   <C>     <C>
Fiscal 1997
  First Quarter.....................  $17.125 $ 12.25
  Second Quarter....................  $26.625 $ 17.25
  Third Quarter.....................  $24.875 $ 17.75
  Fourth Quarter....................  $ 28.50 $17.375
Transition Period Ended December 27,
 1997
  First Quarter.....................  $ 27.00 $19.563
  Second Quarter....................  $ 24.75 $18.875
Fiscal 1998
  First Quarter.......................$ 31.75 $ 20.75
  Second Quarter....................  $ 28.94 $ 16.75
  Third Quarter.....................  $ 23.06 $  8.56
  Fourth Quarter....................  $ 15.06 $  5.38
</TABLE>
 
  The stock prices shown above have been adjusted to reflect the two-for-one
stock split effected as a stock dividend that was paid on March 24, 1998.
 
Holders of Record
 
  On March 25, 1999 there were approximately 125 holders of record of
Renaissance's common stock.
 
Dividends
 
  America's Registry, Inc., a wholly-owned subsidiary of Renaissance
("America's Registry") paid cash dividends in the approximate aggregate amount
of $862,000 to Mr. Conway in December 1995, of which amount $645,000 was
immediately used to repay certain indebtedness of Mr. Conway to the Company.
 
  The Company currently intends to retain future earnings, if any, to fund the
development and growth of its business and does not anticipate paying any cash
dividends on its common stock in the foreseeable future. In addition, the
Company's revolving line of credit agreements prohibit the payment of
dividends without consent of the lender. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."
 
Sales of Unregistered Securities
 
  On March 31, 1998 and April 2, 1998, the Company issued and sold 2,113,840
and 2,440,920 shares of common stock to the former shareholders of Neoglyphics
Media Corporation and Triad Data, Inc., respectively, in connection with these
acquisitions. There were no underwriters involved in these sales. The Company
relied on the exemption from registration under Section 4(2) of the Securities
Act of 1933.
 
                                       8
<PAGE>
 
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
 
  During the Company's fiscal year ended June 28, 1997 and the six-month
transition period ended December 27, 1997, the Company acquired Application
Resources, Inc. ("ARI"), Shamrock Computer Resources, Ltd. ("SCR"),
Renaissance Solutions, Inc. ("RSI") and The Hunter Group, Inc. ("Hunter") in
transactions accounted for as poolings of interest. In the second quarter of
fiscal 1998, the Company acquired Triad Data, Inc. ("Triad") and Neoglyphics
Media Corporation ("Neoglyphics") in transactions also accounted for as
poolings of interest. Each of the acquired companies had a fiscal year that
ended in December. The Statement of Operations Data and Balance Sheet Data for
the Company's fiscal years presented below give effect to these acquisitions
by combining their financial position as of the date shown and their results
of operations for the twelve months ended on that date with those of the
Company, as shown in the following table. For the transition period, the
Statement of Operations Data and Balance Sheet Data reflect the results of
operations for the six months ended December 27, 1997 and the financial
position on that date for all the companies.
 
<TABLE>
<CAPTION>
                   Renaissance
                  (The Registry)      ARI              SCR           RSI         Hunter         Triad      Neoglyphics
                  -------------- -------------    ------------- ------------- ------------- ------------- -------------
<S>               <C>            <C>              <C>           <C>           <C>           <C>           <C>
Fiscal 1993......  May 31, 1993            --     Dec. 31, 1993 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1993           --
Fiscal 1994......  May 31, 1994  Dec. 31, 1994(a) Dec. 31, 1994 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1994           --
Fiscal 1995...... June 24, 1995  Dec. 31, 1995    Dec. 31, 1995 Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1995(b)
Fiscal 1996...... June 29, 1996  June 30, 1996    June 30, 1996 Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1996 Dec. 31, 1996
Fiscal 1997...... June 28, 1997  June 30, 1997    June 30, 1997 June 30, 1997 Dec. 31, 1996 Dec. 31, 1997 Dec. 31, 1997
</TABLE>
 
(a) ARI commenced operations as a separate entity on October 1, 1994. The
    results of operations for 1994 include the three months ended December 31,
    1994.
(b) Neoglyphics commenced operations as a separate entity in February 1995.
    The results of operations for 1995 include the 11 months ended December
    31, 1995.
 
 
                                       9
<PAGE>
 
  The following table sets forth, on the basis described above, certain
selected consolidated financial data of the Company. The selected consolidated
financial data should be read in conjunction with "Managements Discussion and
Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements and Notes thereto.
<TABLE>
<CAPTION>
                                         Year Ended
                          ------------------------------------------
                                                                      Transition
                                                                     Period Ended
                          May 31,    June 24,   June 29,   June 28,  December 27,    Year Ended
                            1994    1995(1)(2) 1996(2)(5) 1997(2)(4)     1997     December 26, 1998
                          --------  ---------- ---------- ---------- ------------ -----------------
<S>                       <C>       <C>        <C>        <C>        <C>          <C>
Statement of Operations
 Data:
Revenue.................  $123,447   $221,957   $333,063   $489,833    $320,119       $776,314
Cost of revenue.........    88,703    156,913    232,496    342,422     215,695        528,059
                          --------   --------   --------   --------    --------       --------
Gross profit............    34,744     65,044    100,567    147,411     104,424        248,255
Selling, general and
 administrative
 expenses...............    27,031     50,344     76,794    108,642      81,686        222,998
Acquisition-related
 expenses(3)............       --         --       3,524      8,268      17,961          6,904
Restructuring and other
 asset writedowns(6)....       --         --         --         --          --          36,089
                          --------   --------   --------   --------    --------       --------
Income (loss) from
 operations.............     7,713     14,700     20,249     30,501       4,777        (17,736)
Interest and other
 income (expense), net..      (901)      (804)      (773)     3,267        (678)        (5,185)
                          --------   --------   --------   --------    --------       --------
Income (loss) before
 taxes..................     6,812     13,896     19,476     33,768       4,099        (22,921)
Provision for income
 taxes..................       619      3,607      7,456     16,594       8,330          8,425
                          --------   --------   --------   --------    --------       --------
Net income (loss).......  $  6,193   $ 10,289   $ 12,020   $ 17,174    $ (4,231)      $(31,346)
                          ========   ========   ========   ========    ========       ========
Net income (loss) per
 share--basic...........  $   0.17   $   0.25   $   0.28   $   0.34    $  (0.08)      $  (0.57)
Weighted average common
 shares outstanding--
 basic..................    36,027     40,776     42,885     50,495      54,537         55,418
Net income (loss) per
 share--diluted.........  $   0.17   $   0.24   $   0.26   $   0.31    $  (0.08)      $  (0.57)
Weighted average common
 and potential common
 shares outstanding--
 diluted................    36,749     43,013     46,862     54,607      54,537         55,418
Distributions...........  $    530   $  4,372   $  2,958   $  3,465    $    925       $    --
 
Balance Sheet Data:
Cash and cash
 equivalents............  $  3,222   $  8,067   $ 64,507   $ 30,013    $ 19,956       $ 10,957
Working capital.........     7,842     26,958    113,147    134,023      75,411         58,530
Total assets............    36,747     75,835    168,024    256,921     316,177        372,065
Total debt, including
 current portion........    13,469     25,016     11,198     12,021      49,928         96,899
Stockholders' equity....    10,670     33,346    123,743    197,092     193,895        179,785
</TABLE>
--------
(1) Renaissance changed its fiscal year end from May 31 to the last Saturday
    in June, effective with the fiscal year ended June 24, 1995. Accordingly,
    the June 1994 results are not included in the data presented above.
(2) Statement of Operations Data for the years ended June 24, 1995, June 29,
    1996, June 28, 1997 and December 26, 1998 are for 52, 53, 52 and 52 weeks,
    respectively.
(3) Represents transaction and other related costs associated with
    acquisitions accounted for as poolings of interests.
(4) In August 1996, ARI received a settlement of $1.6 million from its
    insurance company for payment of defense costs and related expenses
    associated with certain litigation. This amount, less related expenses,
    has been included in interest and other income (expense), net, in the
    Statement of Operations Data above.
(5) In conjunction with the renegotiation of Renaissance's lease with a real
    estate trust of which Mr. Conway is the sole beneficiary and an officer of
    the Company is the trustee (the "Realty Trust"), the accounts of the
    Realty Trust have been consolidated with those of Renaissance, commencing
    September 19, 1995. See Note 16 to Consolidated Financial Statements.
(6) Includes a $27.1 million charge for the write-down of goodwill and other
    assets in the Company's COBA U.K. and Technomics businesses and a $9.0
    million charge for other restructuring expenses, primarily severance.
 
                                      10
<PAGE>
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
     AND RESULTS OF OPERATIONS
 
Overview
 
  Since its initial public offering in June 1996, the Company has executed an
aggressive acquisition strategy acquiring twenty-three companies,
significantly expanding the Company's national and international presence and
increasing the number of management consulting and IT service offerings
provided by the Company. With the growth came a reorganization of the
Company's structure into four business segments: Business Strategy, Enterprise
Solutions Group, Government Solutions Group and Information Technology
Consulting Services ("ITCS"); and a renaming of the Company to Renaissance
Worldwide, Inc. to reflect the Company's expanded international presence and
broader range of consulting services.
 
  Five of these acquisitions were completed during fiscal 1998. Exad Galons
and Hackenberg and Partners were acquired in the first quarter of fiscal 1998
expanding the international presence of the Enterprise Solutions Group.
Neoglyphics Media Corporation ("Neoglyphics") and Triad Data Corporation
("Triad") were acquired in the second quarter of fiscal 1998 with Neoglyphics
adding Internet development and e-commerce services to the Enterprise
Solutions Group and Triad further expanding the Information Technology
Consulting Services Group. In the third quarter of fiscal 1998, International
Public Access Technologies ("IPAT") was acquired and added to our 1997
acquisition, Eligibility Management Systems, to form the Company's Government
Solutions Group.
 
  Consulting services performed are billed either on a time and materials
basis, as is the case with the ITCS Group and certain sectors of the Solutions
Groups, or on a fixed price basis for the remainder of the Solutions Groups
and the Business Strategy Group. Revenue for fixed price contracts is
recognized using the percentage of completion method based upon the number of
labor hours incurred compared to the total estimated labor hours at estimated
realizable rates. Under the percentage of completion method, the Company must
estimate the percentage of completion of each project at the end of each
financial reporting period. Estimates are subject to adjustment as a project
progresses to reflect changes in projected completion costs or dates. The
cumulative effect of any revision in estimates of the percentage of
completion, or the effect of identifiable losses on cost over-runs, is
reflected in the financial reporting period in which the change in the
estimate or the loss becomes known. The Company mitigates the risk of losses
for cost over-runs by subdividing its projects into smaller phases. In these
cases, the Company and its clients agree on a fixed price and fixed time frame
before beginning each phase of the project. These agreements may be revised,
by mutual agreement, when a significant change in the scope or cost of a phase
arises that neither the Company nor the client had anticipated. Because the
Company bears the risk of cost over-runs and inflation associated with fixed-
price, fixed-time frame projects, the Company's operating results may be
adversely affected by inaccurate estimates of contract completion costs and
dates.
 
  Because revenue is recognized only when consultants are working, operating
results are adversely affected when client facilities are closed due to
holidays or inclement weather. The Company experiences a certain amount of
seasonality in the quarter ended the last Saturday in December due to the
number of holidays falling in the quarter and shutdowns by certain customers
for the holiday week. In addition, lower gross margins are experienced in the
first quarter of the calendar year due primarily to the timing of unemployment
tax accruals and, to a lesser extent, social security taxes.
 
  Revenue growth is achieved by increasing the number of projects or
consultants on engagements and, to a lesser extent, by increasing average bill
rates. Gross margin increases are achieved primarily by increasing the
utilization of the salaried consultants, and to a lesser extent, by increasing
the bill rates of hourly consultants and increasing the amount of revenue
generated by the Business Strategy and Solutions Groups. The Business Strategy
and Solutions Groups generally obtain higher gross margin percentages than the
ITCS Group for a variety of reasons.
 
  As a result of the number of acquisitions and expansion since June 1996, the
Company has increased its IT, human resources, legal, marketing and finance
infrastructure and expanded the number and size of branch facilities to
accommodate growth. These measures have resulted in increased selling, general
and administrative
 
                                      11
<PAGE>
 
expenses. Delays in integrating the back office operations of certain
acquisitions have resulted in some redundant expenditures, increasing selling,
general and administrative expenses. In January 1999, the Company consolidated
certain back office operations in order to reduce these expenditures and
streamline processes.
 
  The Company is currently reviewing its IT infrastructure for year 2000
considerations and capacity given the recent growth and anticipated growth in
the next five years. The Company is also converting its enterprise-wide
financial and human resource systems to the PeopleSoft system. The Company
expects a significant benefit by conforming all accounting and human resource
systems to PeopleSoft, allowing for additional capacity without additional
headcount, a reduction of manual input, as well as expanded and more timely
reporting of financial information. The Company is staffing the PeopleSoft
project internally. While using internal resources reduces the overall costs
of this project, the Company will experience some decrease in the billable
utilization of its consultants as a result of using these resources on
internal projects.
 
Recent Acquisitions
 
  In March 1998 the Company, through a wholly-owned subsidiary, acquired all
of the outstanding stock of Neoglyphics Media Corporation ("Neoglyphics").
Neoglyphics is an Internet development and applications company based in
Chicago, Illinois and is the foundation of the e-commerce business unit within
the Enterprise Solutions Group. Pursuant to the agreement and plan of merger,
each share of Neoglyphics was converted into the right to receive .12495
shares of Renaissance common stock. Renaissance also assumed outstanding
options for the purchase of Neoglyphics common stock at the same conversion
ratio.
 
  In April 1998 the Company, through a wholly-owned subsidiary, acquired all
of the outstanding stock of Triad Data, Inc. ("Triad"). Triad is an
information technology consulting firm performing services similar to those of
the ITCS Group of the Company. Pursuant to the agreement and plan of merger,
each share of Triad common stock was converted into the right to receive
24,409.2 shares of Renaissance common stock.
 
  In total 4,554,760 shares of the Company's Common Stock were exchanged for
all of the outstanding common stock of Neoglyphics and Triad. In addition,
outstanding stock options to purchase Neoglyphics common stock were converted
into options to purchase 119,940 shares of the Company's common stock. These
transactions have been accounted for as poolings-of-interests and, therefore,
the financial statements of the Company have been restated to include the
financial condition, results of operations and cash flows of these two
companies for all periods presented. The Company incurred $6.9 million in
acquisition-related expenses in the second quarter of 1998 related to these
transactions.
 
  In addition, in fiscal 1998, the Company acquired three companies accounted
for as purchases: Exad Galons; Hackenberg and Partners; and IPAT. Renaissance
paid an aggregate of $12.5 million in cash for these acquisitions. In
addition, the Company may be obligated to pay contingent cash consideration
over the next three years based upon the future operating results of the
acquired entities. The purchase price has been allocated to the assets
acquired and liabilities assumed based upon their fair values as of the
respective dates of acquisition. The excess of the consideration paid over the
estimated fair value of net assets acquired has been recorded as goodwill. The
results of operations for these acquisitions have been included in
Renaissance's results of operations from the respective dates of acquisition.
 
                                      12
<PAGE>
 
Additional Selected Consolidated Financial Data
 
  The following table sets forth certain consolidated financial data of the
Company. This data is presented to reflect the comparative periods discussed
in the following analysis.
 
<TABLE>
<CAPTION>
                                Six Months Ended         Twelve Months Ended
                            ------------------------- -------------------------
                            December 28,              December 27,
                                1996     December 27,     1997     December 26,
                            (Unaudited)      1997     (Unaudited)      1998
                            ------------ ------------ ------------ ------------
<S>                         <C>          <C>          <C>          <C>
Revenue ..................    $214,774     $320,119     $595,178     $776,314
Cost of revenue ..........     150,052      215,695      408,065      528,059
                              --------     --------     --------     --------
                                64,722      104,424      187,113      248,255
Selling, general and
 administrative expenses
 .........................      50,200       81,686      140,134      222,998
Acquisition-related
 expenses ................       8,662       17,961       17,561        6,904
Restructuring and other
 asset writedowns ........         --           --           --        36,089
                              --------     --------     --------     --------
Income (loss) from
 operations ..............       5,860        4,777       29,418      (17,736)
Interest expense .........       1,829         (678)         (11)      (5,185)
                              --------     --------     --------     --------
Income (loss) before taxes
 .........................       7,689        4,099       29,407      (22,921)
Income tax provision .....       6,035        8,330       18,119        8,425
                              --------     --------     --------     --------
Net income (loss) ........    $  1,654     $ (4,231)    $ 11,288     $(31,346)
                              ========     ========     ========     ========
</TABLE>
 
Twelve months ended December 26, 1998 and December 27, 1997
 
  Revenue: Revenue increased 30.4% to $776.3 million for the twelve months
ended December 26, 1998 from $595.2 million for the twelve months ended
December 27, 1997. The increase was attributable primarily to increases in the
revenues of the ITCS Group, whose revenues comprised 68% of the total revenues
for the twelve months ended December 26, 1998. The ITCS Group's revenues
increased by $108.2 million or 25.1% in the period due to growth within
existing branch offices. The Business Strategy Group, which comprised 8% of
Renaissance's total revenues, experienced revenue increases of 3.6% to $66.2
million for the twelve months ended December 26, 1998 from $63.9 million for
the twelve months ended December 27, 1997. This increase was attributable
primarily to increases in revenues of the COBA Boston subsidiary whose
revenues increased 24% or $4.4 million in fiscal 1998. These increases were
mitigated by slower growth and reduced revenues in certain other areas of the
Company's North American and European strategy branches. In the restructuring
of the Company's operations in the third quarter of fiscal 1998, certain
domestic strategy offices were closed and the consultants were either
terminated or transferred to other Strategy units. In the fourth quarter of
fiscal 1998, in anticipation of the sale of certain of the under performing
European strategy units, the Company accrued certain severance costs and wrote
down non-recoverable goodwill on these units. Revenues from the Enterprise
Solutions Group increased $65.3 million or 67.0% to $162.7 million in the
period due to an increase in the overall number of engagements, the
acquisition of Exad Galons and Hackenberg and the creation of additional
service offerings during the year. Revenues from the Company's Government
Solutions Group increased 461% to $19.9 million from $3.5 million in the
comparable prior period. These increases are attributable primarily to the
addition of the IPAT acquisition in July of 1998 and the full year impact of
the EMS acquisition acquired in August of 1997.
 
  Gross Profit: Gross profit increased 32.7% to $248.3 million for fiscal 1998
from $187.1 million in the twelve months ended December 27, 1997. As a
percentage of revenue, gross profit increased to 32.0% in fiscal 1998 from
31.4% in the twelve months ended December 27, 1997. This increase is
attributable to the number of higher margin solutions and strategy projects
and the increased utilization and number of salaried consultants as compared
with the prior period.
 
  Selling, General and Administrative Expenses: Selling, general and
administrative expenses, excluding acquisition-related expenses and
restructuring and other asset writedown charges, increased by 59.2% to $223.0
million in fiscal 1998 from $140.1 million in the twelve months ended December
27, 1997. As a percentage of revenue, selling, general and administrative
expenses increased to 28.7% of revenue for fiscal 1998 from 23.5% for the
comparable prior period. The increase was attributable to the additional costs
necessary to support the
 
                                      13
<PAGE>
 
growth in the Company's business and professional staff, increases in the size
and number of facilities, investments in upgrading the Company's
telecommunications networks and systems and additional provisions to the
allowance for doubtful accounts. In addition, the Company experienced
increases in amortization of goodwill due to the acquisitions made during
fiscal 1997 and 1998.
 
  Acquisition-related Expenses: The Company incurred acquisition-related
expenses in fiscal 1998 of $6.9 million as a result of the acquisitions of
Neoglyphics and Triad in the second quarter. Acquisition-related expenses of
$18.0 million in the twelve months ended December 27, 1997 resulted from the
acquisitions of RSI and Hunter during the period. These costs represent
investment banking, accounting, printing, and legal costs. Costs were higher
for the RSI and Hunter acquisitions due to their relatively larger size.
 
  Restructuring charges and other asset writedowns: The restructuring and
other asset write-downs of $36.1 million in 1998 included a $21.4 million
charge for the write-down of goodwill in the Company's COBA U.K. business and
a $5.7 million charge for the write-down of goodwill and other assets
associated with the Company's Technomics business, both recorded in the fourth
quarter of 1998. In connection with certain business unit and functional
realignments made by the Company, a decision was made to dispose of these non-
performing strategy business units. No proceeds are anticipated from the
discontinuance of these business units.
 
  Net restructuring and other asset write-downs also included $9.0 related to
a restructuring plan designed to focus the Company on the new corporate
strategy and eliminate redundant facilities and personnel recorded in the
third quarter of 1998. Details of the charges and the activity recorded during
1998 are as follows:
 
<TABLE>
<CAPTION>
                             Discontinuance   Severance    Write-down
                            And Consolidation and Other   of Equipment   Total
                               Of Offices       Costs   and Other Assets Costs
                            ----------------- --------- ---------------- ------
<S>                         <C>               <C>       <C>              <C>
Total restructuring and
 other asset write-downs..       $1,254        $4,198        $3,528      $8,980
Total charges through
 year-end.................
  Non-cash costs..........          --            --          2,938       2,938
  Payments................          205         2,965           --        3,170
                                 ------        ------        ------      ------
Balance, December 27,
 1998.....................       $1,049        $1,233        $  590      $2,872
                                 ======        ======        ======      ======
</TABLE>
 
  The write-down of equipment and other assets relates primarily to impaired
software and other computer equipment resulting from the reorganization.
Charges for the discontinuance and consolidation of offices are related to
future lease payments related to vacated properties in excess of estimated
sublease income. Severance and other costs include expenses related to the
termination of approximately 50 employees, primarily in certain business
initiatives the Company decided to exit, and amounts owned under recruiting
contracts for individuals or positions which were terminated.
 
  The Company currently expects the remaining restructuring accrual to be
utilized, primarily through cash disbursements funded from operations or the
use of additional borrowings, by the end of the second quarter of 1999. These
restructuring activities are expected to result in future savings in 1999 of
approximately $7.5 million.
 
  Interest and Other Income (Expense), Net: Interest and other income
(expense), net changed by $5.2 million from $11,000 in expense for the twelve
months ended December 27, 1997 to $5.2 million in expense in fiscal 1998. This
decrease was a result of increased borrowings under the Company's line of
credit during fiscal 1998 to fund acquisitions, earnout payments and working
capital expenditures. The Company had lower borrowings under its line of
credit in 1997 as a result of cash received in a public offering of the
Company's common stock in February 1997.
 
Six Months Ended December 27, 1997 and December 28, 1996
 
  Revenue: Revenue increased 49% to $320.1 million for the six months ended
December 27, 1997 from $214.8 million for the six months ended December 28,
1996. The increase was attributable primarily to increases in the revenues of
the ITCS Group, whose revenues comprised 71.4% of the total revenues for the
six months
 
                                      14
<PAGE>
 
ended December 27, 1997. The ITCS Group's revenues increased by $59.7 million,
or 35.4%, in the period due to growth within existing branch offices, as well
as growth resulting from having the revenues of acquisitions made during the
six months ended December 1996 in the results of operations for the entire
period of 1997. The Business Strategy Group, which comprised 11.6% of
Renaissance's total revenues, experienced revenue increases of 100.8% to $37.0
million for the six months ended December 27, 1997 from $18.6 million for the
six months ended December 28, 1996. The increases were a result of greater
utilization of the salaried consultants as well as the addition of certain
acquisitions in the third quarter of fiscal 1997. Revenues from the Enterprise
Solutions Group increased $24.1 million, or 86.7%, to $51.9 million in the
period due to an increase in the overall number of engagements over the prior
period. Revenues from the Government Solutions Group were $3.5 million. This
was the first year of the Government Solutions Group operations which
commenced upon acquisition of EMS in August 1997.
 
  Gross Profit: Gross profit increased 61% to $104.4 million for the six
months ended December 27, 1997 from $64.7 million in the comparable prior
period. As a percentage of revenue, gross profit increased to 32.6% in the six
months ended December 27, 1997 from 30.1% in the six months ended December 28,
1996. This increase is attributable to the increased number of higher margin
solutions and strategy projects and the increased utilization of the salaried
consultants as compared with the prior period.
 
  Selling, General and Administrative Expenses: Selling, general and
administrative expenses, excluding acquisition-related expenses, increased by
63% to $81.7 million in the six months ended December 27, 1997 from $50.2
million in the six months ended December 28, 1996. As a percentage of revenue,
selling, general and administrative expenses increased to 25.5% of revenue for
the six months ended December 27, 1997 from 23.4% in the six months ended
December 28, 1996. This increase was attributable to the additional costs
necessary to support the growth in the Company's business and professional
staff, increases in facilities and investments in upgrading the Company's
telecommunications networks and systems, as well as increases in amortization
of goodwill due to the additional acquisitions made during fiscal 1997 and the
transition period ended December 27, 1997.
 
  Acquisition-Related Expenses: The Company incurred acquisition-related
expenses in the six months ended December 27, 1997 of $18.0 million as a
result of its acquisitions of RSI and Hunter during the period. Acquisition-
related costs of $8.7 million in the six months ended December 28, 1996
resulted from the acquisitions of Application Resources Inc. ("ARI"), Shamrock
Computer Resources ("SCR") and International System Services Corporation
("ISS") during the period. These costs primarily represent investment banking,
accounting, printing, and legal costs. Costs were higher for the RSI and
Hunter acquisitions due to their relatively larger size.
 
  Interest and Other Income (Expense), Net: Interest and other income
(expense), net changed by $3.3 million to $0.7 million in expense in the six
months ended December 27, 1997 from $2.6 million in income in the six months
ended December 28, 1996. The 1996 period included the receipt by ARI of
approximately $1.6 million in net proceeds from the settlement of certain
litigation. In addition, amounts outstanding under the Company's lines of
credit and other indebtedness were reduced during the 1996 period as a result
of the receipt of the proceeds from the Company's initial public offering in
June 1996 and from the proceeds from RSI's public offerings in May and
November of 1996. Borrowings under the Company's line of credit increased
during the period ended December 27, 1997.
 
Fiscal Years Ended June 28, 1997 and June 29, 1996
 
  Revenue: Revenue increased 47% to $489.8 million for fiscal 1997 from $333.1
million in fiscal 1996. The increase was attributable primarily to increases
in the revenues of the ITCS Group, which comprised 73.8% of the Company's
total revenues for the fiscal year ended June 28, 1997. The ITCS Group's
revenue increased by $107.5 million, or 42.3%, in the period due to growth
within the existing branch offices, the continued maturation of newer branch
offices and the addition of new branches resulting from acquisitions accounted
for as purchases completed during the year, all of which resulted in a greater
number of IT professionals placed during the period. The Business Strategy
Group, which comprised 9.3% of Renaissance's total revenues,
 
                                      15
<PAGE>
 
experienced revenue increases of $10.5 million, or 30.2%, during the fiscal
year ended June 28, 1997. Revenues from the Enterprise Solutions Group
increased $38.7 million, or 87.2%, in the period due to an increase in the
overall number of engagements and the enhanced performance of Hunter's UK
subsidiary which commenced operations in September 1995.
 
  Gross Profit: Gross profit increased 47% to $147.4 million for fiscal 1997
from $100.6 million in fiscal 1996. As a percentage of revenue, gross profit
decreased slightly to 30.1% in fiscal 1997 from 30.2% in fiscal 1996.
 
  Selling, General and Administrative Expenses: Selling, general and
administrative expenses, excluding acquisition-related expenses, increased by
41% to $108.6 million in fiscal 1997 from $76.8 million in fiscal 1996. As a
percentage of revenue, selling, general and administrative expenses decreased
to 22.2% of revenue for fiscal 1997 from 23.1% in fiscal 1996. This decrease
was attributable to the increase in total revenues during a period in which,
other than through acquisition, there was limited branch expansion. The total
increase in the selling, general and administrative expenses is a result of
additional costs necessary to support the growth in the Company's business and
professional staff, increases in facilities and investments in upgrading the
Company's telecommunications networks and systems.
 
  Acquisition-Related Expenses: The Company incurred acquisition-related
expenses in fiscal 1997 of $8.3 million in connection with its acquisitions of
International Systems Services Corporation ("ISS"), ARI, and SCR during the
period. The Company incurred acquisition-related expenses in fiscal 1996 of
$3.5 million in connection with its acquisition of ISS.
 
  Interest and Other Income (Expense), Net: Interest and other income
(expense), net increased $4.0 million to $3.3 million in income in fiscal 1997
from $0.8 million in expense in fiscal 1996. The 1996 period included the
receipt by ARI of approximately $1.6 million in net proceeds from the
settlement of certain litigation. In addition, amounts outstanding under the
Company's lines of credit were reduced during the year upon receipt of the
proceeds from the Company's initial public offering in June 1996 and its
subsequent offering in February of 1997 and from the proceeds from RSI's
public offerings in May and November of 1996. The remaining proceeds from
these offerings also generated increased interest income.
 
Quarterly Results
 
  The following table sets forth certain unaudited quarterly operating
information for each of the ten quarters ending with the quarter ended
December 26, 1998, in dollars and as a percentage of revenue. These data have
been prepared on the same basis as the audited financial statements and, in
the opinion of management, includes all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the information
for the periods presented, when read in conjunction with Renaissance's
Consolidated Financial Statements and related Notes thereto. Results for any
previous fiscal quarter are not necessarily indicative of results for the full
year or for any future quarter.
 
<TABLE>
<CAPTION>
                                        Three Months Ended
                          ---------------------------------------------------
                          September  December    March      June    September
                            1996     1996(1)      1997      1997      1997(2)
                          ---------  --------   --------  --------  ---------
                              (In thousands, except per share data)
<S>                       <C>        <C>        <C>       <C>       <C>
Revenue.................. $101,975   $112,799   $131,820  $143,239  $155,953
Gross profit.............   29,416     35,306     41,808    40,881    51,386
Income (loss) from
 operations..............    5,194        666     13,814    10,827     2,158
Net income (loss)........    4,259     (2,605)     8,493     7,027    (2,719)
Net income (loss) per
 share--basic............ $   0.09   $  (0.05)  $   0.17  $   0.13  $  (0.05)
Net income (loss) per
 share--diluted.......... $   0.08   $  (0.05)  $   0.16  $   0.12  $  (0.05)
As a Percentage of
 Revenue:
  Revenue................      100%     100.0 %    100.0%    100.0%    100.0 %
  Gross profit...........     28.8%      31.3 %     31.7%     28.5%     32.9 %
  Income from
   operations............      5.1%       0.6 %     10.5%      7.6%      1.4 %
  Net income (loss)......      4.2%      (2.3)%      6.4%      4.9%     (1.7)%
</TABLE>
 
                                      16
<PAGE>
 
<TABLE>
<CAPTION>
                                      Three Months Ended
                         ---------------------------------------------------
                         December    March      June     September  December
                           1997(3)    1998      1998(4)    1998(5)    1998(6)
                         --------   --------  --------   ---------  --------
                             (In thousands, except per share data)
<S>                      <C>        <C>       <C>        <C>        <C>
Revenue................. $164,166   $175,364  $196,467   $209,073   $195,410
Gross profit............   53,038     58,296    67,074     71,392     51,492
Income (loss) from
 operations.............    2,619     11,570    10,234     11,115    (50,655)
Net income (loss).......   (1,512)     5,463      (439)     5,601    (41,971)
Net income (loss) per
 share--basic........... $  (0.03)  $   0.10  $  (0.01)  $   0.10   $  (0.75)
Net income (loss) per
 share--diluted......... $  (0.03)  $   0.09  $  (0.01)  $   0.10   $  (0.75)
As a Percentage of
 Revenue:
  Revenue...............    100.0 %    100.0%    100.0 %    100.0%     100.0 %
  Gross profit..........     32.3 %     33.2%     34.1 %     34.1%      26.4 %
  Income (loss) from
   operations...........      1.6 %      6.6%      5.2 %      5.3%     (25.9)%
  Net income (loss).....     (0.9)%      3.1%     (0.2)%      2.7%     (21.5)%
</TABLE>
--------
(1) Includes transaction costs of $8.4 million associated with the
    acquisitions of ARI, SCR, and ISS, each of which has been accounted for as
    a pooling-of-interests.
(2) Includes transacation costs of $11.2 million associated with the
    acquisition of RSI, which has been accounted for as a pooling of
    interests.
(3) Includes transaction costs of $6.8 million related to the acquisition of
    Hunter, which has been accounted for as a pooling of interests.
(4) Includes transaction costs of $6.9 million associated with the
    acquisitions of Neoglyphics and Triad, which have been accounted for as
    poolings-of-interests and a $2.9 million charge associated with Triad's
    conversion from an S corporation to a C corporation.
(5) Includes charges for restructuring and other asset writedowns of $9.0
    million which includes costs for severence, lease closures, and other
    writeoffs of non-performing assets.
(6) Includes charges of $27.1 million associated with the writeoff of goodwill
    and other costs associated with the Technomics and COBA-UK subsidiaries
    (see Note 8).
 
  During the October to December quarter, the number of holidays and vacation
days marginally reduces revenue. Some clients also close operations completely
during the last week of the year. Renaissance also experiences a lower
operating profit margin in the January to March quarter, in part as a result
of higher unemployment tax accruals and, to a lesser extent, FICA taxes which
are expensed as incurred. During this quarter, the unemployment tax, which is
based on the first $7,000-$24,500 of wages for each employee, depending on the
state, is significantly higher than other quarters.
 
Liquidity and Capital Resources
 
  The Company has a line of credit facility in place which provides a
borrowing base of 85% of eligible accounts receivable as defined, up to a
maximum borrowing of $85 million, payable on demand. Interest is payable
monthly in arrears at the bank's prime rate plus .5% (9.0% at June 28, 1997,
9.0% at December 27, 1997, and 8.25% at December 26, 1998) or the LIBOR rate
plus 2.5% (8.64% at June 28, 1997, 8.16% at December 27, 1997, and 7.71% at
December 26, 1998), at the option of the Company. The line of credit is
collateralized by all of the assets of the Company, excluding the assets of
the Trust, contains certain restrictions, including limitations on the amount
of distributions which can be made to stockholders, purchases of fixed assets,
and loans which can be made to officers, and requires the maintenance of
certain financial covenants.
 
  This line of credit was scheduled to expire in February 1999 but was
extended. This line was terminated on March 24, 1999.
 
  In February of 1999, the Company entered into a new line of credit with a
different bank to provide a borrowing base of 85% of eligible accounts
receivable as defined, up to a maximum borrowing of $110 million. Interest is
payable monthly in arrears at the LIBOR rate plus 2.0% on the higher of the
bank's prime rate or the
 
                                      17
<PAGE>
 
Fed Funds rate plus .50%, plus .75%, at the Company's option. The line is
collateralized by all of the assets of the Company, contains certain
restrictions, and requires maintenance of certain financial covenants. The new
line of credit is for a 90 day term until syndication of a Senior Credit
facility committed to by the bank consisting of a $100 million Revolving
Credit Facility and a $50 million three year Term Loan Facility is executed.
The Company will incur certain underwriting and commitment fees in the first
quarter of fiscal 1999 upon funding of this line as well as termination fees
with the former bank upon payoff of the former line.
 
  As of December 26, 1998, there was $81.6 million outstanding with
availability of $3.4 million. The Line of Credit bears an interest rate of
LIBOR plus 2.5% or the Bank of New York alternate base rate plus 0.5% at the
Company's option.
 
  The Company experienced negative cash flows from operations of $28.0 million
for the fiscal year ended December 26, 1998. The negative operating cash flows
during this period are primarily due to a $50.3 million increase in gross
accounts receivable during the period. This increase was attributable
primarily to increased revenues. Additionally, cash flows from operations were
impacted by fluctuations in current and other assets and payable balances
between the periods and changes in deferred taxes in the period. The operating
cash flow decreases were mitigated by an $18.4 million increase in accrued
expenses due primarily to acquisition related and restructuring accruals and
end of year bonus accruals.
 
  The Company had negative cash flows from investing activities of $34.6
million for the fiscal year ended December 26, 1998. The primary uses of cash
for investing activities in the period were $24.3 million paid for
acquisitions and $14.4 million in fixed asset purchases. This was mitigated by
net proceeds from sales of marketable securities of $5.8 million in the
period.
 
  The Company had cash provided by financing activities of $53.6 million for
the fiscal year ended December 26, 1998. The primary sources of cash from
financing activities were $47.4 million in net borrowings on the Company's
lines of credit and $10.6 million of cash received from employees to purchase
stock or exercise options.
 
  The Company anticipates that its primary uses of working capital in future
periods will be for funding growth, either through acquisitions, the internal
development of existing branch offices or the development of new branch
offices and service offerings. The Company also anticipates making
approximately $13.0 million in capital expenditures over the next twelve
months, primarily related to information systems. In connection with certain
of its acquisitions, the Company may be obligated to make certain contingent
payments over the next several years, including $7.1 million which the Company
currently is required to pay over the next 12 months. The Company does not
believe that such payments would have a material impact on the Company's
liquidity, results of operations or capital requirements. The Company's
principal capital requirement is working capital to support the accounts
receivable associated with its revenue growth. The Company believes that its
new financing from Bank of America, together with cash flows from operations,
will be sufficient to meet the Company's presently anticipated working capital
needs for at least the next 12 months.
 
  Foreign currency fluctuations and inflation did not have a significant
impact on the Company for any of the periods presented.
 
Impact of the Year 2000 Issues
 
  The "Year 2000" problem arose because many computer programs use only the
last two digits to refer to a year. Therefore, date-sensitive software or
hardware may not be able to distinguish between 1900 and 2000 and programs
that perform arithmetic operations, comparisons or sorting of date fields may
begin yielding incorrect results. The Year 2000 problem could potentially
cause a system failure or miscalculations that could disrupt the Company's
operations.
 
                                      18
<PAGE>
 
  The Company's State of Readiness. The Company has developed a Year 2000
remediation plan that involves three overlapping phases.
 
  In the catalog phase, the Company has created an index of Year 2000 issues
broken down into three functional areas:
 
  . Applications and information technology (IT) equipment--This area
    includes all mainframe, network and desktop hardware and software,
    including custom and packaged applications, and IT embedded systems.
 
  . Non-information technology (non-IT) embedded systems--These systems
    include non-IT equipment and machinery. Non-IT embedded systems, such as
    security, fire prevention and climate control systems, typically include
    embedded technology, such as microcontrollers.
 
  . Vendor and customer relationships --These include significant third-party
    vendors and suppliers of goods and services, as well as vendor and
    supplier interfaces. These also include customers of the Company's
    products and services as well as customer interfaces and accounts
    receivable.
 
  The Company completed the catalog phase in April of 1998.
 
  In the analysis phase, the Company evaluated the catalogued items for Year
2000 compliance, determining the remediation method and resources required and
developing an implementation plan. The Company completed the analysis phase in
April 1998.
 
  In the implementation phase, the Company will execute the implementation
plan for all applicable hardware and software, interfaces and systems. This
phase will involve replacing certain software and hardware not being upgraded,
testing the implemented changes, using the changed procedures in actual
operations, testing in a Year 2000-simulated environment and vendor and
customer interface testing. After implementation, the Company intends to
conduct live testing commencing in the second quarter 1999. All components of
the implementation phase are expected to be completed by October 1, 1999.
 
  The Company's remediation plan for its Year 2000 issues is an ongoing
process and the estimated completion dates above are subject to change.
 
  The Risk of the Company's Year 2000 Issues. Generally, the Company has
completed an assessment of Year 2000 issues with respect to its business
systems and has already begun to take actions to ensure their compliance.
Plans and associated milestones are being executed to ensure that those
business systems not currently certified as compliant are either upgraded to
certified status or replaced well in advance of December 31, 1999. Based on
the completed assessment, management does not expect that the costs of
bringing the Company's systems into compliance with Year 2000 to have a
material adverse effect on the Company's financial position, results of
operations or liquidity. The Company does not believe that it is subject to
significant business risks related to its customers' and suppliers' Year 2000
efforts.
 
  The Company's Contingency Plans. The Company does not currently have
contingency plans with respect to the Year 2000 problem. If the Company's
implementation efforts fail or are no longer on schedule for completion the
Company will divert its resources to contingency planning.
 
  Costs to Address the Company's Year 2000 Issue. The total cost of the
Company's remediation plan is estimated at approximately $400,000 to $600,000
and is being funded through operating cash flows. Of the total cost,
approximately $450,000 is attributable to new hardware and software that will
be capitalized. The remainder will be expensed as incurred. It is impossible
for the Company to completely account for the costs incurred in its
remediation effort as many of its employees have focused and will continue to
focus significant efforts in evaluating the Company's Year 2000 state of
readiness and in remediating problems that have arisen, and will continue to
arise, from such evaluation. Consultants' internal work for the Company
negatively impacts the Company's ability to employ its consultants on billable
projects externally which could have a material adverse effect on the
Company's results of operations, financial position or cash flow.
 
                                      19
<PAGE>
 
Factors That May Affect Future Results
 
  We have divided the following discussion of factors that may affect the
future results of our business between those that relate specifically to our
Company and those that relate to companies in the IT services industry.
 
                  Risks relating specifically to our company
 
  Our inability to manage growth could adversely affect our operating results
 
  The significant growth of our business in recent years has placed
significant demands on our managerial and other resources. Our ability to
manage this growth effectively will require us to continue to improve our
operating, financial and other internal systems. We will also have to improve
our business development capabilities and train, motivate and manage an
increasing number of employees. We currently rely on several different
financial reporting systems to monitor and manage our financial performance.
These multiple systems are both inefficient and difficult to operate. We are
implementing a new single financial reporting system, but that system is not
yet in place. If we fail to implement this new system effectively or if we
have difficulty transitioning to the new system, we will have difficulty
managing the business, which could adversely affect our operating results and
stock price. The significant growth in our business since June of 1996 has
been coupled with significant increases in our selling, general and
administrative expenses. Specifically, such expenses increased 41% from the
fiscal year ended June 1996 to the fiscal year ended June 1997. Such expenses
increased 63% from the six-month period ended December 1996 to the six-month
period ended December 1997 and 59% from the year ended December 1997 to the
year ended December 1998. Our failure to effectively control and curb the
significant increase in our selling, general and administrative expenses could
adversely affect our operating results and stock price.
 
  Acquisitions involve many financial uncertainties as well as personnel
contingencies and therefore can be risky and difficult to integrate
 
  We have completed more than twenty acquisitions in the last two years.
Acquisitions continue to be part of our growth strategy. Acquired businesses
do not always generate the revenues or earnings that we thought they would and
occasionally we find that they have unknown or undisclosed liabilities. When
these situations occur, the Company's business is adversely affected.
 
  We only receive the anticipated benefits from an acquisition when we
successfully integrate it into our own business in a timely and non-disruptive
manner. Integration requires substantial management attention. Difficulties we
encounter integrating an acquired business can have an adverse effect on our
business and operating results. If we fail to integrate the acquired business
effectively, key employees of that business may leave, which can further
complicate our integration efforts and jeopardize the anticipated benefits of
the acquisition.
 
  We depend on our relationship with PeopleSoft
 
  The Hunter Group, the principal business in the Enterprise Solutions
business unit, derives a substantial proportion of its revenue from its
relationship with PeopleSoft, a provider of enterprise resource planning
software that addresses broad functional areas such as human resources,
finance, treasury and project management. Because The Hunter Group contributes
a significant proportion of our operating profits, we are in part dependent on
PeopleSoft's continued success. An adverse change in The Hunter Group's
relationship with PeopleSoft could adversely affect our operating results. Any
changes in PeopleSoft-sponsored programs or a loss of PeopleSoft
certifications would adversely affect our business by reducing the number of
client referrals and PeopleSoft engagements.
 
  Our operating results fluctuate and our business is slightly seasonal
 
  Our operating results have fluctuated from quarter to quarter as a result of
many different factors, including the number, significance, mix and timing of
client projects, the number of business days in a particular period,
 
                                      20
<PAGE>
 
and general economic conditions. As our solutions business unit, which
provides services principally on a project-by-project basis, grows and
contributes a greater percentage of our revenues, we expect that greater
variability in quarterly operating results may occur. Our business is also
somewhat seasonal. We experience this seasonality in the fourth quarter
because of an increased number of holidays in that quarter. Investors should
not rely on operating results in any one quarter as an indicator of our future
results.
 
  Doing business internationally involves additional risks unique to foreign
operations
 
  We recruit consultants and generate a portion of our revenues from outside
the United States. Foreign operations are subject, however, to special risks
that can adversely affect revenues and profits. These risks include:
 
 .  currency exchange rate fluctuations    .  tariff and trade barriers
 .  labor strikes                          .  immigration laws and regulations
 .  political and economic disruptions     .  potentially adverse tax
 .  changes in government                     consequences
   policies and regulatory                .  exchange controls
   requirements
 
 
  Two officers control a substantial amount of our common stock
 
  More than 35% of our common stock is held by Mr. Conway (25.5%), our
chairman and chief executive officer, and Mr. Hunter (10.7%), president of The
Hunter Group and a director. As a result, Messrs. Conway and Hunter would be
able to significantly influence any matter requiring stockholder approval.
This concentration of ownership could also have the effect of making it
difficult for a third party to acquire control of the company and may
discourage third parties from attempting to do so. Future sales of substantial
amounts of this common stock, or the potential for such sales, may adversely
affect the prevailing market price of the common stock.
 
        Risks relating to the information technology services industry
 
  All providers of IT services face similar risks and we are no exception. We
discuss below the significant risks and how they affect our business.
 
  Our business depends on attracting and retaining qualified IT professionals
who are in high demand
 
  Our business and future growth depend upon our ability to attract and retain
experienced and skilled management consultants, IT professionals and IT
project managers. Competition for these professionals is intense because the
demand for them is greater than their current availability. Despite our best
efforts, not all of our professionals will always be satisfied with our
culture, compensation and benefits. This problem can be particularly
troublesome with professionals of an acquired business who may have come from
a corporate culture that is different than our's. There is great mobility
among the employees that we need to attract. Many of our competitors have
substantially greater financial and other resources than we do. They may offer
these individuals more attractive compensation and benefits packages. If we do
not recruit, train and maintain a sufficient number of professional personnel,
we will not be able to satisfy our clients' demands for IT services and our
business will be adversely affected.
 
  IT projects are complex and subject us to non-payment and other financial
risk
 
  Many of our IT projects subject us to financial risks. These engagements
often involve critical business processes and leading-edge software
applications. Despite our best efforts, we may not always be able to satisfy a
customer's expectations because software applications do not always work as
expected. A customer's dissatisfaction could affect its willingness to pay us
for these services, which would result in a financial loss on that project.
Customer dissatisfaction can also damage our reputation and negatively affect
our ability to attract new business. Even in situations where the scope of a
project changes, as a result of customer demands or otherwise, we may not
always be successful in obtaining a price adjustment as large as the one we
seek. To the extent that projects are extended or enlarged without
corresponding changes in fee schedules, our business would be adversely
affected.
 
                                      21
<PAGE>
 
  Failure to remediate Year 2000 problems could lead to liability claims
 
  Some of our clients have hired us to evaluate and remedy their Year 2000
problem. Many of these engagements involve projects that are critical to the
client's operations and business. Despite our best efforts, because the Year
2000 problem is complex and because it is often associated with critical
client systems or processes, we may be subject to claims from clients that we
failed properly to evaluate or remedy the client's Year 2000 problem. In
addition, we have written software code and performed services for our clients
in the past that may still be in use but are not year 2000 compliant. Such
past efforts may subject us to claims similar to those mentioned above despite
the fact that we were not engaged to evaluate or remedy the clients year 2000
problems. Any claims with respect to year 2000 problems, whether meritorious
or not, may adversely affect our business.
 
  Demand for our IT services may decline after 2000
 
  As the year 2000 approaches, many companies are evaluating their IT systems
to decide whether to repair or replace applications that have Year 2000
operability issues. Although we believe that these evaluations are increasing
the demand for our services in the short term, this demand will likely
dissipate as Year 2000 issues are resolved. Given the lack of precedent for an
issue of this magnitude, we cannot accurately forecast the effect of this
issue on quarter-to-quarter revenue achievement and our failure to estimate
this forecast accurately could adversely affect our business.
 
  Because we depend on key clients and have no long-term agreements the loss
of a key client or clients would be significant
 
  Although none of our clients accounts for more than 5% of the our revenues,
the successive loss of one or more of our significant clients may adversely
affect our business. In addition, we face pricing pressure from large clients
who often seek reduced prices for a desired volume of business or from clients
with whom we wish to maintain a preferred vendor status. Further, in virtually
all cases a client can terminate our services agreements on short notice and
without any penalty. If a number of these cancellations were to occur in a
short time period, our business and operating results would be adversely
affected in the short run.
 
  Our business is subject to fluctuations in the general health of the economy
 
  Demand for IT consulting services will be affected by the general health of
the domestic and international economies. Some clients may reduce expenditures
for information technology if they suffer slowdowns in their businesses due to
a general slowing of the economy. This reduction in spending may require some
clients to delay or cancel IT projects that we had been engaged to manage or
on which our consultants may have been staffed. Fluctuations in the general
economy that adversely affect the amount of money our clients are willing to
spend on IT consulting or related services may adversely affect our business.
 
  U.S. government limits on immigration restrict our ability to hire foreign
nationals
 
  Each year we hire IT professionals who are foreign nationals working in the
United Stated under H-1B permits. Under current law, there is a fixed annual
number of H-1B visas available for issuance. Once this limit has been reached,
we are unable to hire additional foreign nationals until additional H-1B visas
are made available in the next fiscal year. Because as we discuss above we are
constantly seeking qualified IT professionals, these limitations on our
ability to hire foreign nationals under H-1B visas may adversely affect our
business.
 
  The market for IT services is competitive
 
  The market for IT services and management consulting services includes a
large number of competitors and is highly competitive. Our competitors include
"Big Five" accounting firms, systems consulting and integration firms,
application software development firms, services divisions of computer
equipment companies and general management consulting companies. Moreover, we
often compete with the internal resources of our clients. The competitive
nature of our marketplaces creates pricing pressures that which may adversely
affect our business.
 
                                      22
<PAGE>
 
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 
  The Company is exposed to a variety of risks, including foreign currency
fluctuations and changes in interest rates on its borrowings. In the normal
course of its business, the Company manages its exposure to these risks as
described below. The Company does not engage in trading market risk sensitive
instruments for speculative purposes.
 
Foreign Exchange
 
  During 1998, less than 10% of the Company's business was transacted in
currencies other than the U.S. dollar. The Company does not enter into forward
exchange contracts as a hedge against foreign currency exchange risk on
transactions denominated in foreign currencies or for speculative or trading
purposes. The Company has performed a sensitivity analysis assuming a
hypothetical 10% adverse movement in foreign exchange rates. As of December
26, 1998 the analysis demonstrated that such market movements would not have a
material adverse effect on the Company's consolidated financial position,
results of operations or cash flows. Actual gains and losses in the future may
differ materially from this analysis based on changes in the timing and amount
of foreign currency rate movements and the Company's actual exposures. The
Company believes that its exposure to foreign currency exchange rate risk at
December 26, 1998 was not material.
 
Interest Rates
 
  As of December 26, 1998, the Company's exposure to market risk associated
with changes in interest rates relates primarily to its debt obligations. A
portion of the borrowings is denominated in foreign currencies which exposes
the Company to risks associated with foreign exchange rates. At December 26,
1998 the fair value of the Company's long-term fixed-rate debt approximated
fair value using quoted market prices where available. Market risk associated
with the Company's long-term debt is the potential increase in fair value
resulting from a decrease in interest rates.
 
  The table below provides information about the Company's financial
instruments that are sensitive to changes in interest rates. For debt
obligations including the line of credit, the table presents principal cash
flows and related weighted average interest rates by expected maturity dates.
 
<TABLE>
<CAPTION>
                                December 26, 1998 Expected maturity date
                         ------------------------------------------------------------
                            1999        2000     2001     2002     2003    Thereafter     Total
                         -----------  --------  -------  -------  -------  ----------  -----------
<S>                      <C>          <C>       <C>      <C>      <C>      <C>         <C>
Long-term Debt:
 Fixed Rate............. $ 1,747,000  $238,000  $55,000  $60,000  $64,000  $1,708,000  $ 3,844,000
 Average interest rate..         4.1%      7.2%     9.1%     9.1%     9.1%        9.1%         6.8%
 Variable Rate.......... $92,603,000  $228,000                                         $92,831,000
 Average interest rate..        8.26%     8.26%                                               8.26%
</TABLE>
 
                                      23
<PAGE>
 
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
 
<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Report of PricewaterhouseCoopers LLP......................................   25
Report of Deloitte & Touche, LLP..........................................   26
Report of Katch Tyson & Company...........................................   27
Report of Goldstein Golub Kessler LLP.....................................   28
Consolidated Balance Sheet as of June 28, 1997, December 27, 1997 and
 December 26, 1998........................................................   29
Consolidated Statement of Operations for the Years Ended June 29, 1996 and
 June 28, 1997, the Six Months Ended December 27, 1997 and the Year Ended
 December 26, 1998........................................................   30
Consolidated Statement of Changes in Stockholders' Equity for the Years
 Ended June 29, 1996 and June 28, 1997, the Six Months Ended December 27,
 1997 and the Year Ended December 26, 1998................................   31
Consolidated Statement of Cash Flows for the Years Ended June 29, 1996 and
 June 28, 1997, the Six Months Ended December 27, 1997 and the Year Ended
 December 26, 1998........................................................   37
Notes to Consolidated Financial Statements................................   38
Financial Statement Schedule:
 II -- Valuation and Qualifying Accounts..................................  S-1
</TABLE>
 
  All other schedules are omitted because they are not applicable or the
required information is shown in the Consolidated Financial Statements or the
Notes thereto.
 
  See selected unaudited quarterly financial data in Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations".
 
                                      24
<PAGE>
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors and Stockholders of
Renaissance Worldwide, Inc.
 
  In our opinion, based upon our audits and the reports of other auditors, the
consolidated financial statements listed in the index appearing under Item 8
on page 24 present fairly, in all material respects, the financial position of
Renaissance Worldwide, Inc. and its subsidiaries (the "Company") at June 28,
1997, December 27, 1997 and December 26, 1998, and the results of their
operations and their cash flows for each of the two years in the period ended
June 28, 1997, for the six months ended December 27, 1997, and for the year
ended December 26, 1998, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the results of operations of
Renaissance Solutions, Inc., a wholly-owned subsidiary, for the year ended
December 31, 1996, which are included in the accompanying consolidated
statement of operations for the year ended June 29, 1996. We also did not
audit the financial statements of Neoglyphics Media Corporation, a wholly
owned subsidiary, as of December 31, 1997 and for the year ended December 31,
1997, which statements are included in the accompanying balance sheet as of
June 28, 1997 and December 27, 1997 and in the accompanying consolidated
statement of operations for the year ended June 28, 1997. We also did not
audit the financial statements of Triad Data, Inc., a wholly owned subsidiary,
as of December 31, 1997 and for each of the two years in the period ended
December 31, 1997, which statements are included in the accompanying balance
sheet as of June 28, 1997 and December 27, 1997 and in the accompanying
consolidated statement of operations for the years ended June 29, 1996 and
June 28, 1997, respectively. In the aggregate, these statements reflect total
assets of $17,787,000, in the accompanying consolidated balance sheet as of
June 28, 1997 and December 27, 1997, and total revenues of $74,454,000 and
$61,575,000 in the accompanying consolidated statement of operations for the
years ended June 29, 1996 and June 28, 1997, respectively. Those statements
were audited by other auditors whose reports thereon have been furnished to
us, and our opinion expressed herein, insofar as it relates to the amounts
included for Renaissance Solutions, Inc., Neoglyphics Media Corporation and
Triad Data, Inc. for these periods is based solely on the reports of the other
auditors. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits and the reports of other auditors
provide a reasonable basis for the opinion expressed above.
 
PricewaterhouseCoopers LLP
 
Boston, Massachusetts
February 25, 1999, except
for the termination of the
line of credit described in
Note 9, which is as of March
24, 1999
 
                                      25
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors and Stockholders of
Renaissance Solutions, Inc.
 
  We have audited the consolidated statements of operations, stockholders'
equity and cash flows of Renaissance Solutions, Inc. and its subsidiaries (the
"Company") for the year ended December 31, 1996 (not presented separately
herein). These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
 
  We conducted our audit in accordance with generally accepted auditing
standards. 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 audit provides a reasonable basis
for our opinion.
 
  In our opinion, such consolidated financial statements present fairly, in
all material respects, the results of operations and cash flows of Renaissance
Solutions, Inc. and its subsidiaries for the year ended December 31, 1996 in
conformity with generally accepted accounting principles.
 
  As described in Note 3, the consolidated financial statements of the Company
give retroactive effect to the acquisition of International Systems Services
Corporation by the Company on December 31, 1996 as a pooling-of-interests.
 
                                          Deloitte & Touche LLP
 
Boston, Massachusetts
February 28, 1997
 
                                      26
<PAGE>
 
                         INDEPENDENT AUDITOR'S REPORT
 
To the Shareholders of
Neoglyphics Media Corporation
 
  We have audited the accompanying statement of financial position of
Neoglyphics Media Corporation as of December 31, 1997, and the related
statements of income and cash flows for the year then ended (not presented
separately herein). These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
  We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 financial statements referred to above present fairly,
in all material respects, the financial position of Neoglyphics Media
Corporation at December 31, 1997, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
 
                                          Katch, Tyson & Company
 
Northfield, IL
March 12, 1998
 
                                      27
<PAGE>
 
                         INDEPENDENT AUDITOR'S REPORT
 
To the Stockholder
Triad Data, Inc.
 
  We have audited the accompanying balance sheets of Triad Data, Inc. as of
December 31, 1997 and 1996 and the related statements of income and retained
earnings, and cash flows for the years then ended (not presented separately
herein). These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. 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 financial statements referred to above present fairly,
in all material respects, the financial position of Triad Data, Inc. as of
December 31, 1997 and 1996 and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.
 
                                          Goldstein Golub Kessler LLP
 
New York, New York
February 27, 1998
 
                                      28
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
                           CONSOLIDATED BALANCE SHEET
                             (Dollars in Thousands)
 
<TABLE>
<CAPTION>
                                            June 28,   December 27, December 26,
                                              1997         1997         1998
                                            ---------  ------------ ------------
<S>                                         <C>        <C>          <C>
                  ASSETS
Current assets
 Cash and cash equivalents................  $  30,013    $ 19,956     $ 10,957
 Marketable securities....................     28,675       5,867          --
 Accounts receivable, net of allowance
  for doubtful accounts of $1,840, $3,444
  and $9,616 at June 28, 1997, December
  27, 1997, and December 26, 1998
  respectively............................    122,552     153,994      196,190
 Notes receivable.........................      1,680       1,706        1,039
 Deferred income taxes....................      2,299       2,167       10,335
 Other current assets.....................      4,256       7,408       22,879
                                            ---------    --------     --------
   Total current assets...................    189,475     191,098      241,400
Fixed assets, net.........................     19,355      26,731       31,157
Notes receivable from officers............        535         108        1,049
Goodwill and other intangible assets, net
 of accumulated amortization of $1,028,
 $2,593 and $6,630 at June 28, 1997,
 December 27, 1997, and December 26, 1998,
 respectively.............................     46,164      94,343       84,869
Other assets..............................      1,392       3,042       11,511
Deferred income taxes.....................        --          855        2,079
                                            ---------    --------     --------
   Total assets...........................  $ 256,921    $316,177     $372,065
                                            =========    ========     ========
   LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
 Lines of credit..........................  $   8,750    $ 43,300     $ 92,476
 Current portion of capital lease
  obligations.............................        185         107          267
 Current portion of long-term debt........        560       2,876        1,803
 Note payable to officer..................         93          93          --
 Accounts payable.........................      9,442      13,101       11,454
 Accrued salaries and wages...............     12,408      13,249       15,761
 Other accrued expenses...................     18,870      41,349       56,928
 Income taxes payable.....................      1,634         201          --
 Deferred income taxes....................      3,510       1,411        4,181
                                            ---------    --------     --------
   Total current liabilities..............     55,452     115,687      182,870
Deferred income taxes.....................      1,166       2,535        5,928
Capital lease obligations.................        242          43           29
Long-term debt............................      2,284       3,602        2,324
Other liabilities.........................        685         415        1,129
                                            ---------    --------     --------
   Total liabilities......................     59,829     122,282      192,280
                                            ---------    --------     --------
Commitments and contingencies (Notes 4 and
 13)
Stockholders' equity
Preferred stock, no par value (Note 11):
 Authorized 5,000,000 shares, issued and
  outstanding--0 at June 28, 1997,
  December 27, 1997, and December 26,
  1998....................................  $     --     $    --      $    --
Preferred stock, $0.10 par value (Note
 11)......................................        --          --           --
Common stock, no par value:
 Authorized 99,000,000 shares; issued and
  outstanding--54,158,078 shares at June
  28, 1997, 54,666,024 shares at December
  27, 1997, and 56,226,552 issued and
  56,026,552, outstanding at December 26,
  1998....................................      4,725       4,725        4,725
Additional paid-in capital................    157,201     160,743      181,520
Notes receivable from stockholders........       (476)       (476)      (1,476)
Retained earnings.........................     35,500      28,704       (2,642)
Accumulated other comprehensive income....        142         199          204
                                            ---------    --------     --------
                                              197,092     193,895      182,331
Less Treasury stock at cost, 200,000
 shares...................................        --          --        (2,546)
                                            ---------    --------     --------
   Total stockholders' equity.............    197,092     193,895      179,785
                                            ---------    --------     --------
   Total liabilities and stockholders'
    equity................................  $ 256,921    $316,177     $372,065
                                            =========    ========     ========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       29
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
                      CONSOLIDATED STATEMENT OF OPERATIONS
                      (In thousands except per share data)
 
<TABLE>
<CAPTION>
                                                       Six Months
                                Year Ended Year Ended    Ended      Year Ended
                                 June 29,   June 28,  December 27, December 26,
                                   1996       1997        1997         1998
                                ---------- ---------- ------------ ------------
<S>                             <C>        <C>        <C>          <C>
Revenue.......................   $333,063   $489,833    $320,119     $776,314
Cost of revenue...............    232,496    342,422     215,695      528,059
                                 --------   --------    --------     --------
                                  100,567    147,411     104,424      248,255
Selling, general and
 administrative expenses......     76,794    108,642      81,686      222,998
Acquisition-related expenses..      3,524      8,268      17,961        6,904
Restructuring and other asset
 writedowns...................        --         --          --        36,089
                                 --------   --------    --------     --------
Income (loss) from
 operations...................     20,249     30,501       4,777      (17,736)
Interest expense..............     (2,476)    (1,446)     (1,495)      (6,342)
Interest and other income.....      1,703      4,713         817        1,157
                                 --------   --------    --------     --------
Income (loss) before taxes....     19,476     33,768       4,099      (22,921)
Income tax provision..........      7,456     16,594       8,330        8,425
                                 --------   --------    --------     --------
Net income (loss).............   $ 12,020   $ 17,174    $ (4,231)    $(31,346)
                                 ========   ========    ========     ========
Net income (loss) per share--
 basic........................   $   0.28   $   0.34    $  (0.08)    $  (0.57)
Weighted average common shares
 outstanding--basic...........     42,885     50,495      54,537       55,418
Net income (loss) per share--
 diluted......................   $   0.26   $   0.31    $  (0.08)    $  (0.57)
Weighted average common and
 potential common shares
 outstanding--diluted.........     46,862     54,607      54,537       55,418
</TABLE>
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                       30
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                        (In thousands except share data)
 
<TABLE>
<CAPTION>
                            Preferred Stock      Common Stock     Common Stock
                                No Par              No Par         $0.01 Par
                           ------------------  ----------------- ---------------
                             Shares    Value     Shares    Value  Shares   Value
                           ----------  ------  ----------  ----- --------  -----
<S>                        <C>         <C>     <C>         <C>   <C>       <C>
Balance at June 24,
 1995....................   2,448,000   1,916  30,603,464    199  200,000     2
Consolidation of real
 estate trust............         --      --          --     --       --    --
Acquisition of America's
 Registry by RWI.........         --      --   10,666,666    --  (200,000)   (2)
Amortization of deferred
 stock compensation......         --      --          --     --       --    --
Proceeds from issuance of
 Common Stock, net of
 issuance costs..........         --      --    6,247,640    --       --    --
Stock issued upon
 exercise of options.....      23,000     --      311,811      3      --    --
Stock issued upon
 exercise of warrants....         --      --    1,013,760    --       --    --
Stock issued through
 stock purchase plan.....         --      --       67,429    --       --    --
Tax benefit associated
 with option exercises...         --      --          --     --       --    --
Capital contribution.....         --      --          --     --       --    --
Distributions............         --      --          --     --       --    --
Unrealized loss on
 marketable securities...         --      --          --     --       --    --
Net income for the year..         --      --          --     --       --    --
Cumulative translation
 adjustment..............         --      --          --     --       --    --
Comprehensive income for
 the year................         --      --          --     --       --    --
Elimination of duplicate
 activity for the six
 month period ended
 December 31, 1995
 resulting from the
 change in fiscal year of
 entities acquired in
 poolings-of-interests...     (23,000)    --      (12,622)   --       --    --
                           ----------  ------  ----------  ----- --------   ---
Balance at June 29,
 1996....................   2,448,000   1,916  48,898,148    202      --    --
Repurchase of stock......         --      --          --     --       --    --
Proceeds from issuance of
 stock, net of issuance
 costs...................     165,000   1,564   2,776,660  1,043      --    --
Stock issued upon sale of
 warrants................         --      --    1,013,760    --       --    --
Compensation in
 connection with grant of
 stock options...........         --      --          --     --       --    --
Stock issued upon
 exercise of options.....         --      --    1,210,537    --       --    --
Stock issued for
 acquisition.............         --      --      266,528    --       --    --
Tax benefit associated
 with option exercises...         --      --          --     --       --    --
Amortization of deferred
 stock compensation......         --      --          --     --       --    --
Conversion of preferred
 stock...................  (2,613,000) (3,480)  1,434,160  3,480      --    --
Stock issued through
 stock purchase plan.....         --      --      111,474    --       --    --
Buy back of Treasury
 Stock...................         --      --      (15,005)   --       --    --
Distributions............         --      --          --     --       --    --
Unrealized loss on
 marketable securities...         --      --          --     --       --    --
Net income for the year..         --      --          --     --       --    --
Cumulative translation
 adjustment..............         --      --          --     --       --    --
Comprehensive income for
 the year................         --      --          --     --       --    --
Elimination of duplicate
 activity for the six
 month period ended
 December 31, 1996
 resulting from the
 change in fiscal year of
 entity acquired in
 pooling-of-interests....         --      --   (1,538,184)   --       --    --
                           ----------  ------  ----------  ----- --------   ---
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       31
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                        (In thousands except share data)
 
<TABLE>
<CAPTION>
                             Preferred Stock       Common Stock    Common Stock
                                  No Par              No Par        $0.01 Par
                             ------------------  ----------------- ------------
                              Shares    Value      Shares   Value  Shares Value
                             --------  --------  ---------- ------ ------ -----
<S>                          <C>       <C>       <C>        <C>    <C>    <C>
Balance at June 28, 1997...       --        --   54,158,078  4,725  --     --
Compensation expense in
 connection with grant of
 stock options.............       --        --          --     --   --     --
Stock issued upon exercise
 of options................       --        --      191,726    --   --     --
Stock issued for
 acquisition...............       --        --      328,578    --   --     --
Tax benefit associated with
 option exercises..........       --        --          --     --   --     --
Stock issued through stock
 purchase plan.............       --        --       73,670    --   --     --
Unrealized gain on
 marketable securities.....       --        --          --     --   --     --
Net loss for the period....       --        --          --     --   --     --
Cumulative translation
 adjustment................       --        --          --     --   --     --
Comprehensive income for
 the period................       --        --          --     --   --     --
Adjustment to add back
 elimination of the six
 month period ended June
 30, 1997 resulting from
 the change in fiscal year
 of entity acquired in
 pooling-of interests......       --        --          --     --   --     --
Elimination of duplicate
 activity for the six month
 period ended December 27,
 1997 resulting from the
 change in fiscal year of
 entities acquired in
 pooling-of-interests......       --        --     (86,028)    --   --     --
                              -------  --------  ---------- ------  ---   ----
Balance at December 27,
 1997......................       --        --   54,666,024  4,725  --     --
Stock issued upon exercise
 of options................       --        --    1,301,014    --   --     --
Repurchase of stock........       --        --          --     --   --     --
Stock issued for
 acquisition...............       --        --          --     --   --     --
Tax benefit associated with
 option exercises..........       --        --          --     --   --     --
Stock issued through stock
 purchase plan.............       --        --      259,514    --   --     --
Issuance of notes to
 stockholders..............       --        --          --     --   --     --
Unrealized gain on
 marketable securities.....       --        --          --     --   --     --
Net loss for the year......       --        --          --     --   --     --
Cumulative translation
 adjustment................       --        --          --     --   --     --
Comprehensive income for
 the year..................       --        --          --     --   --     --
                              -------  --------  ---------- ------  ---   ----
Balance at December 26,
 1998......................       --   $    --   56,226,552 $4,725  --    $--
                              =======  ========  ========== ======  ===   ====
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       32
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                        (In thousands except share data)
 
<TABLE>
<CAPTION>
                                                   Treasury Stock
                                                   ---------------
                                        Warrant to                     Notes
                             Additional  Acquire                     Receivable
                              Paid-In     Common                        From
                              Capital     Stock    Shares   Value   Stockholders
                             ---------- ---------- -------  ------  ------------
<S>                          <C>        <C>        <C>      <C>     <C>
Balance at June 24, 1995...    15,659      1,600       --      --       (476)
Consolidation of real
 estate trust..............      (111)       --        --      --        --
Acquisition of America's
 Registry by RWI...........         2        --        --      --        --
Amortization of deferred
 stock compensation........       --         --        --      --        --
Proceeds from issuance of
 Common Stock, net of
 issuance costs............    68,962        --        --      --        --
Stock issued upon exercise
 of options................     1,696        --        --      --        --
Stock issued upon exercise
 of warrants...............    11,917     (1,600)      --      --        --
Stock issued through stock
 purchase plan.............       607        --        --      --        --
Tax benefit associated with
 option exercises..........     1,178        --        --      --        --
Capital contribution.......       421        --        --      --        --
Distributions..............       --         --        --      --        --
Unrealized loss on
 marketable securities.....       --         --        --      --        --
Net income for the year....       --         --        --      --        --
Cumulative translation
 adjustment................       --         --        --      --        --
Comprehensive income for
 the year..................       --         --        --      --        --
Elimination of duplicate
 activity for the six month
 period ended December 31,
 1995 resulting from the
 change in fiscal year of
 entities acquired in
 poolings-of-interests.....       --         --        --      --        --
                              -------     ------   -------  ------      ----
Balance at June 29, 1996...   100,331        --        --      --       (476)
Repurchase of stock........       --         --     96,286  (2,000)
Proceeds from issuance of
 stock, net of issuance
 costs.....................    52,916        --    (96,286)  2,000       --
Stock issued upon sale of
 warrants..................    11,917     (1,600)      --      --        --
Compensation expense in
 connection with grant of
 stock options.............       528        --        --      --        --
Stock issued upon exercise
 of options................     3,497        --        --      --        --
Stock issued for
 acquisition...............     3,979        --        --      --        --
Tax benefit associated with
 option exercises..........     3,557        --        --      --        --
Amortization of deferred
 stock compensation........       --         --        --      --        --
Conversion of preferred
 stock.....................       --         --        --      --        --
Stock issued through stock
 purchase plan.............     1,126        --        --      --        --
Buy back of Treasury
 Stock.....................       --         --        --      --        --
Distributions..............       --         --        --      --        --
Unrealized loss on
 marketable securities.....       --         --        --      --        --
Net income for the year....       --         --        --      --        --
Cumulative translation
 adjustment................       --         --        --      --        --
Comprehensive income for
 the year..................       --         --        --      --        --
Elimination of duplicate
 activity for the six month
 period ended December 31,
 1996 resulting from the
 change in fiscal year of
 entity acquired in
 pooling-of-interests......   (20,650)     1,600       --      --        --
                              -------     ------   -------  ------      ----
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       33
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                        (In thousands except share data)
 
<TABLE>
<CAPTION>
                                                   Treasury Stock
                                                   ---------------
                                        Warrant to                     Notes
                             Additional  Acquire                     Receivable
                              Paid-In     Common                        From
                              Capital     Stock    Shares   Value   Stockholders
                             ---------- ---------- ------- -------  ------------
<S>                          <C>        <C>        <C>     <C>      <C>
Balance at June 28, 1997...
 .                             157,201      --         --      --        (476)
Compensation expense in
 connection with grant of
 stock Options.............        750      --         --      --         --
Stock issued upon exercise
 of options................      1,057      --         --      --         --
Stock issued for
 acquisition...............        --       --         --      --         --
Tax benefit associated with
 option exercises..........        302      --         --      --         --
Stock issued through stock
 purchase plan.............      1,475      --         --      --         --
Unrealized gain on
 marketable securities.....        --       --         --      --         --
Net loss for the period....        --       --         --      --         --
Cumulative translation
 adjustment................        --       --         --      --         --
Comprehensive income for
 the period                        --       --         --      --         --
Adjustment to add back
 elimination of the six
 month period ended June
 30, 1997 resulting from
 the change in fiscal year
 of entity acquired in
 pooling-of-interests......        --       --         --      --         --
Elimination of duplicate
 activity for the six month
 period ended December 27,
 1997 resulting from the
 change in fiscal year of
 entities acquired in
 poolings-of-interests.....        (42)     --         --      --         --
                              --------     ----    ------- -------    -------
Balance at December 27,
 1997......................    160,743      --         --      --        (476)
Stock issued upon exercise
 of stock options..........      5,861      --         --      --         --
Repurchase of stock........        --       --     200,000  (2,546)       --
Stock issued for
 acquisition...............        129      --         --      --         --
Tax benefit associated with
 option exercises..........      9,914      --         --      --         --
Stock issued through stock
 purchase plan.............      4,873      --         --      --         --
Issuance of notes to
 stockholders..............        --       --         --      --      (1,000)
Unrealized loss on
 marketable securities.....        --       --         --      --         --
Net loss for the year......        --       --         --      --         --
Cumulative translation
 adjustment................        --       --         --      --         --
Comprehensive income for
 the period................        --       --         --      --         --
                              --------     ----    ------- -------    -------
Balance at December 26,
 1998......................   $181,520     $--     200,000 $(2,546)   $(1,476)
                              ========     ====    ======= =======    =======
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       34
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                        (In thousands except share data)
 
<TABLE>
<CAPTION>
                                                   Accumulated Other
                                                  Comprehensive Income
                                                  --------------------
                            Deferred             Unrealized  Cumulative      Total
                             Stock     Retained Gain/Loss on Translation Stockholders'
                          Compensation Earnings Investments  Adjustment     Equity
                          ------------ -------- ------------ ----------- -------------
<S>                       <C>          <C>      <C>          <C>         <C>
Balance at June 24,
 1995...................       (195)    14,760         35         (48)       33,452
Consolidation of real
 estate trust...........        --         --         --          --           (111)
Acquisition of America's
 Registry by RWI........        --         --         --          --            --
Amortization of deferred
 stock compensation.....         31        --         --          --             31
Proceeds from issuance
 of Common Stock, net of
 issuance costs.........        --         --         --          --         68,962
Stock issued upon
 exercise of options....        --         --         --          --          1,699
Stock issued upon
 exercise of warrants...        --         --         --          --         10,317
Stock issued through
 stock purchase plan....        --         --         --          --            607
Tax benefit associated
 with option exercises..        --         --         --          --          1,178
Capital contribution....        --         --         --          --            421
Distributions...........        --      (2,958)       --          --         (2,958)
Unrealized loss on
 marketable securities..        --         --         (53)        --
Net income for the
 year...................        --      12,020        --          --
Cumulative translation
 adjustment.............        --         --         --          313
Comprehensive income for
 year...................        --         --         --          --         12,280
Elimination of duplicate
 activity for the six
 month period ended
 December 31, 1995
 resulting from the
 change in fiscal year
 of entities acquired in
 poolings-of-interests..        (15)    (2,120)       --          --         (2,135)
                             ------     ------     ------      ------       -------
Balance at June 29,
 1996...................       (179)    21,702        (18)        265       123,743
Repurchase of stock.....        --         --         --          --         (2,000)
Proceeds from issuance
 of stock, net of
 issuance costs.........        --         (80)       --          --         57,443
Stock issued upon sale
 of warrants............        --         --         --          --         10,317
Compensation in
 connection with grant
 of stock options.......        --         --         --          --            528
Stock issued upon
 exercise of options....        --         --         --          --          3,497
Stock issued for
 acquisition............        --         --         --          --          3,979
Tax benefit associated
 with option exercises..        --         --         --          --          3,557
Amortization of deferred
 stock compensation.....        179        --         --          --            179
Conversion of preferred
 stock..................        --         --         --          --            --
Stock issued through
 stock purchase plan....        --         --         --          --          1,126
Buy back of Treasury
 Stock..................        --         --         --          --            --
Distributions...........        --      (3,465)       --          --         (3,465)
Unrealized loss on
 marketable securities..        --         --         (15)        --
Net income for the
 year...................        --      17,174        --          --
Cumulative translation
 adjustment.............        --         --         --          200
Comprehensive income for
 the year...............        --         --         --          --         17,359
Elimination of duplicate
 activity for the six
 month period ended
 December 31, 1996
 resulting from the
 change in fiscal year
 of the entities
 acquired in pooling-of-
 interests..............        --         169         12        (302)      (19,171)
                             ------     ------     ------      ------       -------
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       35
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                        (In thousands except share data)
 
<TABLE>
<CAPTION>
                                                    Accumulated Other
                                                   Comprehensive Income
                                                   --------------------
                            Deferred              Unrealized  Cumulative      Total
                             Stock     Retained  Gain/Loss on Translation Stockholders'
                          Compensation Earnings  Investments  Adjustment     Equity
                          ------------ --------  ------------ ----------- -------------
<S>                       <C>          <C>       <C>          <C>         <C>
Balance at June 28,
 1997...................        --      35,500         (21)         163      197,092
Compensation expense in
 connection with grant
 of stock options               --         --          --           --           750
Stock issued upon
 exercise of options....        --         --          --           --         1,057
Stock issued for
 acquisitions...........        --         --          --           --           --
Tax benefit associated
 with option exercises..        --         --          --           --           302
Stock issued through
 stock purchase plan....        --         --          --           --         1,475
Unrealized gain on
 marketable securities..        --         --           43          --
Net loss for the
 period.................        --      (4,231)        --           --
Cumulative translation
 adjustment.............        --         --          --           160
Comprehensive income for
 the period.............        --         --          --           --        (4,028)
Adjustment to add back
 elimination of the six
 month period ended June
 30, 1997 resulting from
 the change in fiscal
 year of entity acquired
 in pooling-of-
 interests..............        --        (827)        --          (146)        (973)
Elimination of duplicate
 activity for the six
 month period ended
 December 27, 1997
 resulting from the
 change in fiscal year
 of the entities
 acquired in pooling-of-
 interests .............        --      (1,738)        --           --        (1,780)
                             ------    -------      ------      -------     --------
Balance at December 27,
 1997...................        --      28,704          22          177      193,895
Stock issued upon
 exercise of stock
 options................        --         --                                  5,861
Repurchase of stock.....        --         --          --           --        (2,546)
Stock issued for
 acquisition............        --         --          --           --           129
Tax benefit associated
 with option exercises..        --         --          --           --         9,914
Stock issued through
 stock purchase plan....        --         --          --           --         4,873
Issuance of notes to
 stockholders...........        --         --          --           --        (1,000)
Unrealized loss on
 marketable securities..        --         --          (22)         --
Net loss for the year...        --     (31,346)        --           --
Cumulative translation
 adjustment.............        --         --          --            27
Comprehensive loss for
 the year...............        --         --          --           --       (31,341)
                             ------    -------      ------      -------     --------
Balance at December 26,
 1998...................        --     $(2,642)        --       $   204     $179,785
                             ======    =======      ======      =======     ========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
 
                                       36
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
                      CONSOLIDATED STATEMENT OF CASH FLOWS
 
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                                 (In thousands)
<TABLE>
<CAPTION>
                                                       Six Months
                                 Year Ended Year Ended    Ended      Year Ended
                                  June 29,   June 28,  December 27, December 26,
                                    1996       1997        1997         1998
                                 ---------- ---------- ------------ ------------
<S>                              <C>        <C>        <C>          <C>
Cash flows from operating
 activities:
 Net income (loss).............   $12,020    $ 17,174    $(4,231)     $(31,346)
 Adjustments to reconcile net
  income (loss) to net cash
  provided by (used for)
  operating activities:
 Depreciation and
  amortization.................     2,129       3,947      5,099        10,748
 Provision for losses on
  accounts receivable..........       539         902      1,274        12,703
 Deferred income taxes.........      (406)      4,129        (97)       (3,624)
 Compensation expense on stock
  options......................        31         494        750           --
 Loss on writedown of fixed
  assets.......................       --          --         --          4,159
 Write down of goodwill........       --          --         --         26,409
 Changes in operating assets
  and liabilities:
  Accounts receivable..........   (19,512)    (39,041)   (26,677)      (50,263)
  Other current assets.........      (726)     (2,478)    (2,708)       (6,063)
  Other assets.................      (287)     (1,093)    (3,446)       (8,757)
  Accounts payable.............     4,538      (3,463)    (3,789)       (2,202)
  Other accrued expenses.......     6,566       3,523     15,380        18,410
  Accrued salaries and wages...     2,350         331      1,134         2,306
  Income taxes payable.........     1,688       2,041     (1,381)          --
  Other liabilities............        94          51        127          (525)
                                  -------    --------    -------      --------
   Net cash provided by (used
    for) operating activities..     9,024     (13,483)   (18,565)      (28,045)
                                  -------    --------    -------      --------
Cash flows from investing
 activities:
 Cash disbursed for
  acquisitions, net of cash
  acquired.....................       --      (41,543)   (36,987)      (24,331)
 Increase in notes receivable
  from officers................    (1,021)        (90)       (31)       (1,134)
 Repayment of notes receivable
  from officers................     2,548         928      1,383           193
 Repayment of notes receivable
  related party................       --          --         --            243
 Increase in notes receivable..       (25)     (1,559)       (81)          --
 Issuance of note receivable
  from stockholders............       --          --         --         (1,000)
 Investment in capitalized
  software.....................       --          --      (1,361)          --
 Purchases of marketable
  securities...................   (46,267)   (246,679)   (91,926)          --
 Sales and maturities of
  marketable securities........    33,194     231,579    114,734         5,845
 Purchases of fixed assets.....    (5,384)     (8,216)   (10,480)      (14,436)
                                  -------    --------    -------      --------
   Net cash used for investing
    activities.................   (16,955)    (65,580)   (24,749)      (34,620)
                                  -------    --------    -------      --------
Cash flows from financing
 activities:
 Cash proceeds from issuance of
  common stock.................    81,876      67,127        --            --
 Cash payments to repurchase
  common stock.................       --       (2,000)       --         (2,546)
 Proceeds from reissuance of
  treasury stock...............       --        1,920        --            --
 Cash proceeds from exercise of
  stock options................     1,181       3,498      1,057         5,861
 Cash proceeds from stock
  purchase plan................       --        1,135      1,473         4,873
 Net borrowings (payments) on
  lines of credit..............   (12,481)      3,507     31,234        47,382
 Net repayments of stockholder
  loans........................       --          --         --            --
 Proceeds from issuance of
  long-term debt...............     2,689         384      4,047           311
 Repayments of short-term
  borrowings...................    (2,145)        --         --            --
 Principal payments on long-
  term debt and capital lease
  obligations..................    (3,697)     (2,564)    (3,292)       (2,242)
 Capital contribution..........       421         --         --            --
 Distributions.................    (2,958)     (3,465)      (925)          --
                                  -------    --------    -------      --------
   Net cash provided by
    financing activities.......    64,886      69,542     33,594        53,639
                                  -------    --------    -------      --------
Effect of exchange rates on
 cash and cash equivalents.....       313          84        169            27
Addition of activity for Hunter
 for January to June 1997 (Note
 3)............................       --          --         200           --
Elimination of duplicated
 activity from July to December
 (Note 3)......................      (855)    (25,057)      (706)          --
                                  -------    --------    -------      --------
Net increase (decrease) in cash
 and cash equivalents..........    56,413     (34,494)   (10,057)       (8,999)
Cash and cash equivalents,
 beginning of period...........     8,094      64,507     30,013        19,956
                                  -------    --------    -------      --------
Cash and cash equivalents, end
 of period.....................   $64,507    $ 30,013    $19,956      $ 10,957
                                  =======    ========    =======      ========
SUPPLEMENTAL DISCLOSURE OF CASH
 FLOW INFORMATION:
 Cash paid for interest........   $ 2,260    $  1,311    $ 1,324      $  5,945
 Cash paid for income taxes....   $ 2,060    $ 10,269    $10,589      $ 12,394
</TABLE>
 
  See additional disclosure of non-cash investing and financing activity in
Notes 3, 4, 7, 8, 10 and 15.
 
   The accompanying notes are an integral part of these financial statements.
 
                                       37
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. NATURE OF BUSINESS
 
  Renaissance Worldwide, Inc. ("Renaissance" or the "Company"), formerly known
as The Registry, Inc., is a global provider of business and technology
consulting services to organizations with complex IT operations in a broad
range of industries. The Company's offerings are categorized into four
segments: Business Strategy, Enterprise Solutions, Government Solutions, and
Information Technology ("IT") Consulting Services. The Business Strategy Group
provides management consulting and technology integration services in
connection with performance support systems. The Enterprise Solutions Group
provides IT solutions design and implementation services. The Government
Solutions Group provides specialized management and technology consulting
services to the public sector. The IT Consulting Services Group provides
consulting services centered around application design, implementation and
support. The Company's primary locations are in North America with
subsidiaries in Europe and Asia/Pacific (see Note 18).
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Basis of Consolidation
 
  The accompanying financial statements include the accounts of Renaissance
Worldwide, Inc. and its wholly-owned subsidiaries. On November 26, 1996,
November 27, 1996, July 31, 1997, and November 26, 1997, the Company completed
the acquisitions of Application Resources, Inc. ("ARI"), Shamrock Computer
Resources, Ltd. ("SCR"), Renaissance Solutions, Inc. ("RSI"), and The Hunter
Group, Inc. ("Hunter"), respectively. On December 31, 1996, RSI completed the
acquisition of International Systems Services Corporation ("ISS"). On March
31, 1998 and April 2, 1998, the Company completed the acquisitions of
Neoglyphics Media Corporation ("Neoglyphics") and Triad Data, Inc. ("Triad"),
respectively. These transactions have been accounted for as poolings-of-
interests and, therefore, the accompanying financial statements have been
retroactively restated to reflect the financial position and results of
operations and cash flows of each of these entities with the Company for all
periods presented (see Note 3). In addition, the accompanying financial
statements include the accounts of several entities acquired in purchase
transactions, subsequent to their respective acquisition dates (see Note 4),
as well as the accounts of a real estate trust (the "Trust") which is
substantially controlled by the Company, subsequent to the renegotiation of
certain lease terms on September 19, 1995 (see Note 16). All material
intercompany balances and transactions have been eliminated.
 
 Fiscal Year
 
  Effective with the period ended December 27, 1997, the Company changed its
fiscal year from the last Saturday in June to the last Saturday in December.
RSI, ARI and SCR previously utilized a December 31 year end. Upon acquisition,
RSI, ARI and SCR changed their fiscal year ends to the last Saturday in June
to conform to the Company's previous fiscal year. Hunter, Neoglyphics, and
Triad previously utilized a December 31 year end. Upon acquisition, Hunter,
Neoglyphics, and Triad changed their fiscal year ends to the last Saturday in
December to conform to the Company's fiscal year (see Note 3).
 
  The six month period ended December 27, 1997 (the "Transition Period")
reflects the results of operations and cash flows for the six months then
ended for the Company and all of its subsidiaries. The results of operations
and of cash flows for the years ended June 29, 1996, June 28, 1997, and
December 26, 1998 are for 53 weeks, 52 weeks and 52 weeks, respectively.
 
  The unaudited results of operations for the six month period ended December
28, 1996 included revenues of $214,774,000, cost of revenues of $150,052,000,
selling, general and administrative expenses (including acquisition-related
expenses) of $58,862,000, income from operations of $5,860,000, income before
taxes of
 
                                      38
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
$7,689,000 and net income of $1,654,000. Earnings per share-basic for the
period was $0.03. Earnings per share-diluted for the period was $0.03. In the
opinion of management, the above unaudited amounts include all adjustments,
consisting solely of normal recurring adjustments, necessary to present fairly
the Company's consolidated results of operations for the six months ended
December 28, 1996.
 
 Cash Equivalents
 
  The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. The
Company's cash equivalents consist primarily of short term federal notes and
money market securities bearing interest at a weighted average rate of
approximately 4.5% at December 26, 1998. The investments are carried at cost
plus accrued interest, which approximates market value. The Company considers
such securities to be classified as "available-for-sale" under Statements of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities."
 
 Revenue Recognition
 
  The Company's revenue is primarily comprised of fees for consulting
services. The majority of the Company's revenue is from contracts on a time
and materials basis and is recognized as the services are performed. The
remainder of the Company's contracts are on a fixed-price basis, and revenue
from those contracts is recognized using the percentage of completion method
based upon the number of labor hours incurred compared to the total estimated
hours at estimated realizable rates. Under the percentage of completion
method, the Company must estimate the percentage of completion of each project
at the end of each financial reporting period. Estimates are subject to
adjustment as a project progresses to reflect changes in projected completion
costs or dates. Revenues are reported net of reimbursable expenses which are
typically billed and collected from clients. Losses, if any, are provided for
in the period in which the loss is determined. Amounts received in excess of
revenue recognized are recorded as deferred revenue.
 
 Accounts Receivable, Concentration of Credit Risk and Uncertainties
 
  The Company is subject to credit risk through trade receivables. Credit risk
with respect to trade receivables is mitigated by the diversification of the
Company's operations, as well as its large client base and its geographical
dispersion. The Company performs ongoing evaluations of its receivables and
may obtain retainers at the onset of significant fixed price client
engagements. Collateral is not required for time and material contracts. In
management's opinion, the Company has provided sufficient provisions to
prevent a significant impact of credit losses to the financial statements. The
failure of the Company to complete a fixed price project to the client's
satisfaction within the fixed price exposes the Company to potentially
unrecoverable cost overruns.
 
  Fees on fixed-price contracts are generally billable to clients upon the
achievement of specified milestones. Unbilled revenue was $5,174,000,
$7,913,000, and $23,073,000, at June 28, 1997, December 27, 1997, and December
26, 1998 respectively.
 
  No single customer accounted for more than 10% of revenues or more than 10%
of accounts receivable for any period presented.
 
                                      39
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
 Fixed Assets
 
  Fixed assets are stated at cost. Additions, renewals and betterments of
fixed assets are capitalized. Repair and maintenance expenditures for minor
items are generally expensed as incurred. Depreciation of fixed assets is
provided using the straight-line method over the following estimated useful
lives:
 
<TABLE>
   <S>                                          <C>
   Buildings and improvements.................. 31 1/2 years
   Computer equipment.......................... 5 years
   Furniture and equipment..................... 5 to 7 years
   Motor vehicles.............................. 5 years
   Leasehold improvements...................... Lesser of lease term or 20 years
</TABLE>
 
  In March 1998, the FASB issued Statement of Position No. 98-1, "Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use"
("SOP 98-1"). SOP 98-1 was effective for fiscal years beginning after December
15, 1998. The Company's existing accounting policies conform with the
requirements of this statement. The Company has capitalized $3.6 million in
1998 in relation to the Peoplesoft implementation. These costs primarily
include licensing fees and internal labor costs of employees directly
associated with the implementation project.
 
 Advertising Costs
 
  Advertising costs are recorded as expense when incurred.
 
 Income Taxes
 
  The Company utilizes the asset and liability method of accounting for income
taxes, as set forth in Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes". SFAS No. 109 requires the recognition
of deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the financial statement and tax
bases of assets and liabilities, utilizing currently enacted tax rates. The
effect of any future change in tax rates is recognized in the period in which
the change occurs.
 
  Certain of the Company's subsidiaries had previously elected to be treated
as small business corporations for income tax purposes with income or loss and
credits passed through to the stockholders. These elections were subsequently
terminated prior to or upon acquisition by the Company and the net deferred
tax asset or liability as of the date of acquisition has been included in the
provision for income taxes in the period of termination.
 
  Certain of the Company's subsidiaries had previously utilized the cash
method of accounting for income taxes. Upon acquisition by the Company, these
subsidiaries converted to the accrual method of accounting for income taxes.
 
 Stock-Based Compensation
 
  The Company accounts for employee awards under its stock plans in accordance
with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" and related interpretations. The Company adopted SFAS No. 123,
"Accounting for Stock-Based Compensation" for disclosure purposes only (See
Note 12).
 
 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
 
                                      40
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
disclosure of contingencies at June 28, 1997, December 27, 1997, and December
26, 1998 and the reported amounts of revenues and expenses for the two years
in the period ended June 28, 1997, the six month period ended December 27,
1997 and the year ended December 26, 1998. Actual results could differ from
those estimates.
 
 Goodwill and Other Intangible Assets
 
  As described in Note 4, the Company amortizes goodwill and intangible assets
arising from purchase acquisitions on a straight-line basis over a period of
10 to 30 years. Goodwill is evaluated for consideration of potential
impairment based on the operating results and forecasted cash flows of the
acquired entity.
 
 Reclassifications
 
  Certain amounts in the prior year financial statements have been
reclassified to conform to the current period presentation.
 
 Segment Reporting
 
  In 1998, the Company adopted SFAS No. 131 "Disclosures about Segments of an
Enterprise and Related Information". SFAS No. 131 superseded SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise", redefining the
segments to be those used by management for making operating decisions and
assessing performance. SFAS No. 131 also requires disclosures about products
and services, geographic areas, and major customers. The adoption of SFAS No.
131 did not affect the results of operations or financial position but did
affect the disclosure of segment information (see Note 18).
 
 Other Comprehensive Income
 
  In the first quarter of 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." This statement requires disclosure of comprehensive
income and its components in interim and annual reports. Comprehensive income
includes all changes in stockholders' equity during a period except those
resulting from investments by stockholders and distributions to stockholders.
Accordingly, the components of comprehensive income include net income,
cumulative translation adjustments and unrealized gains and losses on
available-for-sale securities. Deferred taxes have not been provided on
cumulative translation adjustments because deferred taxes have not been
provided on unremitted earnings (see Note 10). Deferred taxes and any
reclassification adjustments related to unrealized gains/losses on investments
are insignificant.
 
 Translation of Foreign Currencies
 
  The functional currency of the Company's subsidiaries is the local currency.
Assets and liabilities of foreign subsidiaries are translated into U.S.
dollars at exchange rates in effect at the balance sheet date; income and
expense items and cash flows are translated at average exchange rates for the
period. Cumulative net translation adjustments are included in stockholders'
equity. Gains and losses resulting from foreign currency transactions, not
significant in amount, are included in the results of operations as other
income (expense).
 
 Net Income Per Share
 
  In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings per Share". SFAS No. 128 specifies modifications to
the Renaissance Worldwide, Inc. calculation of earnings per share from that
previously used by the Company. Under SFAS No. 128, "earnings per share-basic"
is calculated based upon the weighted average number of common shares actually
outstanding, and "earnings per share-diluted" is calculated based upon the
weighted average number of common shares and dilutive potential common stock
outstanding. Potential common stock includes stock options and warrants,
calculated using the
 
                                      41
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
treasury stock method, and the assumed conversion of ARI's preferred stock
(see Note 11). However, potential common stock has been excluded from the
calculation of diluted earnings per share for the six months ended December
27, 1997 and the year ended December 26, 1998, as its effect would be anti-
dilutive.
 
 
  A reconciliation of the weighted average number of common shares outstanding
is as follows:
 
<TABLE>
<CAPTION>
                                  Year Ended
                          --------------------------- Six Months Ended     Year Ended
                          June 29, 1996 June 28, 1997 December 27, 1997 December 26, 1998
                          ------------- ------------- ----------------- -----------------
                                                (in thousands)
<S>                       <C>           <C>           <C>               <C>
Weighted average number
 of common shares
 outstanding--basic.....     42,885        50,495          54,537            55,418
Assumed exercise of
 stock options, using
 the treasury stock
 method.................      2,641         3,553             --                --
Assumed exercise of
 warrants, using the
 treasury stock method..        104           --              --                --
Assumed conversion of
 ARI's preferred stock..      1,232           559             --                --
                             ------        ------          ------            ------
Weighted average number
 of common and potential
 common shares
 outstanding--diluted...     46,862        54,607          54,537            55,418
                             ======        ======          ======            ======
</TABLE>
 
3. ACQUISITION OF SUBSIDIARIES--POOLING OF INTERESTS
 
 Fiscal 1998 Poolings of Interests
 
  In March 31, 1998 the Company, through a wholly-owned subsidiary, acquired
all of the outstanding stock of Neoglyphics. Neoglyphics is an Internet
development and applications company based in Chicago, Illinois and is a part
of the e-commerce business unit within the Enterprise Solutions group.
Pursuant to the agreement, each share of Neoglyphics was converted into the
right to receive .12495 shares of Renaissance common stock. Renaissance also
assumed outstanding options for the purchase of Neoglyphics common stock at
the same conversion ratio.
 
  On April 2, 1998, the Company, through a wholly-owned subsidiary, acquired
all of the outstanding stock of Triad. Triad is an information technology
consulting firm performing services similar to those of the IT Consulting
Services group of the Company. Pursuant to the agreement, each share of Triad
common stock was converted into the right to receive 24,409.2 shares of
Renaissance common stock.
 
  In total, 4,554,760 shares of the Company's common stock were exchanged for
all of the outstanding common stock of Neoglyphics and Triad. In addition,
outstanding stock options to purchase Neoglyphics common stock were converted
into options to purchase 119,940 shares of the Company's common stock.
 
  Neoglyphics and Triad each had a calendar year end and the results of
operations for the years ended December 31, 1995, December 31, 1996 and
December 31, 1997 were combined with the results of operations for
Renaissance's fiscal years ended June 24, 1995, June 29, 1996 and June 28,
1997, respectively. Additionally, the financial position of Neoglyphics and
Triad as of December 31, 1994, 1995 and 1996 have been combined with the
Company's financial position as of June 24, 1995, June 29, 1996, and June 28,
1997, respectively. In order to conform Neoglyphics' and Triad's year end to
Renaissance's fiscal year end, the consolidated statement of income for the
six months ended December 27, 1997 includes six months (July to December 1997)
for Neoglyphics and Triad which has also been included in the consolidated
statement of income for the fiscal year ended June 28, 1997. An adjustment has
been made to retained earnings in the transition period ended December 28,
1997 to eliminate the duplication of net income of Neoglyphics and Triad for
such six month period.
 
                                      42
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
 Transition Period Poolings of Interests
 
  On July 31, 1997, pursuant to an Agreement and Plan of Merger dated May 19,
1997, the Company, through a wholly-owned subsidiary, acquired RSI. RSI
provides management consulting and client/server systems integration services,
primarily for large corporations. Pursuant to the agreement, each outstanding
share of RSI common stock was converted into the right to receive 1.6 shares
of Renaissance common stock. Renaissance also assumed outstanding options for
the purchase of RSI common stock at the same conversion ratio. Immediately
prior to the acquisition, there were 9,573,204 shares of RSI common stock and
options to purchase 1,364,895 shares of RSI common stock outstanding.
 
  On November 26, 1997, the Company, through a wholly-owned subsidiary,
acquired Hunter. Hunter provides management consulting, systems implementation
and education services to organization seeking to deploy enterprise software
applications, including enterprise resource planning ("ERP") software
applications. Pursuant to the agreement, each outstanding share of Hunter
common stock was converted into the right to receive 19.9086 shares of
Renaissance common stock. Renaissance also assumed outstanding options for the
purchase of Hunter common stock at the same conversion ratio. Immediately
prior to the acquisition, there were 300,000 shares of Hunter common stock and
options to purchase 59,133 shares of Hunter common stock outstanding. In
addition, in conjunction with the acquisition of Hunter, Renaissance issued
328,578 shares of Common Stock in exchange for a residual equity interest in
Hunter held by a third party.
 
  In total, 21,647,012 shares of Renaissance common stock were exchanged for
all of the outstanding common stock of RSI and Hunter. In addition,
outstanding stock options to purchase RSI and Hunter common stock were
converted into options to purchase 3,361,088 shares of Renaissance's common
stock.
 
  RSI had a calendar year end and the results of operations for the years
ended December 31, 1995 and December 31, 1996 were combined with the results
of operations for Renaissance's fiscal years ended June 24, 1995 and June 29,
1996, respectively. Additionally, the financial position of RSI as of December
31, 1995 and 1996 has been combined with the Company's financial position as
of June 24, 1995 and June 29, 1996, respectively. In order to conform RSI's
year end to Renaissance's fiscal year end, the consolidated statement of
income for fiscal 1997 includes six months (July to December 1996) for RSI
which has also been included in the consolidated statement of income for the
fiscal year ended June 29, 1996. An adjustment has been made to retained
earnings in fiscal 1997 to eliminate the duplication of net income of RSI for
such six month period.
 
  Hunter had a calendar year end and the results of operations for the years
ended December 31, 1994, December 31, 1995 and December 31, 1996 were combined
with the results of operations for Renaissance's fiscal years ended June 24,
1995, June 29, 1996 and June 28, 1997, respectively. Additionally, the
financial position of Hunter as of December 31, 1994, 1995 and 1996 has been
combined with the Company's financial position as of June 24, 1995, June 29,
1996, and June 28, 1997, respectively. In order to conform Hunter's year end
to Renaissance's fiscal year end, the consolidated statement of income omits
six months (January to June 1997) for Hunter. An adjustment has been made to
retained earnings in the Transition Period  to add back the net loss for
Hunter for such six month period.
 
 Fiscal 1997 Poolings of Interests
 
  On November 26, 1996, pursuant to an Agreement and Plan of Merger dated
October 30, 1996, the Company, through a wholly-owned subsidiary, acquired
ARI. ARI is an information technology consulting firm performing services
similar to those of the IT Consulting Services group of the Company. Pursuant
to the agreement, each outstanding share of ARI common stock was converted
into the right to receive .548856 shares of the Company's common stock. The
Company also assumed outstanding options for the purchase of ARI common stock
at the same conversion ratio. Immediately prior to the acquisition, there were
5,217,000 shares of ARI common stock and options to purchase 794,000 shares of
ARI common stock outstanding.
 
                                      43
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
  On November 27, 1996, pursuant to an Agreement and Plan of Merger dated
November 2, 1996, the Company, through a wholly-owned subsidiary, acquired
SCR. SCR is an information technology consulting firm performing services
similar to those of the IT Consulting Group of the Company. Pursuant to the
agreement, each outstanding share of SCR common stock was converted into the
right to receive 273.539 shares of the Company's Common Stock. Pursuant to the
provisions of the Iowa Business Corporation Act (the "IBCA"), a stockholder of
SCR holding 352 shares of SCR common stock perfected dissenters' rights under
the IBCA and was paid $2,000,000 in redemption of such shares.
 
  On December 31, 1996, the Company, through its RSI subsidiary, acquired ISS,
a Connecticut corporation. ISS is a consulting firm providing business and
management consulting services. Pursuant to the agreement, all of the
outstanding capital stock of ISS was acquired in exchange for 1,310,000 shares
of RSI common stock (equal to 2,096,000 shares of the Company's Common Stock
pursuant to the July 31, 1997 merger of RSI with the Company).
 
  In total, 6,797,548 shares of the Company's Common Stock were exchanged for
all of the outstanding common stock of ARI, SCR and ISS. In addition,
outstanding stock options to purchase ARI common stock were converted into
options to purchase 435,810 shares of the Company's common stock.
 
  ARI and SCR each had a calendar year end and the results of operations for
ARI and SCR for the year ended December 31, 1995 have been combined with the
results of operations for the Company's fiscal year ended June 24, 1995.
Additionally, the financial position of ARI and SCR as of December 31, 1995
has been combined with the Company's financial position as of June 24, 1995.
In order to conform ARI and SCR's year end to the Company's fiscal year end,
the consolidated statement of income for fiscal 1996 includes six months (July
to December 1995) for both companies which are also included in the
consolidated statement of income for the fiscal year ended June 24, 1995. An
adjustment has been made to retained earnings in fiscal 1996 to eliminate the
duplication of net income of ARI and SCR for such six month period.
 
  There were no material transactions between the Company, ARI, SCR, ISS, RSI,
Hunter, Neoglyphics or Triad during any of the periods presented. No material
adjustments to net assets or results of operations were necessary to conform
the accounting practices of ARI, SCR, ISS, RSI, Hunter, Neoglyphics or Triad
to that of the Company. Certain reclassifications were made to the financial
statements of ARI, SCR, ISS, RSI, Hunter, Neoglyphics and Triad to conform
with the Company's classifications. All costs associated with the acquisitions
have been expensed as incurred.
 
 
                                      44
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
  Separate results of operations for the periods prior to the acquisitions of
ARI, SCR, ISS, RSI, Hunter, Neoglyphics and Triad by the Company were as
follows:
 
<TABLE>
<CAPTION>
                                           Year Ended
                                     ------------------------
                                                                 Six Months
                                     June 29,     June 28,          Ended
                                       1996         1997      December 27, 1997
                                     --------  -------------- -----------------
                                               (in thousands)
<S>                                  <C>       <C>            <C>
Revenue
  Renaissance Worldwide, Inc........ $145,588     $324,766(a)     $285,937 (c)
  Application Resources, Inc........   37,615          -- (a)          --  (c)
  Shamrock Computer Resources,
   Ltd..............................   33,675          -- (a)          --  (c)
  International Systems Services
   Corporation......................   17,666          -- (b)          --  (c)
  Renaissance Solutions, Inc........   34,784       64,277(b)          --  (c)
  The Hunter Group, Inc.............   19,554       39,215             --  (c)
  Neoglyphics Media Corporation.....    4,511        9,539           6,241
  Triad Data, Inc...................   39,670       52,036          27,941
                                     --------     --------        --------
    Combined........................ $333,063     $489,833        $320,119
                                     ========     ========        ========
Net income (loss)
  Renaissance Worldwide, Inc........ $  2,543     $ 10,900(a)     $ (5,969)(c)
  Application Resources, Inc........    1,228          -- (a)          --  (c)
  Shamrock Computer Resources,
   Ltd..............................    2,861          -- (a)          --  (c)
  International Systems Services
   Corporation......................     (704)         -- (b)          --  (c)
  Renaissance Solutions, Inc........    2,474        3,217(b)          --  (c)
  The Hunter Group, Inc.............     (399)         443             --  (c)
  Neoglyphics Media Corporation.....      689        1,295             559
  Triad Data, Inc...................    3,328        1,319           1,179
                                     --------     --------        --------
    Combined........................ $ 12,020     $ 17,174        $ (4,231)
                                     ========     ========        ========
Other changes in stockholders'
 equity
  Renaissance Worldwide, Inc........ $ 33,003     $ 51,027(a)      $ 2,814 (c)
  Application Resources, Inc........        3          -- (a)          --  (c)
  Shamrock Computer Resources, Ltd..   (1,416)         -- (a)          --  (c)
  International Systems Services
   Corporation......................      --           -- (b)          --  (c)
  Renaissance Solutions, Inc........   48,815       26,917(b)          --  (c)
  The Hunter Group, Inc.............        1          285             --  (c)
  Neoglyphics Media Corporation.....      --            42            (601)
  Triad Data, Inc...................      --        (2,925)         (1,179)
                                     --------     --------        --------
    Combined........................ $ 80,406     $ 75,346        $  1,034
                                     ========     ========        ========
</TABLE>
 
--------
(a) Includes the results of ARI and SCR, which were acquired by the Company
    during the year ended June 28, 1997
(b) Includes the results of ISS, which was acquired by RSI during the year
    ended June 28, 1997
(c) Includes the results of ARI, SCR, ISS, RSI and Hunter, which were acquired
    by the Company prior to December 27, 1997
 
 
                                      45
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
4. ACQUISITION OF SUBSIDIARIES--PURCHASES
 
 Fiscal 1998 Purchases
 
  Exad Galons: On March 12, 1998, the Company, through a wholly-owned
subsidiary, completed the acquisition of the outstanding common stock of Exad
Galons, a French corporation headquartered in Paris, France, for $5.0 million
in cash.
 
  Hackenberg & Partner: On March 25, 1998, the Company, through a wholly-owned
subsidiary completed the acquisition of all of the outstanding common stock of
Hackenberg & Partner ("Hackenberg"), a German corporation based in Starnberg,
Germany, for $3.2 million in cash.
 
  Both Exad Galons and Hackenberg are business process and information
technology consulting firms both of which augment the international presence
of the Enterprise Solutions Group.
 
  IPAT: On June 30, 1998, the Company, through a wholly-owned subsidiary
completed the acquisition of all of the outstanding common stock of IPAT, an
Ohio corporation based in Cinncinati, Ohio, for $4.3 million in cash. IPAT
provides information technology implementation and consulting services
primarily to governmental entities.
 
  The aggregate purchase price and related costs associated with Exad Galons,
Hackenberg and IPAT (collectively the "Fiscal 1998 Acquisitions") was
$12.5 million. The purchase price has been allocated to the assets and
liabilities assumed and the excess of the purchase price over the fair value
of the acquired assets and liabilities has been allocated to goodwill which
will be amortized on a straight line basis over a period up to 30 years.
 
  In connection with these acquisitions, the Company may pay contingent
consideration of $8.3 million based upon certain earnout arrangements. Such
amounts will be recorded as additional purchase price when paid.
 
 Transition Period Purchases
 
  During the transition period ended December 27, 1997, the Company acquired
four companies: McClain Group, Inc., Technomics Consultants International,
Inc., Eligibility Management Systems, Inc., and Cambridge Software Group. The
aggregate purchase price and related costs associated with the Transition
Period Acquisitions was $37.5 million which has been allocated to the assets
and liabilities assumed based upon their fair value on the date of
acquisition. The excess of the purchase price over this fair value of acquired
assets and liabilities has been allocated to goodwill which is being amortized
on a straight line basis over a period up to 30 years.
 
  In connection with the Transition Period Acquisitions, the Company may pay
contingent consideration of up to $12.6 million based upon certain earnout
arrangements. Such amounts are recorded as additional purchase price when
paid.
 
 Fiscal 1997 Purchases
 
  During the fiscal year ended June 28, 1997, the Company acquired five
companies: Morris Information Systems, Sun-Tek Consultants, Inc., Sterling
Information Group, James Duncan & Associates ("JDA"), and Connexus Consulting
Group, Inc. In addition, during Fiscal 1997, prior to the merger with the
Company, RSI acquired two companies: COBA Consulting Limited ("COBA UK") and
C.M. Management Systems Ltd., Inc. ("COBA-Boston"). These acquisitions are
collectively referred to as the "Fiscal 1997 Acquisitions". The aggregate
purchase price and related costs associated with the Fiscal 1997 Acquisitions
was $38.0 million plus 266,528 shares of the Company's common stock, which has
been allocated to the assets acquired and liabilities assumed based upon their
fair value on the date of acquisition. The excess of purchase price over the
fair value of acquired net assets has been allocated to goodwill which is
being amortized over a period of up to 30 years.
 
 
                                      46
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
  In connection with the Fiscal 1997 Acquisitions, the Company may pay
contingent consideration of up to $32.3 million based on certain earn-out
arrangements. Such amounts, if paid, will be recorded as additional purchase
price. The acquisition agreement of COBA-Boston contained certain change of
control provisions which were triggered upon the acquisition of RSI by
Renaissance. This resulted in the acceleration of $9.3 million of contingent
consideration, $6.9 million of which was paid in fiscal 1998 and the remainder
has been accrued and is included in accrued expenses at December 26, 1998.
 
  The pro forma results of operations, assuming that the acquisition of the
Fiscal 1998 Acquisitions, the Transition Period Acquisitions and the Fiscal
1997 Acquisitions occurred at the beginning of the year ended June 28, 1997,
the six months ended December 27, 1997, or the year ended December 26, 1998
would not materially differ from the Company's reported results of operations.
 
5. MARKETABLE SECURITIES
 
  Marketable securities are classified as available for sale and consist of
U.S. Treasury Notes, Federal Agency Bonds and Corporate Bonds having maturity
dates of more than three months and are stated at fair value. Aggregate net
unrealized holding gains/(losses) of $(21,000) and $22,000 at June 28, 1997
and December 27, 1997, respectively, have been included as a separate
component of stockholders' equity in the accompanying consolidated balance
sheet. Certain information with respect to the Company's marketable securities
as of June 28, 1997 and December 27, 1997 is presented below:
 
<TABLE>
<CAPTION>
                                                     Gross      Gross
                                                   Unrealized Unrealized
                                         Amortized  Holding    Holding    Fair
              Security Type                Cost      Gains      Losses    Value
              -------------              --------- ---------- ---------- -------
                                                      (in thousands)
                                                       June 28, 1997
   <S>                                   <C>       <C>        <C>        <C>
   U.S. Treasury Notes.................   $ 4,331     $--        $ 18    $ 4,313
   Federal Agency Bonds................    16,688      --          17     16,671
   Commercial Paper....................     7,677       14        --       7,691
                                          -------     ----       ----    -------
                                         $28,696      $ 14       $ 35    $28,675
                                          =======     ====       ====    =======
<CAPTION>
                                                     December 27, 1997
   <S>                                   <C>       <C>        <C>        <C>
   U.S. Treasury Notes.................   $ 4,331     $ 13       $--     $ 4,344
   Federal Agency Bonds................     1,514        9        --       1,523
                                          -------     ----       ----    -------
                                          $ 5,845     $ 22       $--     $ 5,867
                                          =======     ====       ====    =======
</TABLE>
 
  The Company had no marketable securities at December 26, 1998. The fair
values of marketable securities by contractual maturity are shown below.
Actual maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations without call or prepayment
penalties.
 
<TABLE>
<CAPTION>
                                                           June 28, December 27,
                                                             1997       1997
                                                           -------- ------------
                                                              (in thousands)
   <S>                                                     <C>      <C>
   Due in one year or less................................ $21,787     $2,057
   Due after one through three years......................   6,888      3,810
                                                           -------     ------
     Total................................................ $28,675     $5,867
                                                           =======     ======
</TABLE>
 
                                      47
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
6. CONSOLIDATED BALANCE SHEET DETAILS
 
<TABLE>
<CAPTION>
                                               June
                                                28,   December 27, December 26,
                                               1997       1997         1998
                                              ------- ------------ ------------
                                                       (in thousands)
<S>                                           <C>     <C>          <C>
Fixed assets:
  Land....................................... $   360   $   360      $   360
  Building...................................   1,439     1,439        1,439
  Computer equipment and software............  13,989    21,879       27,789
  Furniture and equipment....................   8,346     9,270       10,711
  Motor vehicles.............................     144       116           66
  Leasehold and building improvements........   2,237     4,331        5,702
                                              -------   -------      -------
    Total fixed assets.......................  26,515    37,395       46,067
  Less: accumulated depreciation and
   amortization..............................   7,160    10,664       14,910
                                              -------   -------      -------
    Net fixed assets......................... $19,355   $26,731      $31,157
                                              =======   =======      =======
Other accrued expenses
  Accrued employee benefits.................. $ 5,389   $ 6,245      $10,662
  Accrued commissions and bonuses............   3,334     7,323       12,394
  Accrued acquisition costs..................   1,169     3,655        4,305
  Accrued contingent consideration...........   3,466    14,305        7,063
  Accrued restructuring reserve..............     --        --         2,872
  Other accrued expenses.....................   5,512     9,821       19,632
                                              -------   -------      -------
                                              $18,870   $41,349      $56,928
                                              =======   =======      =======
</TABLE>
 
7. NOTES RECEIVABLE AND RELATED PARTY TRANSACTIONS
 
  Notes receivable due in March 2001 include $1,500,000 at June 28, 1997 and
December 27, 1997, and $985,000 at December 26, 1998 from an unrelated third
party corporation. This note bears interest at the LIBOR rate plus 2.5% (8.22%
at June 28, 1997, 8.16% at December 27, 1997, and 7.713% at December 26,
1998), which is payable quarterly. This note is secured by an interest in all
of the assets of the corporation subject to a prior security interest under
the corporation's bank debt and line of credit, and the personal guarantee of
the corporation's majority stockholder.
 
  Notes receivable from officers represents notes due from various senior
officers of the Company and bear interest at the prime rate (8.5% at June 28,
1997, 8.5% at December 27, 1997, and 7.75% at December 26, 1998).
 
  Notes receivable from stockholders of $476,000 at June 28, 1997 and December
27, 1997, and $1,476,000 at December 26, 1998, which are included as a
reduction of stockholders' equity in the accompanying balance sheet, include
promissory notes from two of ARI's officers totaling $226,000 for the exercise
of stock options bearing interest at a variable rate based upon federal income
tax requirements (approximately 6.5% at June 28, 1997, and 6% at December 27,
1997 and December 26, 1998), two demand notes from an individual who was the
sole stockholder of Hunter totaling $250,000, which accrue interest at 5%, and
notes issued to various employees to purchase the Company's common stock
totaling $1,000,000 which accrue interest at 7.0%.
 
  During the year ended June 28, 1997, the Company entered into a contract
with an entity controlled by the president of the Company to utilize an
airplane for corporate travel purposes. The Company pays for such usage on a
per-flight basis at a rate which management believes approximates market
prices. Total amounts incurred to this entity during the year ended June 28,
1997, the six months ended December 27, 1997, and the year ended December 26,
1998 were $100,000 and $267,000, and $291,000 respectively.
 
                                      48
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
8. RESTRUCTURING AND OTHER ASSET WRITE-DOWNS
 
  The net restructuring and other asset write-downs of $36.1 million in 1998
included a $21.4 million charge for the write-down of the Company's COBA U.K.
business and a $5.7 million charge for the write-down of goodwill and other
assets associated with the Company's Technomics business, both recorded in the
fourth quarter of 1998. In connection with certain business unit and
functional realignments made by the Company, a decision was made to dispose of
these non-performing Strategy business units. No proceeds are anticipated from
the discontinuance of these business units.
 
 
  Net restructuring and other asset write-downs also included $9.0 related to
a restructuring plan designed to focus the Company on the new corporate
strategy and eliminate redundant facilities and personnel recorded in the
third quarter of 1998. Details of the charges and the activity recorded during
1998 are as follows:
 
<TABLE>
<CAPTION>
                             Discontinuance   Severance    Write-down
                            And Consolidation and Other   of Equipment   Total
                               Of Offices       Costs   and Other Assets Costs
<S>                         <C>               <C>       <C>              <C>
Total restructuring and
 other asset write-downs         $1,254        $4,198        $3,528      $8,980
Total charges through
 year-end
 Non-cash costs
 Payments                           --            --          2,938       2,938
Balance, December 26, 1998          205         2,965           --        3,170
                                 ------        ------        ------      ------
                                 $1,049        $1,233        $  590      $2,872
                                 ======        ======        ======      ======
</TABLE>
 
  The write-down of equipment and other assets relates primarily to software
and other computer equipment no longer utilized by the Company. Charges for
the discontinuance and consolidation of offices are related to future lease
payments related to vacated properties in excess of estimated sublease income.
Severance and other costs include expenses related to the termination of
approximately 50 employees, primarily in certain business initiatives the
Company decided to exit, and amounts owed under recruiting contracts for
positions which were eliminated.
 
  The Company currently expects the remaining restructuring accrual to be
utilized, primarily through cash disbursements funded from operations or the
use of additional borrowings in 1999.
 
9. FINANCING ARRANGEMENTS
 
 Lines of Credit
 
  Renaissance: The Company has a line of credit facility in place which
provides a borrowing base of 85% of eligible accounts receivable as defined,
up to a maximum borrowing of $85 million, payable on demand. Interest is
payable monthly in arrears at the bank's prime rate plus .5% (9.0% at June 28,
1997, 9.0% at December 27, 1997, and 8.25% at December 26, 1998) or the LIBOR
rate plus 2.5% (8.64% at June 28, 1997, 8.16% at December 27, 1997, and 7.71%
at December 26, 1998), at the option of the Company. The line of credit is
collateralized by all of the assets of the Company, excluding the assets of
the Trust, contains certain restrictions, including limitations on the amount
of distributions which can be made to stockholders, purchases of fixed assets,
and loans which can be made to officers, and requires the maintenance of
certain financial covenants.
 
  This line of credit was scheduled to expire in February 1999 but was
extended. This line was terminated on March 24, 1999.
 
                                      49
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
  In February of 1999, the Company entered into a new line of credit with a
different bank to provide a borrowing base of 85% of eligible accounts
receivable as defined, up to a maximum borrowing of $110 million. Interest is
payable monthly in arrears at the LIBOR rate plus 2.0% on the higher of the
bank's prime rate or the Fed Funds rate plus .50%, plus .75%, at the Company's
option. The line is collateralized by all of the assets of the Company,
contains certain restrictions, and requires maintenance of certain financial
covenants. The new line of credit is for a 90 day term until syndication of a
senior credit facility committed to by the bank consisting of a $100 million
Revolving Credit Facility and a $50 million three year term loan facility is
executed. This line was used to fund the debt previously funded by the line of
credit which was terminated on March 24, 1999.
 
  In addition to these lines of credit, the Company assumed with certain
acquisitions additional revolving credit facilities, which collectively
allowed borrowings of up to $15 million at interest rates ranging from, prime
to prime plus 2.5%. These credit facilities were terminated during 1998
concurrent with increase of the company's primary line of credit to $85
million.
 
  In June 1997, the Company entered into a line of credit agreement with a
foreign bank to provide an overdraft facility of 1,400,000 British Sterling to
JDA. This facility matures on January 31, 1998 and is secured by a $2.0
million standby letter of credit from a U.S. bank. The Company is required to
maintain this level of cash in this bank. There was $1.5 million, $1.5 million
and $1.0 million drawn on this facility as of June 28, 1997, December 27,
1997, and December 26, 1998, respectively. Interest is payable quarterly at
the bank's base rate plus 0.875% (7.35% at June 28, 1997, 8.125% at December
27, 1997, and 8.625% at December 26, 1998) for amounts up to 1,000,000 British
Sterling and the bank's base rate plus 2.0% for amounts over this level.
 
  Neoglyphics: At June 29, 1996 Neoglyphics had a $0.6 million line of credit
with a bank, which was amended to $2.0 million on December 12, 1997,
collaterialized by a promissory note and security agreement covering
substantially all of Neoglyphics' assets. Interest is payable at one point
above the bank's base rate (8.5% at June 29, 1996 and 8.5% at December 28,
1997) Borrowings under the line were, $13,000 at June 28, 1997, $700,000 at
December 28, 1997, and $1,734,000 at December 26, 1998.
 
 Long-Term Debt
 
  Long term debt consists of the following:
 
<TABLE>
<CAPTION>
                                             June 28, December 27, December 26,
                                               1997       1997         1998
                                             -------- ------------ ------------
                                                       (in thousands)
<S>                                          <C>      <C>          <C>
Note payable due December 1997.............. $   129    $   129         --
Notes payable due November 30, 1998.........     375        250         --
Note payable due November 30, 1998..........     113         37         --
Note payable due December 31, 1998..........      10         10         --
Notes payable due August 1, 1999............     --       3,748       1,500
Note payable due December 31, 1999..........     --         108          61
Note payable due May 2000...................     --         --          169
Notes payable due June 30, 2000.............     167        167         128
Notes payable due June 30, 2000.............     --         --          283
9.375% term loan due August 27, 2010........   1,387      1,378       1,360
6.75% term loan due April 1, 2013...........     663        651         626
                                             -------    -------       -----
                                               2,844      6,478       4,127
Less: Current portion.......................     560      2,876       1,803
                                             -------    -------       -----
                                              $2,284    $ 3,602       2,324
                                             =======    =======       =====
</TABLE>
 
                                      50
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
  The note payable due December 1997 resulted from Renaissance's acquisition
of JDA in December 1996 (see Note 4). These notes were paid in full via stock
to the principal employees of JDA in January 1998.
 
  The notes payable due November 30, 1998 resulted from Renaissance's
acquisition of the former Axiom Consulting Group, Inc. in November 1994. The
notes were unsecured and were payable to the former stockholders of Axiom
Consulting Group, Inc. in semi-annual installments of $125,000, plus interest
at the prime rate published in The Wall Street Journal, beginning in May 1996.
 
  The note payable due November 30, 1998 was due to a former executive of
Hunter. The note was unsecured and non-interest bearing and due in
installments of $40,000 paid in January 1997 and four semi-annual installments
of $18,000 beginning in May 1997.
 
  The note payable due December 31, 1998 was payable in monthly installments
of $904, including interest at an annual rate of 8.5%. A vehicle secured the
note.
 
  The notes payable due August 1, 1999 resulted from Renaissance's acquisition
of EMS in August 1997. The notes are unsecured and payable to the former
stockholders of EMS. The Company paid $0.3 million in December 1997 and $1.8
million in January 1998. An additional $1.0 million is payable in two semi-
annual installments beginning in August 1998 and an additional $1.0 million is
payable in August 1999.
 
  The note payable due December 31, 1999 relates to an acquisition made by RSI
prior to its acquisition by the Company. The note is unsecured and non-
interest bearing.
 
  The notes payable due June 30, 2000 resulted from ARI's repurchase of
510,436 shares of common stock and 465,000 shares of preferred stock from
certain of its stockholders in June 1995 at a price of $0.12 and $0.325 per
share, respectively. These repurchased shares have been excluded from the
number of shares issued and outstanding on the accompanying consolidated
balance sheet. In conjunction with this transaction, ARI issued $261,000 in
promissory notes, recorded as long-term debt on the accompanying balance
sheet, due through June 30, 2000 in five equal installments of $63,000,
including interest of 6.83%, with the first payment due in June 1996. These
notes are unsecured.
 
  In July 1997, Neoglyphics entered into an installment note agreement with a
bank for up to $300,000. Monthly installments of principal and interest are
based on the amount drawn with a maximum monthly payment of $6,301. Final
payment is due June 30, 2000. The note is collaterialized by substantially all
assets of Neoglyphics and bears interest at one point above the bank's base
rate, (8.5% at December 27, 1997).
 
  The term loan due August 27, 2010 is payable to a bank in monthly
installments of $12,000, including interest, and is collateralized by certain
property of the Trust and the personal guarantee of Renaissance's president
and significant stockholder.
 
  The term loan due April 1, 2013 is payable in semi-annual installments of
$34,000, including interest, and is secured by a mortgage on the land and
building of the Trust and the assignment of a life insurance policy on
Renaissance's president and significant stockholder.
 
                                      51
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
  Aggregate maturities of long-term debt are as follows at December 26, 1998
(in thousands):
 
<TABLE>
   <S>                                                                     <C>
   1999................................................................... $1,874
   2000...................................................................    466
   2001...................................................................     55
   2002...................................................................     60
   2003...................................................................     64
   Thereafter.............................................................  1,708
                                                                           ------
     Total................................................................ $4,127
                                                                           ======
</TABLE>
 
10. INCOME TAXES
 
  Prior to April 11, 1995, January 1, 1996, November 27, 1996, January 1,
1997, December 31, 1996 and April 2, 1998, RSI, America's Registry, SCR,
Neoglyphics, ISS and Triad, respectively, had each elected to be an S
Corporation for federal income tax purposes as provided in Section 1362(a) of
the Internal Revenue Code. As such, the corporate income or loss and credits
were passed through to the stockholders and reported on their personal tax
returns.
 
  RSI's election to be treated as an S Corporation terminated effective with
the closing of RSI's initial public offering. The cumulative effect of the
temporary differences between financial accounting and income tax reporting
was not material.
 
  Neoglyphics elected to terminate its S Corporation status on January 1,
1997. At the time of this conversion, a net deferred tax liability of $302,000
was recorded through the income tax provision on January 1, 1997. This
deferred tax liability was comprised principally of the effects of Neoglyphics
being a cash basis tax payer.
 
  America's Registry's, SCR's, ISS's and Triad's elections to be treated as S
Corporations terminated in conjunction with the acquisition of all of the
common stock of America's Registry, SCR, ISS and Triad by the Company. As a
result, the income or loss of America's Registry commencing on January 1,
1996, the income or loss of SCR commencing on November 27, 1996, the income or
loss of ISS commencing on December 31, 1996 and the income or loss of Triad
commencing on April 2, 1998 is subject to corporate income tax, and is
included in the income tax provision (benefit) described below.
 
  At the time of conversion of America's Registry from an S Corporation to a C
Corporation, a net deferred tax liability of $642,000 was recorded through the
income tax provision on January 1, 1996. This deferred tax liability was
comprised principally of the remaining effects of America's Registry
converting from the cash basis to the accrual basis for tax reporting purposes
on January 1, 1994, offset by deferred tax assets for certain accrued expenses
which are recognized in different periods for financial and tax reporting.
 
  At the time of the conversion of SCR from an S Corporation to a C
Corporation, a net deferred tax asset of $403,000 was recorded through the
income tax provision on November 27, 1996. The deferred tax asset was
comprised principally of certain accrued expenses and allowances which are
recognized in different periods for financial and tax reporting.
 
  At the time of conversion of ISS from an S Corporation to a C Corporation, a
net deferred tax liability of $1,002,000 was recorded through the income tax
provision on December 31, 1996. This deferred tax liability was comprised
principally of the effect of converting from the cash basis to the accrual
basis for tax reporting purposes.
 
  At the time of conversion of Triad from an S Corporation to a C Corporation,
a net deferred tax liability of $2,878,000 was recorded through the income tax
provision on April 2, 1998. This deferred tax liability was comprised
principally of the effect of converting from the cash basis to the accrual
basis for tax reporting purposes.
 
                                      52
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
  From its inception, Hunter reported its financial results for income tax
purposes using the cash method of accounting. Upon acquisition by Renaissance,
Hunter changed its method of accounting for income tax reporting purposes from
the cash method to the accrual method. As a result, substantially all of the
deferred tax liability related to Hunter accumulated on the balance sheet will
become due and payable over a four-year period.
 
  The components of the income tax provision (benefit) are as follows:
 
<TABLE>
<CAPTION>
                          Year Ended    Year Ended   Six Months Ended     Year Ended
                         June 29, 1996 June 28, 1997 December 27, 1997 December 26, 1998
                         ------------- ------------- ----------------- -----------------
                                                 (in thousands)
<S>                      <C>           <C>           <C>               <C>
Current:
  Federal...............    $6,228        $11,730         $6,138            $ 7,939
  State.................     1,660          2,724          1,573              1,648
  Foreign...............       --           1,150          1,566              1,859
                            ------        -------         ------            -------
                             7,888         15,604          9,277             11,446
Deferred:
  Federal...............    (1,846)            46           (780)            (4,739)
  State.................      (230)             8           (167)            (1,160)
                            ------        -------         ------            -------
                            (2,076)            54           (947)            (5,899)
Change in tax status of
 RSI, America's
 Registry, SCR, ISS,
 Neoglyphics and Triad..     1,644            936            --               2,878
                            ------        -------         ------            -------
                            $7,456        $16,594         $8,330            $ 8,425
                            ======        =======         ======            =======
</TABLE>
 
  Pretax income (loss) is summarized as follows:
 
<TABLE>
<CAPTION>
                 Year Ended    Year Ended   Six Months Ended     Year Ended
                June 29, 1996 June 28, 1997 December 27, 1997 December 26, 1998
                ------------- ------------- ----------------- -----------------
                                        (in thousands)
<S>             <C>           <C>           <C>               <C>
Domestic.......    $19,248       $30,762         $  686           $ (4,104)
Foreign........        228         3,006          3,413            (18,817)
                   -------       -------         ------           --------
  Total........    $19,476       $33,768         $4,099           $(22,921)
                   =======       =======         ======           ========
</TABLE>
 
  Deferred income taxes reflect the tax impact of temporary differences
between the amount of assets and liabilities for financial reporting purposes
and such amounts as measured by tax laws and regulations. Under SFAS 109, the
benefit associated with future deductible temporary differences and operating
loss or credit carryforwards is recognized if it is more likely than not that
a benefit will be realized. Deferred tax expense (benefit) represents the
change in the net deferred tax asset or liability balance. Deferred tax assets
and liabilities are comprised of the following at June 28, 1997, December 27,
1997 and December 26, 1998:
 
<TABLE>
<CAPTION>
                                              June 28, December 27, December 26,
                                                1997       1997         1998
                                              -------- ------------ ------------
                                                        (in thousands)
<S>                                           <C>      <C>          <C>
Deferred tax assets:
  Net operating loss carryforward............  $ 433      $  45        $1,282
  Allowance for doubtful accounts............    723      1,234         3,749
  Accounts payable and accrued expenses......  1,012      2,357         4,787
  Other......................................    875      1,440           739
  Valuation allowance........................   (131)       --            --
                                               -----      -----        ------
    Total gross deferred tax assets..........  2,912      5,076        10,557
                                               -----      -----        ------
</TABLE>
 
                                      53
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
<TABLE>
<CAPTION>
                                              June
                                               28,    December 27, December 26,
                                              1997        1997         1998
                                             -------  ------------ ------------
                                                      (in thousands)
<S>                                          <C>      <C>          <C>
Deferred tax liabilities:
  Differences arising due to tax accounting
   method changes...........................   4,424     3,357         5,676
  Prepaid expenses..........................      85        72             9
  Fixed assets..............................     552       331           855
  Other.....................................     228     2,240         1,712
                                             -------     -----        ------
    Total gross deferred tax liabilities....   5,289     6,000         8,252
                                             -------     -----        ------
    Net deferred tax asset (liability)...... $(2,377)    $(924)       $2,305
                                             =======     =====        ======
</TABLE>
 
  As of December 26, 1998, the Company has $569,000 and $20,362,000 of net
operating loss carryforwards which may be used to offset future federal and
state taxable income, respectively. The carryforwards expire on various dates
from 2009 to 2018. An ownership change, as defined in the Internal Revenue
Code, may limit the amount of net operating loss that can be utilized annually
to offset future taxable income.
 
  Income taxes computed using the federal statutory income tax rate differs
form Renaissance's effective tax rate primarily due to the following:
 
<TABLE>
<CAPTION>
                           Year Ended    Year Ended   Six Months Ended     Year Ended
                          June 29, 1996 June 28, 1997 December 27, 1997 December 26, 1998
                          ------------- ------------- ----------------- -----------------
<S>                       <C>           <C>           <C>               <C>
Statutory U.S. Federal
 tax rate...............       35.0%        35.0%            35.0%            (35.0%)
State taxes, net of
 federal tax benefit....        4.8          5.3             22.4               1.4
Income from RSI,
 America's Registry,
 SCR, ISS, Triad and
 Neoglyphics not taxable
 for corporate income
 tax purposes                 (14.8)        (3.3)            (4.8)              3.8
Non-deductible
 expenses...............        4.2          7.8            136.0              10.2
Goodwill not deductible
 for corporate income
 tax purposes...........        0.2          0.7              4.1              42.6
Foreign income taxed at
 different rates........        0.5          0.3              8.5              (0.2)
Change in tax status of
 America's Registry, SCR
 and ISS................        9.1          2.5              --               12.6
Other...................       (0.7)         0.8              2.0               1.3
                              -----         ----            -----             -----
Effective tax rate......       38.3%        49.1%           203.2%             36.7%
                              =====         ====            =====             =====
</TABLE>
 
  Non-deductible expenses during the year ended June 28, 1997 and six months
ended December 27, 1997 and the year ended December 26, 1998 primarily relate
to certain costs incurred in connection with the acquisitions of ARI, SCR,
ISS, RSI, Hunter, Neoglyphics and Triad.
 
  Undistributed earnings of certain foreign subsidiaries aggregated
approximately $2.3 million on December 26, 1998, which under existing law,
will not be subject to U.S. tax until distributed as dividends. Since the
earnings have been or are intended to be indefinitely reinvested in foreign
operations, no provision has been made for any U.S. taxes that may be
applicable thereto. Furthermore, any taxes paid to foreign governments on
those earnings may be used in whole or in part as credits against the U.S. tax
on any dividends distributed from such earnings. It is not practicable to
estimate the amount of unrecognized deferred U.S. taxes on these undistributed
earnings.
 
                                      54
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
11.  STOCKHOLDERS' EQUITY
 
 Preferred Stock, $.10 par value
 
  On April 10, 1996, Renaissance's then sole stockholder authorized 1,000,000
shares of preferred stock, $.10 par value. Preferred stock may be issued in
one or more series at the discretion of the Board of Directors of Renaissance
(without shareholder approval) with such designations, rights and preferences
as the Board of Directors may determine. The preferred stock may have
dividend, liquidation, redemption, conversion, voting or other rights which
may be more expansive than the rights of the holders of Renaissance's common
stock.
 
 Preferred Stock, no par value
 
  Renaissance's wholly-owned subsidiary, ARI, was authorized to issue
5,000,000 shares of preferred stock, of which 3,000,000 shares were designated
as Series A Preferred Stock (the "Series A Preferred Stock"). The remaining
preferred stock may have been issued from time to time in one or more
additional series at the discretion of the Board of Directors. Shares of
Series A Preferred Stock were non-redeemable and had a liquidation preference
of $.79 per share plus any declared but unpaid dividends.
 
  Each share of Series A Preferred Stock was convertible into the number of
shares of common stock that results from dividing the conversion price in
effect at the time of conversion into $.79 for each share of Series A
Preferred Stock being converted. The conversion price of the Series A
Preferred Stock was initially $.1084 per share, subject to adjustment for
stock splits, dividends, distributions, and combinations. At June 29, 1996,
all shares of Series A Preferred Stock were convertible into .548856 shares of
Renaissance's common stock based on a conversion price of $.1084 per share.
 
  On November 26, 1996, in conjunction with the acquisition of ARI by
Renaissance (see Note 3), all of the outstanding shares of Series A Preferred
Stock were converted into 1,434,160 shares of common stock.
 
 RSI Preferred Stock, $.01 par value
 
  Renaissance's wholly-owned subsidiary, RSI authorized 2,000,000 shares, $.01
par value per share preferred stock. RSI's Board of Directors was authorized,
without shareholder approval, to issue such shares of preferred stock in one
or more series, with such rights, preferences, privileges and restrictions,
including voting rights, dividend rights, conversion rights, redemption
privileges and liquidation preferences, as the Board of Directors may
determine.
 
 Stock Split and Authorized Shares
 
  On July 30, 1997, Renaissance's stockholders approved an increase to
99,000,000 in the number of authorized shares of common stock of Renaissance.
On February 12, 1998, Renaissance announced a 2-for-1 stock split, effected as
a dividend, on Renaissance common stock. Shareholders of record on March 2,
1998 participated in the stock split, which took place on March 24, 1998.
 
  All shares and per share amounts included in the consolidated financial
statements have been adjusted to give retroactive effect to the stock split
for all periods presented.
 
 Sale of Common and Preferred Stock
 
  On November 19, 1996, ARI sold 55,000 units to an unrelated investor for net
proceeds of $2.6 million. Each unit consisted of shares of ARI's series A
Preferred Stock and 1.0978 shares of Renaissance's common stock, for a total
of 165,000 shares of Series A Preferred Stock and 60,374 shares of common
stock.
 
                                      55
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
 Public Offerings of Common Stock
 
  On June 10, 1996, Renaissance completed its initial public offering for the
sale of 4,460,000 shares of common stock, which included 660,000 shares in
respect of the underwriters' over-allotment option. Renaissance received $34.5
million from the sale of the shares, net of the underwriting discounts and
expenses associated with the offering. Additionally, Renaissance had
previously incurred $294,000 of costs related to the initial public offering
that were deferred in previous years which were also charged against the
proceeds of the offering. Net proceeds were used to repay all outstanding
indebtedness under Renaissance's credit facility and certain term loans.
 
  On February 26, 1997, Renaissance completed a secondary public offering for
the sale of 2,468,332 shares of common stock, including the reissuance of the
treasury shares acquired in conjunction with the acquisition of SCR (see Note
3). Renaissance received approximately $48.3 million from the sale of the
shares, net of the underwriting discounts and expenses associated with the
offering. The excess of the cost of the treasury stock over the net reissuance
price has been charged to retained earnings. Net proceeds were used to repay
all outstanding indebtedness under Renaissance's credit facility.
 
  On May 17, 1996, RSI completed a follow-on public offering, whereby RSI
issued 1,443,400 shares of common stock and existing shareholders sold
1,036,000 shares of common stock. The net proceeds from the sale of shares by
RSI were approximately $28.3 million, after deducting offering expenses of
$225,000.
 
  On November 18, 1996, RSI completed an additional offering. The transaction
included 344,240 shares sold by the Company and 1,679,760 shares sold by
existing shareholders, including shares acquired by Gemini upon exercise of
the Gemini Warrants (below). The net proceeds of the offering were $6.5
million, after deducting offering expenses of $353,000.
 
 Treasury Stock
 
  In September 1998, the Board of Directors authorized the Company to
repurchase up to 200,000 shares of its common stock through the open market.
The Company repurchased 200,000 shares through December 26, 1998 for a total
of $2.5 million.
 
 Gemini Warrants
 
  RSI sold two warrants (together, the "Gemini Warrants") to Gemini upon the
closing of RSI's initial public offering for an aggregate purchase price of
$1.6 million. One warrant was exercisable through April 11, 1998 for up to
501,760 shares of common stock at an exercise price equal to $8.125 per share.
The second warrant was exercisable through November 1, 1999 for up to 512,000
shares of common stock at an exercise price equal to $12.1875 per share. In
November 1996, Gemini exercised the warrants and RSI received proceeds from
the exercise of $10.3 million.
 
12.  STOCK PLANS
 
Employee Stock Option Plans
 
  The Company currently has seven employee stock options plans, four of which
were assumed upon the acquisitions of ARI, RSI, Hunter and Neoglyphics and one
created to authorize grants of options to the Company's international
employees. They are as follows:
 
 1996 Stock Plan
 
  This plan, adopted in March 1996, authorizes the grant of incentive stock
options, non-qualified stock options, stock purchase authorizations or stock
bonus awards to key employees, including officers, employee directors and
consultants.
 
                                      56
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
  As of December 27, 1997, the total number of shares of Common Stock
authorized under the 1996 Plan was 7,200,000. In May of 1998, the shareholders
approved an amendment to the 1996 Stock Plan increasing the number of shares
of common stock available for awards under the Plan. The amendment provided
that for a three-year period, the shares available under the Plan will be
increased each year by a number of shares equal to 4% of the total outstanding
shares at the beginning of each year. For 1998, that increase was equal to 4%
of the shares outstanding on the date of the annual meeting of shareholders
(55,796,624 shares resulting in 2,231,864 additional shares authorized).
 
  Incentive stock options cannot be granted to consultants. For incentive
options, the purchase price is equal to the fair market value on the date of
grant (110% of fair market value for stockholders who hold greater than 10% of
Renaissance's stock at the time of grant). For non-qualified options and stock
purchase authorizations, the purchase price is determined by the Board of
Directors within limits as set forth in the plan, but shall not be less than
85% of the fair market value of common stock on the date of grant. The periods
over which options are exercisable are determined by the Board of Directors.
If permitted by the Board of Directors, employees may use previously acquired
shares of Renaissance's common stock (provided that such shares tendered have
been held for at least six months) or may borrow money from Renaissance on a
recourse basis (for a period of time not to exceed five years) to pay the
exercise price of shares purchased. Options may expire up to ten years after
the date of grant (five years for incentive options granted to 10%
stockholders). The Board of Directors has the discretion to designate non-
qualified options as transferable. The plan will terminate in March 2006.
 
 1995 RSI Equity Incentive Plan
 
  In January 1995, RSI's Board of Directors adopted and the stockholders
approved the 1995 Equity Incentive Plan (the "RSI Equity Plan"). Under the
terms of the RSI Equity Plan, the Company is authorized to make awards of
restricted stock and to grant incentive and non-statutory options to employees
of, and consultants and advisors to the Company to purchase shares of the
common stock of the Company. A total of 3,360,000 shares of common stock may
be issued upon exercise of options granted or awards made under the RSI Equity
Plan. Options granted through December 27, 1997 generally vest in either four
or five equal annual installments commencing on the first anniversary of the
optionee's date of hire.
 
 SCR Option
 
  On April 1, 1993, SCR granted a non-qualifying stock option to a key
employee to purchase 96,286 shares of common stock at an exercise price of
$0.00365 per share. The option had a nine-year vesting period, subject to
acceleration for certain events (such as the sale, merger or liquidation of
SCR, or an initial public offering), and an expiration date of April 1, 2002.
Compensation expense of $281,000, which represented the excess of the
estimated fair value of the stock on the date of grant over the exercise
price, was being recognized over the nine-year vesting period. The
unrecognized portion of the compensation expense was recorded as a reduction
of stockholders' equity in the accompanying balance sheet. Effective November
27, 1996, the stock option was exercised in accordance with the acceleration
clause of the option agreement in connection with the acquisition of SCR by
the Company (see Note 3) and the remaining unamortized balance of deferred
stock compensation of $164,000 was recorded as expense at that time.
 
 1994 ARI Stock Plan
 
  In 1994, ARI adopted the 1994 Stock Option Plan (the "1994 ARI Plan"), under
which 823,284 shares of common stock were reserved for issuance to eligible
employees, directors and consultants upon the exercise of stock options. ARI
also had outstanding options to purchase 14,818 shares of common stock and
27,000 shares of Series A Preferred Stock which were granted prior to the
adoption of the 1994 ARI Plan. Stock options were granted at prices determined
by ARI's former Board of Directors and generally may not be less than 100% and
85%, for incentive and nonstatutory options, respectively, of the estimated
fair value of the related shares on the
 
                                      57
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
date of grant. Options granted under the 1994 ARI Plan are for a period not to
exceed ten years, are exercisable beginning generally one year after the date
of grant and vest ratably over a maximum period of five years following the
date of grant.
 
  ARI also had options outstanding to purchase 27,000 shares of Series A
Preferred Stock outstanding at June 24, 1995 and June 29, 1996. On November
26, 1996, in conjunction with the acquisition of ARI by the Company, all
options to purchase Series A Preferred Stock were converted into options to
purchase 14,818 shares of common stock.
 
  All stock options granted to ARI's former management employees fully vested
in the event of a change of control, as defined by the ARI Board of Directors.
This change of control occurred upon acquisition of ARI by the Company in
November of 1996. Since that date, all options outstanding were exercised.
There are no outstanding options in the 1994 ARI Plan at December 26, 1998.
 
  Renaissance does not intend to grant any further options under the 1994 ARI
Plan.
 
 1991 Hunter Employee Non-Qualified Stock Option Plan
 
  In 1991, Hunter adopted the 1991 Employee Non-Qualified Stock Option Plan
(the "Hunter Employee Non-Qualified Stock Option Plan") to provide long term
performance incentives to Hunter employees. All options granted are non-
qualified options. The Hunter Board of Directors determines the option price,
which may be different than the fair market value of the common stock at the
date of option grant. Hunter has reserved 1,990,860 shares for issuance under
the Hunter Employee Non-Qualified Stock Option Plan. Options vest and expire
as determined at the grant date by the Hunter Board of Directors, provided
that no options may be exercised later than ten years after the grant of the
option.
 
  A former officer of Hunter exercised options to purchase 18,913 shares of
common stock in October 1996. Upon ceasing employment, Hunter promised to pay
this individual $113,000 instead of issuing shares. This promise was evidenced
in January 1997 by a $113,000 non-interest bearing note (see Note 9). The
amount of the note, which is included as compensation expense, was based on
Hunter's estimate of the fair market value of the underlying stock at the time
of his exercise.
 
 1996 Neoglyphics Stock Option Plan
 
  In 1996, Neoglyphics adopted a stock option plan that provides for incentive
stock options for key employees and nonqualified stock options for key
individuals, including nonemployees. Neoglyphics had reserved 224,910 shares
for issuance under the stock option plan.
 
 1998 Acquisition Plan
 
  In April 1998, the Board of Directors approved the 1998 Acquisition Plan for
use exclusively for non-qualified options to be awarded to employees of
acquired businesses. This plan has the same term and vesting provisions of the
1996 Stock Plan. A total of 1,000,000 shares of common stock were authorized
for issuance under the Plan.
 
                                      58
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
 1998 International Plan
 
  In April 1998, the Board of Directors approved the 1998 International Plan
for use exclusively for non-qualified options to be awarded to employees in
foreign jurisdictions. This plan has the same term and vesting provisions of
the 1996 Stock Plan. A total of 1,000,000 shares of Common Stock were
authorized for issuance under the Plan.
 
 Option repricing
 
  In December 1998 the Company offered employees the opportunity to reprice
their stock options at the current fair market value of the Company's common
stock on December 15, 1998, the repricing date. Employees electing to take
advantage of this repricing program agreed to a two for one exchange of their
options and to a one year holding period. In connection with the repricing,
the Company repriced 6,079,000 of existing options with a weighted average
exercise price of $21.60. This plan was completed on December 15, 1998.
 
  Transactions under the Stock Plans are summarized as follows:
 
<TABLE>
<CAPTION>
                            June 29, 1996        June 28, 1997      December 27, 1997    December 26, 1998
                          ------------------- -------------------- -------------------- --------------------
                                     Weighted             Weighted             Weighted             Weighted
                                     Average              Average              Average              Average
                          Number Of  Exercise Number Of   Exercise Number Of   Exercise Number Of   Exercise
                           Options    Price    Options     Price    Options     Price    Options     Price
                          ---------  -------- ----------  -------- ----------  -------- ----------  --------
<S>                       <C>        <C>      <C>         <C>      <C>         <C>      <C>         <C>
Outstanding at beginning
 of period..............  2,256,432   $3.82    5,640,109   $ 7.13   8,347,962   $14.85  12,221,607  $ 16.12
  Elimination of
   duplicate activity
   from July to
   December.............      1,646    0.12    (376,368)      --          --       --          --       --
  Addition of activity
   from January to
   June.................        --      --           --       --      248,559   $11.00         --       --
  Granted...............  3,929,405    8.88    5,141,809    18.70   4,421,009    22.43   7,546,143    13.44
  Exercised.............   (311,810)   5.82   (1,217,193)    3.19     (91,902)    7.99  (1,301,014)    4.44
  Canceled..............   (235,564)   6.43     (855,213)   9.967    (704,021)   20.26  (8,541,374)   21.15
  Conversion of Series A
   Preferred Stock
   Options to Common
   Stock Options........        --       --       14,818     0.66         --       --          --       --
                          ---------   ------  ----------   ------  ----------   ------  ----------  -------
Outstanding at end of
 period.................  5,640,109    $7.13   8,347,962   $14.85  12,221,607   $16.12   9,925,362  $ 11.28
                          =========   ======  ==========   ======  ==========   ======  ==========  =======
Exercisable at end of
 year...................  1,185,332   $1.23    1,185,229   $ 3.14   1,686,430   $ 4.01   1,681,809     9.55
Weighted average fair
 value of options
 granted during the
 period.................              $ 3.96               $10.98               $13.42              $  9.34
Options available for
 future grant...........  4,099,893            6,543,988            4,667,335            8,894,430
</TABLE>
 
  The following table summarizes information about stock options outstanding
at December 26,1998 under the RSI Equity Plan and RSI Director Plan:
<TABLE>
<CAPTION>
                     Number     Weighted              Number
                   Outstanding   Average   Weighted Exercisable Weighted
                      As Of     Remaining  Average     As Of    Average
                    December   Contractual Exercise  December   Exercise
     Range Of       26, 1998      Life      Price    26, 1998    Price
 Exercise Prices   ----------- ----------- -------- ----------- --------
 <S>               <C>         <C>         <C>      <C>         <C>
 $ 0.40 - $ 1.99      324,499     6.52      $ 0.93     190,414   $0.96
 $ 5.00 - $ 6.50    4,797,618     8.14        5.80     910,755    5.76
 $ 7.38 - $ 7.66      404,085     9.65        7.40      32,000    7.66
 $ 8.00 - $10.63      766,215     9.10        9.54      53,308    8.70
 $11.00 - $13.50      270,289     8.50       11.91      38,254   11.28
 $14.22 - $15.78      261,029     9.01       15.23      28,943   15.68
 $16.25 - $19.69    1,133,792     9.25       17.97     133,691   17.47
 $20.16 - $22.63    1,157,752     8.74       22.04     220,565   22.06
 $23.13 - $29.56      810,083     8.76       25.22      73,879   24.80
                    ---------     ----      ------   ---------   -----
 $ 0.40 - $29.56    9,925,362     8.50      $11.28   1,681,809   $9.54
                    =========     ====      ======   =========   =====
</TABLE>
 
                                      59
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
 Shares Reserved for Future Issuance
 
  A total of 18,214,591 shares of Renaissance Common Stock has been reserved
for issuance under Renaissance's various stock plans at December 26, 1998.
 
Directors Stock Plans
 
 1996 Eligible Directors' Stock Plan
 
  This plan authorizes the grant of an option to purchase 40,000 shares of
common stock to each non-employee director on the date of the director's
initial election to the Board of Directors. The exercise price of options
granted is 100% of the closing price per share of common stock on the date of
grant. Directors may use previously acquired shares of Renaissance's common
stock to pay the exercise price of shares purchased provided that such shares
tendered have been held for at least six months. An aggregate of 200,000
shares of common stock may be issued under the plan. Options are exercisable
in four equal annual installments, commencing on the first anniversary date of
the grant. Options expire ten years after the date of grant. The plan will
terminate in March 2006.
 
  In April and May 1996, options to purchase 40,000 shares each of common
stock at an exercise price of $5.50 and $6.50 per share, respectively, were
granted to newly-elected directors.
 
 1995 RSI Director Stock Option Plan
 
  In January 1995, the RSI Board of Directors adopted and the RSI stockholders
approved the 1995 Director Stock Option Plan (the "RSI Director Plan"), which
became effective on the closing of RSI's initial public offering. Under the
terms of the RSI Director Plan, the directors of RSI who were not employees of
the Company were eligible to receive non-statutory options to purchase shares
of common stock. A total of 80,000 shares of common stock may be issued upon
exercise of options granted under the RSI Director Plan. Options to purchase
40,000 shares of Common Stock have been granted to the two eligible directors.
The exercise price of options granted under the RSI Director Plan was equal to
the closing price of the common stock on the date of grant.
 
1998 Directors Stock Plan
 
  In May of 1998, the stockholders of the Company approved the 1998 Directors
Stock Option Plan (the "1998 Directors Plan") that replaced the existing 1996
Eligible Directors' Stock Plan. Under the 1998 Directors Plan, outside
directors of the Company will receive equity compensation in three ways. Upon
joining the Board, an outside director will receive an option covering 20,000
shares of Common Stock. This option will become exercisable in four annual
installments beginning one year after grant. Outside directors will also
receive an option covering 2,500 shares of common stock after each year of
service. This award, which represents compensation for service during the
previous year, will be immediately exercisable. Each director will be required
to take one-half on the annual retainer (currently $12,000) in options having
an equivalent value and may elect to take all or a portion of the balance in
options as well. Two outside directors, who had served two years without
annual equity awards, were each granted immediately exercisable options
covering 5,000 shares.
 
Stock Purchase Plans
 
 1996 Employee Stock Purchase Plan
 
  This plan, which is intended to qualify under Section 423 of the Internal
Revenue Code, authorizes the grant of options to eligible employees on a semi-
annual basis to purchase shares of Renaissance's common stock. For the June
1996, January 1997, and July 1997 offerings, the plan permitted eligible
employees to purchase up to 400 shares of common stock in any six month
offering period through the accumulation of payroll deductions,
 
                                      60
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
which may not exceed 10% of the employee's compensation. For the June 1996,
January 1997 and July 1997 offerings, employees were eligible to participate
if they have been employed by Renaissance for at least eighteen months.
Commencing with the January 1998 offering, employees are eligible to
participate upon employment by Renaissance. Shares are purchased at 85% of the
lower of the fair market value of Renaissance's common stock at the beginning
or end of each six month offering period. Employees may end their
participation in the offering at any time during the offering period, and
participation ends automatically on termination of employment. The first stock
offering period under the plan commenced on June 5, 1996, the effective date
of the registration statement covering Renaissance's initial public offering.
56,178, 46,510 and 259,514 shares of Common Stock were issued under this plan
during the year ended June 28, 1997, the six month period ended December 27,
1997 and the year ended December 26, 1998, respectively, at issuance prices of
$7.23, $19.55, and $18.78 respectively. In May 1998, the shareholders approved
an amendment to the 1996 Employee Stock Purchase Plan changing the maximum
number of shares to be purchased by eligible employees in any six month
offering period to 200 shares and amending the termination provisions of an
employee under the plan. In addition, greater flexibility in choosing which
subsidiaries will participate in the Plan was granted in consideration of some
of the subsidiaries in foreign countries. The plan will terminate in March
2006.
 
 1995 RSI Employee Stock Purchase Plan
 
  In January 1995, RSI's Board of Directors adopted and the shareholders
approved the 1995 Employee Stock Purchase Plan (the "RSI Purchase Plan"),
which became effective on the closing of RSI's initial public offering. The
RSI Purchase Plan authorizes the issuance of up to a total 720,000 shares of
common stock to participating employees. Under the terms of the RSI Purchase
Plan, the purchase price is an amount equal to 85% of the fair market value
per share of the common stock on either the first day or the last day of the
offering period, whichever is lower. 67,429 shares, 55,296 shares and 27,160
shares were issued under the RSI Purchase Plan during the years ended June 29,
1996, June 28, 1997 and the six months ended December 27, 1997 at a weighted
average price of $9.16, $13.21, and $24.57, respectively. The weighted average
fair value of the 1996, 1997, and December 1997 awards under the RSI Purchase
Plan were $1.61, $4.77, and $11.79 per share, respectively. Commencing in
January of 1998, the Company terminated the RSI Employee Stock Purchase Plan.
 
 Accounting Treatment
 
  Renaissance applies Accounting Principles Board Opinion No. 25 and related
Interpretations in accounting for its stock option plans. Compensation is
recognized for the difference between the exercise price of options granted
and the estimated fair value of the related shares on the date of grant, and
is recorded over the vesting period. Amortization of compensation expense
totaled $31,000, $494,000, $750,000, and $0 in the years ended June 29, 1996
and June 28, 1997, and in the six months ended December 27, 1997 and in the
year ended December 26, 1998, respectively. The benefit of tax deductions
associated with the exercise of non-qualified stock options in excess of the
amount of compensation recorded for financial reporting purposes is recorded
as a credit to additional paid-in capital.
 
  In October 1995, the FASB issued SFAS No. 123 "Accounting for Stock-Based
Compensation". SFAS No. 123 is effective for periods beginning after December
15, 1995. SFAS No. 123 requires that companies either recognize compensation
expense for grants of stock options and other equity instruments based on fair
value, or provide pro forma disclosure of net income and earnings per share in
the notes to the financial statements. Renaissance adopted the disclosure
provisions only of SFAS No. 123. Had compensation cost of Renaissance's stock-
based compensation plans been determined based on the fair value at the grant
dates as calculated in accordance with SFAS No. 123, Renaissance's net income
and earnings per share for the years ended June 29,
 
                                      61
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
1996 and June 28, 1997, the six months ended December 27, 1997 and December
26, 1998 would have been reduced to the pro forma amounts indicated below:
 
<TABLE>
<CAPTION>
                                                   As Reported
                         ---------------------------------------------------------------
                          Year Ended    Year Ended   Six Months Ended     Year Ended
                         June 29, 1996 June 28, 1997 December 27, 1997 December 26, 1998
                         ------------- ------------- ----------------- -----------------
<S>                      <C>           <C>           <C>               <C>
Net Income (loss).......    $12,020       $17,174         $(4,231)         $(31,346)
Net Income (loss) per
 share--basic...........    $  0.28       $  0.34         $ (0.08)         $  (0.57)
Net Income (loss) per
 share--diluted.........    $  0.26       $  0.31         $ (0.08)         $  (0.57)
</TABLE>
 
<TABLE>
<CAPTION>
                                                    Pro Forma
                         ---------------------------------------------------------------
                          Year Ended    Year  Ended  Six Months Ended     Year Ended
                         June 29, 1996 June 28, 1997 December 27, 1997 December 26, 1998
                         ------------- ------------- ----------------- -----------------
<S>                      <C>           <C>           <C>               <C>
Net Income (loss).......    $10,229       $10,737        $(13,970)         $(65,595)
Net Income (loss) per
 share--basic...........    $  0.24       $  0.21        $  (0.26)         $  (1.18)
Net Income (loss) per
 share--diluted.........    $  0.22       $  0.20        $  (0.26)         $  (1.18)
</TABLE>
 
  Because options vest over several years and this pro forma disclosure only
reflects grants made in the last three fiscal periods, the effects of applying
SFAS No. 123 in this pro forma disclosure are not likely to be representative
of the effects on reported net income for future years.
 
  The fair market value of each stock option granted during the year ended
June 29, 1996 was estimated using the Black-Scholes option-pricing model with
the following assumptions: an expected life of 3-4 years, expected volatility
of 0% for Hunter and Renaissance (pre IPO periods) and 62% for RSI, a dividend
yield of 0% and risk-free interest rates of 5.8 to 6.4%. The fair market value
of each stock option granted during the year ended June 28, 1997 was estimated
using the Black-Scholes option-pricing model with the following assumptions:
an expected life of 3-5 years, expected volatility of 43% to 62%, a dividend
yield of 0% and risk-free interest rates of 6.3%. The fair market value of
each stock option granted during the six months ended December 27, 1997 was
estimated using the Black-Scholes option-pricing model with the following
weighted-average assumptions: an expected life of 5.25 years, expected
volatility of 45%, a dividend yield of 0% and risk-free interest rates of
6.2%. The fair market value of each stock option granted during the year ended
December 26, 1998 was estimated using the Black-Scholes option-pricing model
with the following weighted average assumptions: an expected life of 5.50
years, expected volatility of 79%, a dividend yield of 0% and risk-free
interest rates of 6.0%.
 
  The fair market value of offerings under the Renaissance stock purchase plan
was estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted average assumptions: an expected life of .5
years, expected volatility of 43.5%, a dividend yield of 0%, and risk-free
interest rates of 6% in the fiscal years ended June 29, 1996, June 28, 1997
and the six months ended December 27, 1997.
 
  The fair market value of offerings under the RSI stock purchase plan was
estimated on the date of grant using the Black-Scholes option-pricing model
with the following weighted average assumptions: an expected life of .5 years,
expected volatility of 62% in fiscal 1996, fiscal 1997, and the six months
ended December 27, 1997, a dividend yield of 0% for all periods, and risk-free
interest rates of 5.63% in fiscal 1996, 5.27% in fiscal 1997 and 6.0% in the
six months ended December 27, 1997. The fair market value of offerings under
the Renaissance stock purchase plan was estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions: an expected life of .5 years, expected volatility of 55%, a
dividend yield of 0% and risk-free interest rates of 6% for the year ended
December 26, 1998.
 
  The fair market value of offerings under the Neoglyphics Stock Option Plan
was estimated on the date of grant using the Black-Scholes option-pricing
model with the following assumptions: an expected life of 1 to 7 years,
expected volatility of 0.01%, a risk-free interst rate of 6.0% and no dividend
yield.
 
                                      62
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
13.  COMMITMENTS AND CONTINGENCIES
 
 Operating Leases
 
  Renaissance occupies premises under various noncancelable operating leases
which include terms requiring Renaissance to pay a pro-rata portion of
increased operating expenses and real estate taxes. The leases expire on
various dates through April 2018, and certain of the leases contain options
for renewal or purchase of related equipment.
 
  In January 1993, Renaissance entered into a three year lease with a real
estate trust of which the president and significant shareholder of Renaissance
is the sole beneficiary (the "Trust"), which required annual rental payments
of $120,000, payable in equal monthly installments of $10,000. This lease
continued to be amended upon subsequent expansions of the leased area and
currently requires annual payments of $531,000 payable in equal monthly
installments of $44,000. The amended lease term is September 2010. In
conjunction with the amendment of the lease in September 1995, Renaissance
began to consolidate the accounts of the Trust on a prospective basis (see
Note 15).
 
  In June 1998, the Company entered into a ten year agreement to lease 200,000
square feet in Waltham, Massachusetts in a building currently under
construction, which is to be the site of the Company's new headquarters. The
Company expects to consolidate four offices located around Massachusetts
(including the Lincoln and Newton locations) into this new location and to
sublet approximately 45,000 square feet of this space. The construction is
scheduled for completion in September of 1999.
 
  In August 1998, the Company entered into a twenty year agreement to lease
30,000 square feet in London, England to consolidate multiple branch locations
operating in the city.
 
  Rent expense for the years ended June 29, 1996 (excluding amounts paid to
the Trust after September 19, 1995), and June 28, 1997, the six months ended
December 27, 1997 and the year ended December 26, 1998 was $5,045,000,
$6,764,000, $5,070,000, and $10,240,000 respectively.
 
  Future minimum payments under non-cancelable leases at December 26, 1998 are
as follows, excluding amounts payable to the Trust (in thousands):
 
<TABLE>
<CAPTION>
                                                              Operating Capital
                                                               Leases   Leases
                                                              --------- -------
   <S>                                                        <C>       <C>
   1999......................................................   10,627    297
   2000......................................................   15,494     30
   2001......................................................   14,687    --
   2002......................................................   13,200    --
   2003......................................................   11,068    --
   Thereafter................................................   85,156    --
                                                              --------   ----
     Total minimum lease payments............................ $150,232    327
                                                              ========   ====
     Less--amount representing interest......................              32
                                                                         ----
     Present value of obligations under capital leases.......            $295
                                                                         ====
</TABLE>
 
                                      63
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
  The cost and accumulated amortization of assets, primarily for office
equipment and software, under capital leases are as follows:
<TABLE>
<CAPTION>
                                              June 28, December 27, December 26,
                                                1997       1997         1998
                                              -------- ------------ ------------
                                                        (in thousands)
   <S>                                        <C>      <C>          <C>
   Cost......................................   $731       $226         $572
   Accumulated amortization..................   (232)       (93)        (154)
                                                ----       ----         ----
                                                $499       $133         $418
                                                ====       ====         ====
</TABLE>
 
14.  EMPLOYEE BENEFIT PLANS
 
  Renaissance provides employee retirement savings plans under Section 401(k)
of the Internal Revenue Code which cover substantially all employees. Under
the terms of the plans, employees may contribute a percentage of their salary
up to a maximum of 10%-20% which is then invested in one or more of several
mutual funds selected by the employee. Renaissance may make contributions to
the Renaissance plan at its discretion; such contributions totaled $563,000,
$605,000, $472,000, and $2,984,000 for the years ended June 29, 1996, and June
28, 1997, the six months ended December 27, 1997 and the year ended December
26, 1998, respectively.
 
15.  FINANCIAL INSTRUMENTS
 
  Renaissance enters into various types of financial instruments in the normal
course of business. Fair values are estimated based on assumptions concerning
the amount and timing of estimated future cash flows and assumed discount
rates reflecting varying degrees of perceived risk. Accordingly, the fair
values may not represent actual values of the financial instruments that could
have been realized as of year end or that will be realized in the future.
 
  The carrying amounts of Renaissance's financial instruments, which include
marketable securities (see Note 5), accounts receivable, notes receivable,
line of credit, accounts payable, accrued salaries and wages, other accrued
expenses, income taxes payable and long-term debt approximate their fair
values at June 28, 1997, December 27, 1997, and December 26, 1998.
 
16.  CONSOLIDATION OF REAL ESTATE TRUST
 
  As described in Note 13, Renaissance leases office space from the Trust, of
which the president and significant stockholder of Renaissance is the sole
beneficiary and an officer of Renaissance is the trustee. Effective September
19, 1995, Renaissance renegotiated its lease with the Trust in conjunction
with a refinancing of the Trust's mortgage. The modified lease terms expanded
the amount of space which Renaissance occupies, committed Renaissance to rent
the facility through the maturity date of the mortgage loan, and granted
Renaissance a right of first refusal to lease any space in the facility
currently occupied by other tenants when the tenants' leases expire.
 
  Accordingly, as of this date, Renaissance obtained significant control over
the operations of the Trust and assumed a significant portion of the Trust's
obligations. As a result, Renaissance has consolidated the accounts of the
Trust as of September 19, 1995 on a prospective basis. As of September 19,
1995, the Trust reported the following assets and liabilities (in thousands):
 
<TABLE>
   <S>                                                                 <C>
   Fixed assets, net.................................................. $ 1,750
   Other current assets...............................................      49
   Security deposits and deferred income..............................     (84)
   Notes payable to Renaissance.......................................    (365)
   Mortgage loans payable.............................................  (1,461)
                                                                       -------
                                                                       $  (111)
                                                                       =======
</TABLE>
 
                                      64
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
17.  LEGAL SETTLEMENT
 
  In August 1996, ARI received a settlement of $1,625,000 from its insurance
company for payment of defense costs and certain expenses associated with a
previous intellectual property rights matter. This amount, net of related
expenses, has been included in interest and other income in the accompanying
consolidated statement of income.
 
18.  SEGMENT INFORMATION
 
 
  The Company adopted SFAS 131 in fiscal 1998. The prior years' segment
information has been restated to represent the Company's four primary business
segments; Business Strategy, Enterprise Solutions, Government Solutions and IT
Consulting Services.
 
  The accounting policies of the segments are the same as those described in
the Summary of Significant Accounting Policies in Note 2 to these financial
statements. Segment data includes intersegment revenues. All intersegment sale
prices are market based.
 
  The following presents information about reported segments for the years
ended June 29, 1996 and June 28, 1997, the six months ended December 27, 1997
and the year ended December 26, 1998:
 
<TABLE>
<CAPTION>
                                     For the year
                                         ended
                                   -----------------
                                                     For the six  For the year
                                                     months ended    ended
                                     June     June   December 27, December 26,
                                   29, 1996 28, 1997     1997         1998
                                   -------- -------- ------------ ------------
                                                 (in thousands)
<S>                                <C>      <C>      <C>          <C>
Revenues:
  Business Strategy............... $ 34,785  $45,329   $ 37,043     $ 66,158
  Enterprise Solutions............   44,379   83,087     51,870      162,722
  Government Solutions............      --       --       3,541       19,876
  IT Consulting Services..........  253,899  361,417    228,451      539,343
  Reconciling items(1)............      --       --        (786)     (11,785)
                                   -------- --------   --------     --------
    Total......................... $333,063 $489,833   $320,119     $776,314
                                   ======== ========   ========     ========
Income from operations before
 other charges:
  Business Strategy............... $  7,437   $6,148     $6,896     $ (8,812)
  Enterprise Solutions............      761    8,866       (561)       9,631
  Government Solutions............      --       --         643        3,297
  IT Consulting Services..........   15,575   23,755     20,369       36,883
                                   -------- --------   --------     --------
    Total......................... $ 23,773 $ 38,769    $27,347     $ 40,999
                                   ======== ========   ========     ========
Total Assets:
  Business Strategy............... $ 59,182 $ 77,482   $ 99,361     $ 51,394
  Enterprise Solutions............   25,053   35,416     33,022       55,023
  Government Solutions............      --       --      20,484       32,998
  IT Consulting Services..........   65,879  115,348    157,443      232,650
  Reconciling items(2)............   17,910   28,675      5,867          --
                                   -------- --------   --------     --------
    Total......................... $168,024 $256,921   $316,177     $372,065
                                   ======== ========   ========     ========
</TABLE>
--------
(1) Represents intersegment revenues
(2) Represents unallocated corporate assets
 
                                      65
<PAGE>
 
                          RENAISSANCE WORLDWIDE, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
Specific items included in segment profit/loss include the following:
 
<TABLE>
<CAPTION>
                                        For the year
                                           ended
                                      -----------------
                                                        For the six  For the year
                                                 June   months ended    ended
                                      June 29,    28,   December 27, December 26,
                                        1996      1997      1997         1998
                                      --------  ------- ------------ ------------
                                                    (in thousands)
<S>                                   <C>       <C>     <C>          <C>
Total Segment Income From Operations
 Before
 Other Charges .....................  $23,773   $38,769   $27,347      $ 40,999
  Acquisition Related Expenses......    3,524     8,268    17,961         6,904
  Restructuring and Other Asset
   Writedowns.......................      --        --        --         36,089
  Corporate expenses................      --        --      4,609        15,742
  Interest and Other Income(Expense)
   Net..............................     (773)    3,267      (678)       (5,185)
                                      -------   -------   -------      --------
    Total Income Before Taxes.......  $19,476   $33,768   $ 4,099      $(22,921)
                                      =======   =======   =======      ========
</TABLE>
 
GEOGRAPHIC INFORMATION
 
  The following represent the revenue and operating income by geographic area
for the years ended June 29, 1996 and June 28, 1997, the six months ended
December 27, 1997, and the year ended December 26, 1998 and the identifiable
assets by geographic area as of these dates:
 
<TABLE>
<CAPTION>
                                    Year Ended
                                 ------------------
                                                      Six Months      Year
                                                        Ended        Ended
                                 June 29,  June 28,  December 27, December 26,
                                   1996      1997        1997         1998
                                 --------  --------  ------------ ------------
                                               (in thousands)
<S>                              <C>       <C>       <C>          <C>
Revenue:
  North America................. $326,631  $466,482    $293,187     $703,948
  Europe........................    6,432    22,671      25,231       67,914
  Other.........................      --        680       1,701        4,452
                                 --------  --------    --------     --------
    Total....................... $333,063  $489,833    $320,119     $776,314
                                 ========  ========    ========     ========
Income from operations
 (excluding acquisition-
  related expenses):
  North America................. $ 23,551  $ 35,193    $ 20,361     $ 50,394
  Europe........................      222     3,383       3,088      (24,835)
  Other.........................      --        193        (711)        (302)
                                 --------  --------    --------     --------
    Total.......................   23,773    38,769      22,738       25,257
  Restructuring and other asset
   writedown....................      --        --          --       (36,089)
  Acquisition-related expenses..   (3,524)   (8,268)    (17,961)      (6,904)
  Interest and other income
   (expenses), net..............     (773)    3,267        (678)      (5,185)
                                 --------  --------    --------     --------
Income before taxes............. $ 19,476  $ 33,768    $  4,099     $(22,921)
                                 ========  ========    ========     ========
Identifiable assets:
  North America................. $148,789  $209,891    $290,853     $359,146
  Europe........................    1,325    18,288      20,176       11,269
  Other.........................      --         67        (719)       1,650
  Corporate assets..............   17,910    28,675       5,867
                                 --------  --------    --------     --------
    Total....................... $168,024  $256,921    $316,177     $372,065
                                 ========  ========    ========     ========
</TABLE>
 
  Corporate assets represent marketable securities invested for all segments
and regions. All other assets are used in the operations of individual
entities in the different segments and geographical areas.
 
                                      66
<PAGE>
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE
 
  None.
                                   PART III
 
ITEM 10. DIRECTORS OF THE REGISTRANT
 
  The information required by this Item is included in Item 1 of this report
or will be included under the captions "Election of Class I Director--
Nominee," "Election of Class I Director--Other Directors," "Election of Class
I Director--Board of Directors and Committees," and "Election of Class I
Director--Director Compensation" and "Section 16(a) Beneficial ownership
Reporting Compliance" in the Proxy Statement, and is incorporated herein by
reference.
 
ITEM 11. EXECUTIVE COMPENSATION
 
  The information required by this Item will be included under the captions
"Executive Compensation--Summary Compensation Table," "Executive
Compensation--Option Grants in Last Fiscal Year," "Executive Compensation--
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values" and "Executive Compensation--Employment Agreements" in the Proxy
Statement and is incorporated herein by reference.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
  The information required by this Item will be included under the caption
"Security Ownership of Certain Beneficial Owners and Management" in the Proxy
Statement and is incorporated herein by reference.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
  The information required by this Item will be included under the caption
"Certain Relationships and Related Transactions" in the Proxy Statement and is
incorporated herein by reference.
 
                                      67
<PAGE>
 
                                    PART IV
 
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
 
  (a) The financial statements and financial statement schedules filed under
Item 8 as part of this report.
 
  Listed below are all Exhibits filed as part of this Report. Certain Exhibits
are incorporated herein by reference to The Registry's Registration Statement
on Form S-1 (File No. 333-03366), and RSI's Registration Statement on Form S-1
(File No. 333-89524).
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
   Exhibit
   Number                     Description of Document                      Page
   -------                    -----------------------                      ----
   <C>     <S>                                                             <C>
    3.2(1) Restated Articles of Organization of Registrant, as filed in
            Massachusetts on May 13, 1996.
    3.3(3) Articles of Amendment to Restated Articles of Organization,
            filed in Massachusetts on July 30, 1997.
 
    3.4(3) Articles of Amendment to Restated Articles of Organization,
            as filed in Massachusetts on January 7, 1998.
 
    3.5(3) By-Laws of Registrant, as amended and restated on November
            20, 1997.
 
    4.1(1) Articles 3, 4, 5, and 6 of the Articles of Organization of
            Registrant (included in Exhibit 3.2).
 
    4.2(3) Specimen Stock Certificate.
 
   10.1(1) Leases dated September 19, 1995 between the 189 Wells Avenue
            Realty Trust and the Registrant for premises located at the
            189 Wells Avenue, Newton, Massachusetts.
 
   10.2(3) Registrant's 1996 Stock Plan and related form of stock option
            agreement.*
 
   10.3(3) Registrant's 1996 Employee Stock Purchase Plan.*
 
   10.4(1) Registrant's 1996 Eligible Directors' Stock Plan.*
 
   10.5(1) Accounts Receivable Management and Security Agreement dated
            as of February 29, 1996 by and among BNY Financial
            Corporation and each of the Registrant, America's Registry,
            Inc. and The Registry, Inc. Network Consulting Practice.
 
   10.6(1) Employment Agreement dated May 1996 between Registrant and G.
            Drew Conway.*
 
   10.7(1) Amended and Restated Promissory Note dated May 30, 1996,
            payable to Registrant by G. Drew Conway.
 
   10.8(1) Amended and Restated Promissory Note dated May 30, 1996,
            payable to Registrant by the 189 Wells Avenue Realty Trust.
 
   10.8(2) Lease Agreement by and between Ladylin Properties Limited
            Partnership and RSI, Inc., dated as of November 1, 1993, as
            amended.
 
   10.9(3) Registration Rights Agreement, dated as of November 26, 1997,
            by and among, The Registrant, Terry L. Hunter, and William
            M. Mercer Incorporated.
   10.10   1998 Directors Stock Plan.*
   10.11   Lease Agreement by and between Waltham 60/10 LLC and
            Renaissance Worldwide, Inc. dated as of June 30, 1998.
</TABLE>
 
                                       68
<PAGE>
 
<TABLE>
<CAPTION>
   Exhibit
   Number                     Description of Document                      Page
   -------                    -----------------------                      ----
   <C>     <S>                                                             <C>
   10.12   Credit Agreement among Renaissance Worldwide, Inc., as
            Borrower, NationsBank, N.A., as Administrative Agent,
            NationsBanc Montgomery Securities LLC, as Syndication Agent,
            and the Lenders, dated February 24, 1999.
   10.13   Pledge and Security Agreement, dated as of February 24, 1999,
            between Renaissance Worldwide, Inc., and NationsBank, N.A.,
            as Administrative Agent for the Lenders.
 
   21      Subsidiaries of Registrant.
 
   23.1    Consent of PricewaterhouseCoopers LLP
 
   23.2    Consent of Katch Tyson & Company.
   23.3    Consent of Deloitte & Touche LLP.
   23.4    Consent of Goldstein Golub Kessler LLP.
 
   27.1    Financial Data Schedule--December 26, 1998.
 
</TABLE>
--------
  * Denotes management contract or compensation arrangements.
(1) Filed as an Exhibit to The Registry's Registration Statement on Form S-1
    (File No. 333-03366) and incorporated by reference herein.
(2) Filed as an Exhibit to RSI's Registration Statement on Form S-1 (File No.
    333-89524).
(3) Filed as an Exhibit to Renaissance Worldwide Inc.'s Report on Form 10-K
    for the transition period from June 28, 1997 to December 27, 1997 (File
    No. 0-28192).
 
  (b) On November 5, 1998, the Company filed a Report on Form 8-K reporting
under Item 5 to restate the financial statements and management's discussion
and analysis of such financial statements to reflect the poolings of interest
transactions with Neoglyphics Media Corporation and Triad Data, Inc. for the
three years ended June 28, 1997 and the six months ended December 27, 1997.
 
 
                                      69
<PAGE>
 
                                  SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
 
Date: March 26, 1999                      Renaissance Worldwide, Inc.
 
                                                    /s/ G. Drew Conway
                                          By: _________________________________
                                                      G. Drew Conway
                                            President, Chief Executive Officer
                                               and Chairman of the Board of
                                                         Directors
 
  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated:
<TABLE>
<S>  <C>
 
              Signature                      Capacity
                                                                     Date
 
         /s/ G. Drew Conway            President, Chief         March 26, 1999
-------------------------------------   Executive Officer
           G. Drew Conway               and Chairman of the
                                        Board of Directors
                                        (Principal
                                        Executive Officer)
 
        /s/ Richard L. Bugley          Vice President,          March 26, 1999
-------------------------------------   General Counsel,
          Richard L. Bugley             Clerk and Assistant
                                        Treasurer (Interim
                                        Principal Financial
                                        and Accounting
                                        Officer)
 
        /s/ Robert P. Badavas          Director                 March 26, 1999
-------------------------------------
          Robert P. Badavas
 
         /s/ Paul C. O'Brien           Director                 March 26, 1999
-------------------------------------
           Paul C. O'Brien
 
</TABLE>
 
                                      70
<PAGE>
 
                                                                     SCHEDULE II
 
                          RENAISSANCE WORLDWIDE, INC.
 
                       VALUATION AND QUALIFYING ACCOUNTS
                                 (In thousands)
 
<TABLE>
<CAPTION>
                                           Additions
                                     ---------------------
                                                            Deductions
                          Balance at   Charged    Charged  Write-off of   Balance
                          Beginning  to Costs and to Other Uncollectible at End of
                          of Period    Expenses   Accounts   Accounts     Period
                          ---------- ------------ -------- ------------- ---------
<S>                       <C>        <C>          <C>      <C>           <C>
Allowance for doubtful
 accounts:
 Year ended June 29,
  1996..................      826        1,225      --           686       1,365
 Year ended June 28,
  1997(1)...............      938        1,336      --           434       1,840
 Six months ended
  December 27, 1997(2)..    2,174        3,090      --         1,820       3,444
 Year ended December 26,
  1998..................    3,444       12,703      --         6,531       9,616
</TABLE>
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(1) Beginning balance adjusted to reflect change in fiscal year end of RSI.
(2) Beginning balance adjusted to reflect change in fiscal year end of Hunter.
 
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