<PAGE>   1
================================================================================


                                    FORM 10-Q
                                ----------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

(MARK ONE)

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


FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
                               -------------------------------------------------
                                       OR

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

FOR THE TRANSITION PERIOD FROM
                               -------------------------------------------------
COMMISSION FILE NUMBER                      0-30035
                       ---------------------------------------------------------


                                   EXULT, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


          DELAWARE                      8742                    33-0831076
 (STATE OR OTHER JURISDICTION     (PRIMARY STANDARD          (I.R.S. EMPLOYER
      OF INCORPORATION                INDUSTRIAL            IDENTIFICATION NO.)
      OR ORGANIZATION)          CLASSIFICATION NUMBER)

                            4 PARK PLAZA, SUITE 1000
                            IRVINE, CALIFORNIA 92614
                                 (949) 250-8002
               (ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
        INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

                                 NOT APPLICABLE
--------------------------------------------------------------------------------
                     (FORMER NAME, FORMER ADDRESS AND FORMER
                   FISCAL YEAR, IF CHANGED SINCE LAST REPORT)


INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.

YES [X]   NO [ ]



                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     INDICATE THE NUMBER OF SHARES OUTSTANDING AND EACH OF THE ISSUER'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.

             CLASS                        OUTSTANDING AT AUGUST 7, 2001
          ------------                    -----------------------------
          COMMON STOCK                           102,262,358

================================================================================



<PAGE>   2



                         PART I. FINANCIAL INFORMATION.

ITEM 1. FINANCIAL STATEMENTS.

                                   EXULT, INC.

                           CONSOLIDATED BALANCE SHEETS
                 (amounts in thousands except per share amounts)


<TABLE>
<CAPTION>
                                                                     DECEMBER 31,       JUNE 30,
                                                                        2000              2001
                                                                     -----------       -----------
                                                                                       (unaudited)
                                   ASSETS

<S>                                                                  <C>               <C>
        Current Assets:
          Cash and cash equivalents ...........................      $    94,890       $    80,013
          Investments .........................................            5,000             2,624
          Accounts receivable .................................           17,713            21,467
          Other receivables ...................................            2,418             2,135
          Prepaid expenses and other current assets ...........            5,764             7,136
                                                                     -----------       -----------
                 Total Current Assets .........................          125,785           113,375
        Property and equipment, net ...........................           24,945            31,927
        Intangibles assets, net ...............................           36,447            31,374
        Other assets ..........................................           17,004            15,970
                                                                     -----------       -----------
                 Total Assets .................................      $   204,181       $   192,646
                                                                     ===========       ===========

               LIABILITIES AND STOCKHOLDERS' EQUITY

        Current Liabilities:
          Accounts payable ....................................      $     3,475       $     7,923
          Accrued liabilities .................................           24,858            31,214
          Current portion of long-term obligations ............            4,419             4,833
                                                                     -----------       -----------
                 Total Current Liabilities ....................           32,752            43,970
                                                                     -----------       -----------

        Commitments and Contingencies

        Stockholders' Equity:
          Common stock, $0.0001 par value;
            Authorized -- 500,000 shares;
            Issued and outstanding -- 90,956 at December 31,
              2000 and 93,750 at June 30, 2001 (unaudited) ....                9                 9
          Additional paid-in capital ..........................          284,393           308,762
          Deferred compensation ...............................           (2,757)           (2,186)
          Cumulative translation adjustments ..................               --              (585)
          Accumulated deficit .................................         (110,216)         (157,324)
                                                                     -----------       -----------
                 Total Stockholders' Equity ...................          171,429           148,676
                                                                     -----------       -----------
                 Total Liabilities and Stockholders' Equity ...      $   204,181       $   192,646
                                                                     ===========       ===========
</TABLE>



The accompanying notes are an integral part of these consolidated balance
sheets.


                                       1
<PAGE>   3



                                   EXULT, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (amounts in thousands except per share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED --              SIX MONTHS ENDED --
                                                         ------------------------------    -------------------------------
                                                         JUNE 30, 2000    JUNE 30, 2001    JUNE 30, 2000     JUNE 30, 2001
                                                         -------------    -------------    -------------     -------------
<S>                                                      <C>              <C>              <C>               <C>
        Revenue .....................................      $    8,172       $   64,318       $   13,749       $  107,782
        Cost of revenue .............................          12,393           72,761           18,143          127,616
                                                           ----------       ----------       ----------       ----------
        Gross loss ..................................          (4,221)          (8,443)          (4,394)         (19,834)
                                                           ----------       ----------       ----------       ----------
        Expenses:
          Product development .......................           1,559              817            2,363            2,986
          Selling, general and administrative(1) ....           7,598           13,642           16,628           19,904
          Depreciation and amortization .............           1,876            2,566            3,563            6,128
                                                           ----------       ----------       ----------       ----------
             Total expenses .........................          11,033           17,025           22,554           29,018
                                                           ----------       ----------       ----------       ----------
        Loss from operations ........................         (15,254)         (25,468)         (26,948)         (48,852)
          Interest income, net ......................           1,452              667            2,244            1,744
                                                           ----------       ----------       ----------       ----------
        Net loss ....................................      $  (13,802)      $  (24,801)      $  (24,704)      $  (47,108)
                                                           ==========       ==========       ==========       ==========

        Net loss per common share:
          Basic and diluted .........................      $    (0.40)      $    (0.27)      $    (1.11)      $    (0.51)
                                                           ==========       ==========       ==========       ==========

        Weighted average number of common shares
          Outstanding:
            Basic and diluted .......................          34,883           92,194           22,248           91,693
                                                           ==========       ==========       ==========       ==========
</TABLE>

----------

(1)  Includes $7,334 of business optimization costs in the 2001 periods.







The accompanying notes are an integral part of these consolidated financial
statements.


                                       2
<PAGE>   4



                                   EXULT, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (amounts in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                     SIX MONTHS ENDED --
                                                                ------------------------------
                                                                JUNE 30, 2000    JUNE 30, 2001
                                                                -------------    -------------
<S>                                                             <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss .................................................      $  (24,704)      $  (47,108)
  Adjustments to reconcile net loss to net cash
    used in operating activities --
      Depreciation and amortization ........................           3,563            7,271
      Stock option charges .................................              --            2,192
      Write-off of intangible assets .......................              --            2,165
  Changes in operating assets and liabilities --
    Investments ............................................          (5,000)           2,376
    Receivables ............................................          (9,495)          (3,471)
    Prepaid expenses and other current assets ..............          (3,764)          (1,372)
    Other assets ...........................................             (92)           1,034
    Accounts payable .......................................           3,641            4,448
    Accrued liabilities ....................................          14,391            6,356
                                                                  ----------       ----------
        Net cash used in operating activities ..............         (21,460)         (26,109)
                                                                  ----------       ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property, equipment and intangible assets ....         (12,551)         (10,637)
                                                                  ----------       ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of preferred stock ................          71,128               --
  Proceeds from issuance of common stock ...................          59,445           20,557
  Proceeds from exercise of stock options ..................             210            1,621
  Payments on long-term obligations ........................             (35)            (104)
                                                                  ----------       ----------
        Net cash provided by financing activities ..........         130,748           22,074
                                                                  ----------       ----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH ....................              --             (205)
                                                                  ----------       ----------

Net increase (decrease) in cash and cash equivalents .......          96,737          (14,877)
Cash and cash equivalents, beginning of period .............          39,199           94,890
                                                                  ----------       ----------
Cash and cash equivalents, end of period ...................      $  135,936       $   80,013
                                                                  ==========       ==========

SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid during the period for:
    Interest ...............................................      $       16       $       31
                                                                  ==========       ==========
    Income taxes ...........................................      $       18       $      158
                                                                  ==========       ==========

SUMMARY OF NON-CASH FINANCING ACTIVITIES:
  Acquisition of equipment through capital lease ...........      $      243       $      517
                                                                  ==========       ==========
</TABLE>




The accompanying notes are an integral part of these consolidated financial
statements.



                                       3
<PAGE>   5

                                  EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

   The unaudited consolidated financial statements of Exult, Inc. and
subsidiaries ("Exult" or the "Company") have been prepared by Exult's management
and reflect all adjustments that, in the opinion of management, are necessary
for a fair presentation of the interim periods presented. The results of
operations for the three and six months ended June 30, 2001 are not necessarily
indicative of the results to be expected for any subsequent periods or for the
entire year ending December 31, 2001. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
under the Securities and Exchange Commission's rules and regulations. A
consolidated statement of comprehensive loss has not been presented because the
components of comprehensive loss are not material.

   These unaudited consolidated financial statements and notes included herein
should be read in conjunction with Exult's audited consolidated financial
statements and notes for the year ended December 31, 2000 which were included in
our Annual Report on Form 10-K filed with the Securities and Exchange
Commission. Certain amounts in the 2000 financial statements have been
reclassified to conform with the 2001 presentation.

Segment Information and Concentration of Revenue/Credit Risk

   Management has determined that the Company operates within a single operating
segment. For the three months ended June 30, 2000 and 2001, 87% and 78%,
respectively, of the Company's revenue has been derived from within the United
States with the balance being derived primarily from within the United Kingdom.
For the six months ended June 30, 2000 and 2001, 89% and 75%, respectively, of
the Company's revenue has been derived from within the United States with the
balance being derived primarily from within the United Kingdom.

   During the three months ended June 30, 2000, the Company's three process
management clients at that time accounted for approximately 32%, 17% and 16% of
revenue. During the six months ended June 30, 2000, the same three process
management clients accounted for approximately 22%, 19% and 17% of revenue.
During the latter half of 2000, the Company added two additional process
management clients. For the three and six months ended June 30, 2001, two
process management clients, the Company's largest client in the 2000 periods and
a new client added during the latter half of 2000, accounted for approximately
45% and 43%, respectively, of revenue in the three-month period and 51% and 36%,
respectively, of revenue in the six-month period. No other client accounted for
more than 10% of revenue in the 2000 and 2001 periods. The Company believes that
the resulting concentration of credit risk in its receivables, with respect to
the limited client base, is substantially mitigated by the credit evaluation
process. To date, bad debt write-offs have not been significant.

Recent Accounting Pronouncements

   In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133, as amended by SFAS
No. 137, is effective for fiscal years beginning after June 15, 2000. SFAS No.
133 requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income (loss) depending on
whether a derivative is designed as part of a hedge transaction and, if so, the
type of hedge transaction involved. The Company adopted SFAS No. 133 on January
1, 2001. The adoption of SFAS No. 133 did not have a material impact on the
Company's consolidated financial position or results of operations as the
Company does not currently hold any derivative financial instruments.

   In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 addresses
financial accounting and reporting for business combinations and is effective
for all business combinations after June 30, 2001. SFAS No. 142 addresses
financial accounting and reporting for acquired goodwill and other intangible
assets and is effective for fiscal years beginning after December 15, 2001, with
early adoption permitted in certain instances for entities with fiscal years
beginning after March 15, 2001. The Company is in the process of determining the
expected impact on earnings and intangible assets upon adoption.


                                       4
<PAGE>   6

                                   EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)


2. CERTAIN CAPITAL TRANSACTIONS

   In February 2000, the Company issued 6,885,480 shares of Series D Convertible
Preferred Stock in a private placement to institutional investors for net
consideration of approximately $59,970,000. In addition, BP International
Limited exercised preemptive rights to purchase 385,805 shares of Series C
Preferred Stock for net consideration of approximately $3,966,000.

   In April 2000, BP International Limited exercised certain warrants to acquire
667,844 shares of Series C Convertible Preferred Stock and 3,339,220 shares of
Common Stock for net consideration of approximately $7,192,000 and $5,243,000,
respectively.

   In June 2000, Exult completed its initial public offering of its Common Stock
issuing 6,000,000 shares. In July 2000, Exult issued an additional 300,000
shares of Common Stock in connection with the underwriters' exercise of their
over-allotment option. The Company received net consideration, after the
underwriting discount and offering costs, of approximately $56,669,000 for the
issuance of the 6,300,000 shares. Concurrent with the consummation of the
initial public offering, all of the outstanding shares of the Company's
Preferred Stock were converted into 65,484,786 shares of Common Stock.

   On October 12, 2000, Exult and Bank of America signed a non-binding
Memorandum of Understanding providing the framework for a broad business
relationship, including the provision of business process management services to
Bank of America by Exult. The business relationship and process management
services transaction were subject to ongoing negotiations and the Memorandum of
Understanding established a 60-day time period to reach a definitive agreement.
Upon executing the Memorandum of Understanding, Bank of America acquired
5,000,000 investment units, each unit consisting of one share of Exult Common
Stock and a warrant to buy one additional share of Exult Common Stock. Each
warrant is exercisable for three years at $11.00 per share. The purchase price
for the 5,000,000 units was $55,000,000, of which $11,000,000 was paid in cash
and the remainder in prepaid rent and intangible assets. The intangible assets
are being amortized as a reduction of revenue over the life of the outsourcing
agreement. In connection with the issuance of the warrants, the Company incurred
a charge of $29,900,000 during the fourth quarter of 2000.

   In June 2001, one of the Company's third-party vendors purchased 1,538,461
shares of the Company's Common Stock for $20,000,000, or $13.00 per share, in
cash. In certain circumstances, the third-party vendor may be required by the
Company to purchase for cash up to an additional $30 million of the Company's
Common Stock in installments over the next four years. The per share purchase
price for future installments, if any, is derived from a formula designed to
approximate the fair market value of a share of Common Stock for a 30-day period
ending each date the third-party vendor is notified by the Company the Company
will require a purchase of its Common Stock by the vendor.

   In August 2001, the Company completed a public offering of its Common Stock
issuing 8,000,000 shares generating net consideration, after the underwriting
discount and estimated offering costs, of approximately $100 million.


3. BUSINESS OPTIMIZATION COSTS

   Included in selling, general and administrative expense for the three and six
months ended June 30, 2001, are $3,419,000 of severance costs (including
non-cash option acceleration charges of $2,189,000), certain wind-up costs
totaling $1,750,000 (including severance costs of $1,000,000) associated with
the consolidation of a secondary processing center and a $2,165,000 non-cash
charge relating to the write-off of a research database that the Company has
determined is no longer a strategic component of its business. In connection
with the severance costs and the consolidation of the processing center, the
Company plans to terminate 122 employees.


4. INCOME TAXES

   The Company did not record a tax provision for any of the three-month and
six-month periods ended June 30, 2000 or 2001, as it had incurred only net
operating losses as of these dates. A full valuation allowance is provided
against the tax benefit generated by the net operating losses because of the
uncertainty of realizing the deferred tax assets associated therewith.


                                       5
<PAGE>   7


                                   EXULT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)


5. NET LOSS PER SHARE

   The net loss per share, basic and diluted, for the three-month and six-month
periods ended June 30, 2000 and 2001, was computed using the weighted average
number of shares of Common Stock outstanding during the respective periods. The
impact of all outstanding shares of Preferred Stock convertible into Common
Stock, if any during the respective periods, warrants to purchase Common Stock
or Preferred Stock convertible into Common Stock, and stock options to purchase
Common Stock were excluded from the respective computations as their impact is
antidilutive.


                                       6
<PAGE>   8

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

   This report contains forward-looking statements that are based on our current
expectations, assumptions, estimates and projections about our company and our
industry. When used in this report, the words "may," "will," "should,"
"predict," "continue," "plans," "expects," "anticipates," "estimates," "intends"
and similar expressions are intended to identify forward-looking statements.
These statements include, but are not limited to, statements under the captions
"Business Overview," "Risk Factors," "Results of Operations" and elsewhere in
this report concerning, among other things, our goals and strategies, the
anticipated scope and result of our business operations, and our ability to:

     -  complete development of our service delivery infrastructure;

     -  obtain new comprehensive process management contracts;

     -  successfully implement our comprehensive Exult eHR(SM) solutions for our
        existing clients and scale our service offering across a broad client
        base;

     -  establish new client service centers;

     -  increase revenue, control expenditures, recognize economies of scale and
        achieve profitability; and

     -  expand our sales and marketing capabilities and our technology and
        general operating infrastructure.

   These forward-looking statements are subject to risks and uncertainties that
could cause actual results to differ materially from those projected. Exult has
not yet proven its business model and must invest substantial resources to build
its service capabilities. It is not certain that the Exult eHR solution will
deliver the results anticipated. The market in which Exult operates is
competitive and other service providers may be more effective at selling or
delivering human resources process management services. These and other risks
and uncertainties are described in this report under the heading "Risk Factors"
and in other filings made from time to time by Exult with the Securities and
Exchange Commission. The cautionary statements made in this report should be
read as being applicable to all related forward-looking statements wherever they
appear in this report. These statements are only predictions. We cannot
guarantee future results, levels of activity, performance or achievements. We
assume no obligation to publicly update or revise these forward-looking
statements for any reason, or to update the reasons actual results could differ
materially from those anticipated in these forward-looking statements, even if
new information becomes available in the future.


                                BUSINESS OVERVIEW

   Our primary source of revenue is fees we earn for providing our HR business
process management services under long-term contracts. We also receive
additional revenue from our consulting services. We recognize revenue for our
services as the services are performed. Some of the services that we are
obligated to provide to our clients are provided by third-party vendors. We may
continue to use these vendors, hire replacement vendors, or provide some of
these services directly; in any case, we are responsible for the delivery and
acceptability of these services. We include in revenue all charges for services
that we are contractually obligated to provide to our clients, whether we
provide these services directly using our own personnel or through third-party
vendors. We pay the costs of these services to the third-party vendors, and such
costs are included in our cost of revenue. In many cases our initial cost of
paying these vendors is equal to our revenue attributable to their services. In
order to realize a profit from revenue received in connection with these
third-party vendor contracts we must reduce these vendor costs by improving
efficiencies, obtaining more favorable pricing, or performing the services
ourselves at a lower cost.

   To date, we have typically generated leads for potential process management
clients through our management, existing consulting relationships, our board of
directors, third-party consultants, contact with key executives at Global 500
corporations or direct communication from such companies. After initial
discussions with and qualification of the potential client, we typically enter
into a letter of intent with the client which establishes a framework for due
diligence and contract negotiations. Our letter of intent may provide for
reimbursement of some or all of our direct and indirect costs incurred during
this process. To the extent such costs are guaranteed by the letter of intent
regardless of whether a contract is ultimately signed, reimbursements of costs
are included in revenue as the costs are incurred. To the extent reimbursements
are guaranteed only if a contract is not signed, such amounts are included in
revenue once invoiced and collection is reasonably assured. All direct and
indirect costs arising from the due diligence and contract negotiation process
are expensed as incurred.

   Our contracts are generally structured so that we receive a fee that is no
greater than our client's historical cost of operating the functions assumed by
us. After we achieve a minimum cost reduction, we may be required to share
further savings with our clients in negotiated gain sharing arrangements. The
amount of minimum cost reduction is determined in accordance with the terms of
the


                                       7
<PAGE>   9

applicable contracts. Once we have signed a contract with a client, we
transition its HR processes to our facilities and control. After we have
transitioned a client's processes, we work to transform these processes in order
to increase efficiencies and reduce costs. Typically the costs we incur during
the transition period for the services provided and the transitioning of the
client's processes have exceeded the revenue received from the client during the
transition period. During the transformation period, we seek to reduce our costs
sufficiently to permit us to provide services at or below the minimum cost
reduction provided in the contract and recover the excess costs incurred during
the transition period to realize a profit for the contract period.

   We incurred a net loss of $10.7 million in 1999, exclusive of a non-cash
warrant charge of $4.5 million, and $64.9 million in 2000, exclusive of a
non-cash warrant charge of $29.9 million, and expect to incur a net loss in 2001
and potentially in future years. In the next two years, we anticipate making
large expenditures to build additional client service centers, to expand our
sales and marketing capabilities, and to fund the development and expansion of
our technology and general operating infrastructures. To the extent that revenue
does not increase at a rate commensurate with our increasing costs and
expenditures, our future operating results and liquidity could be materially and
adversely affected.

                                  RISK FACTORS

WE HAVE A LIMITED OPERATING HISTORY AND UNPROVEN BUSINESS MODEL.

   We entered into our first process management contract in December 1999. We
have five clients under contract for our HR business process management
services, and we are still transitioning the HR processes of the three largest
of these clients. While we are ahead of our planned rate of client acquisition
and overall transition, our business model is unproven. Our success depends on
our ability to develop and implement a high quality, cost-effective service
offering, operate it profitably, produce satisfactory results for our clients
and attract new clients. While we have met our development objectives to date
and we believe our current clients have perceived our services as beneficial, we
have not been in operation long enough to judge whether we can accomplish these
objectives. Accordingly, our revenue and income potential and future operating
results are uncertain.

WE CURRENTLY DEPEND ON A SMALL NUMBER OF CLIENTS FOR SUBSTANTIALLY ALL OF OUR
REVENUE. IF ANY OF THESE CLIENTS WERE TO SUBSTANTIALLY REDUCE OR STOP USING OUR
SERVICES, OR IF WE EXPERIENCE SIGNIFICANT, REPEATED PERFORMANCE FAILURES IN
PROVIDING SERVICES TO THESE CLIENTS, OUR REPUTATION AND FUTURE REVENUES WOULD BE
SERIOUSLY IMPAIRED.

   Bank of America Corporation, BP p.l.c., and Unisys Corporation are the first
clients for which we are offering a comprehensive HR process management
solution, and we anticipate revenue from each of these contracts will represent
a substantial portion of our revenue through 2001 and possibly in future
periods. In the first six months of fiscal 2001 these three customers accounted
for approximately 90.1% of our revenues. Our contracts with these clients are
still relatively new and our service offering is not yet fully implemented for
these clients. We believe our ability to secure future clients and revenues will
be largely dependent upon our ability to perform and achieve the contracted
service levels and cost savings for these clients. Each of our process
management contracts can be terminated for material breach, significant or
repeated performance failures or in certain instances for convenience upon
required notice and payment of specified early termination penalties. In
addition, Bank of America has the right to terminate its agreement with us if
our current Chief Executive Officer or our current Chief Operating Officer
ceases to be employed by us (other than due to non performance, death or
disability) within one year after specified contract milestones are met. The
early termination penalties may not cover our termination costs and are not
intended to replace profits we might have earned. If any of these clients were
to substantially reduce or stop using our services, or if we experience
significant, repeated performance failures, our reputation and future revenues
would be seriously impaired. We expect to face similar risks with other
significant clients until our business model and service offering are more
firmly established.

OUR CLIENT CONTRACTS MAY NOT YIELD THE RESULTS WE EXPECT.

   We may from time to time provide estimates of revenues we expect to receive
from our significant contracts. These estimates are subject to reduction based
upon a number of factors, including those discussed above and as a result of a
reduction in contract scope due to client downsizing or partial termination,
refusal of some of the clients' third-party vendors to perform their services
within the scope of our contract, client retention of specific functions that
are expected to be transferred to us and other circumstances within the client's
organization. In addition, our receipt of revenue under any particular contract
may be delayed if transition of the client's processes to our infrastructure
takes longer than anticipated. While our contracts with our clients may
contemplate further expansion, this may not occur, and if it does occur,
significant additional expenditures by us may be required to fund such
expansion. In addition, our process management contracts generally permit our
clients to impose financial penalties against us for specified material
performance failures.


                                       8
<PAGE>   10

   A significant part of our revenue is attributable to services we offer to our
clients through third-party vendors that provide specialized services, such as
benefits administration and relocation services. We select some of these vendors
and assume others from relationships established by our clients before
contracting with us. These vendors may act as subcontractors or vendors to us or
provide services directly to our clients under our management; in either case,
we are responsible for the delivery and acceptability of these services and
errors or omissions by our vendors could cause us to have liability to our
clients in excess of the limits of liability the vendors negotiate with us. If
our clients are not satisfied with the services provided by these third-party
vendors, they may be entitled to recover penalties or to terminate their
agreements with us, which could seriously harm our business. In many cases our
initial cost of paying these vendors is equal to our revenue attributable to
their services. In order to realize a profit from revenue received in connection
with these third-party vendor contracts we must reduce these vendor costs by
improving efficiencies, obtaining more favorable pricing, or performing the
services ourselves at a lower cost. We plan to achieve these efficiencies and
cost reductions through vendor management and consolidation, but this may
involve delay as existing contracts run their course and we attempt to
renegotiate with or replace these vendors. At the conclusion of these
third-party contracts we must negotiate new third-party contracts, or provide
these services ourselves, at the same or more favorable rates or our operating
results could be seriously harmed because we may not be able to adjust our
contracts with our clients to offset an increase in the cost of these
specialized services.

WE MIGHT NOT BE ABLE TO ACHIEVE THE COST SAVINGS REQUIRED TO BECOME PROFITABLE
UNDER OUR CONTRACTS.

   We provide our services for fixed fees that are generally equal to or less
than our clients' historical costs to provide for themselves the services we
contract to deliver. Additionally, our contracts generally require a percentage
reduction of this fixed fee after a specified period of time, irrespective of
our cost of providing these services. As a result, our profitability will depend
on our ability to provide services cost-effectively. Achieving the efficiency we
need to operate profitably depends upon our ability to develop our process
operations and our Exult eHR solution into a standardized management system that
can be operated from our client service centers and extended to multiple clients
with limited client-specific adaptation and modification. The actual cost
reductions we are able to achieve will vary by client for a variety of reasons,
including the scope of services we agree to provide, the existing state of our
clients' HR departments and processes, and our ability to standardize,
centralize, and simplify their processes, notwithstanding the complexity of
their existing systems and potential resistance by some parts of the client
organization to change. If we miscalculate the resources or time we need to
perform under any of our contracts, the costs of providing our services could
exceed the fees we receive from our clients, and we would lose money.

OUR EXULT EHR SOLUTION IS EVOLVING AND REQUIRES ONGOING DEVELOPMENT.

   We are still developing our service delivery infrastructure, and our ability
to continue to deliver and expand our broad process management solution depends
upon continued success in assembling and managing our own systems and
capabilities and third-party vendors into an integrated and efficient delivery
platform. Our clients use disparate information systems and operating methods,
and transitioning their processes to our operating platforms requires
significant technology and process integration. We often must adapt or develop
new systems and processes to accommodate various clients' needs. Clients'
employees may access and utilize our web-enabled Exult eHR solution and systems
through interfaces that require significant development and integration of many
independent programs and complex functions, as well as ongoing revision,
adaptation and maintenance. If we fail to develop a client's service delivery
infrastructure in accordance with the specifications and delivery milestones
agreed upon, or if we are unable to complete development of scalable systems and
achieve the functionality we expect, our ability to deliver our services and
achieve our business objectives in general could be seriously impeded.

WE MUST ANTICIPATE AND CONFORM TO THE NEW AND EVOLVING MARKET IN WHICH WE
OPERATE.

   Our business model is based on integrated management of a variety of client
HR and finance processes. Based on client reaction to date, we believe there is
significant market demand for this service, but our ability to satisfy this
demand depends upon our ability to anticipate market developments. If we are
unable to react quickly to changes in the market, if the market fails to develop
in the ways we expect, or if our services do not achieve additional market
acceptance, then we are unlikely to maintain our leadership position or become
or remain profitable. Our ability to be successful in this regard may be
impaired because the market is new.


                                       9
<PAGE>   11


CAPACITY CONSTRAINTS AND THE LENGTH OF OUR NEW CLIENT SALES AND INTEGRATION
CYCLES MAY LIMIT OUR REVENUE GROWTH.

   We expect most of our future revenue growth in 2002 and beyond to come from
new client engagements. However, because we are a new company and are still
creating the components of our service offering, we plan to limit the number of
additional client engagements we accept over the near term. This strategy may
negatively affect our revenue growth until we have developed our services to the
point that they can be extended more rapidly across a greater number of clients.

   Our client contracts involve significant commitments and cannot be made
without a lengthy, mutual due diligence process during which we identify the
potential client's service needs and costs, and our ability to meet those needs
and provide specified cost savings. While we may receive some fees for
conducting due diligence, we will not recover all our costs from conducting the
due diligence unless it results in a client engagement. We must devote
significant management time and other resources to each due diligence process
over a period of four to six months or more, and we can conduct at most only a
few of these due diligence undertakings at one time. This lengthy due diligence
process limits our revenue growth, and we have invested significant time in some
potential client relationships that have not resulted in contracts. It is
possible that any potential client due diligence process could result in a
decision by us or the potential client not to enter into a contract after we
have made significant investments of time and resources.

   After a new client contract is signed, we typically convert the client's HR
processes to our systems and infrastructure in stages. This transition period
can take from six months to over one year and may involve unanticipated
difficulties and delays. We cannot realize the full efficiencies of providing
services to the client through our infrastructure until this transition is
complete. Therefore, any increase in our earnings that could be expected from
our agreements can be delayed for at least several months after the contract is
signed, and it could take a significant amount of time for our agreements to
contribute significantly to profits or cash flow. The transition of HR processes
under our existing contracts with BP, Unisys, and Bank of America to our systems
and infrastructure is not scheduled to be complete until various times later in
2001, and could be delayed. We attempt to negotiate long-term contracts in order
to give us time to complete the transition and earn a profit, but if
implementation of our service model is delayed, or if we do not meet our service
commitments under any particular contract and the client terminates our
engagement early as a result, we might experience no return on our substantial
investment of time and resources in that client.

WE EXPECT TO INCUR SIGNIFICANT NET OPERATING LOSSES AND WE MAY NEED TO RAISE
ADDITIONAL CAPITAL.

   Since our formation, we have not had a profitable quarter. We incurred a net
loss of $64.9 million, exclusive of a non-cash warrant charge of $29.9 million,
for the year ended December 31, 2000, and a net loss of $47.1 million for the
six months ended June 30, 2001. For the year ended December 31, 2000 and the
six-month period ended June 30, 2001, we used cash of $60.7 million and $26.1
million, respectively, in operating activities and $23.8 million and $10.6
million, respectively, in investing activities. Expansion of our infrastructure
and service capacity, acquiring new client contracts and transitioning their
services requires significant capital investment. We may also need cash to make
acquisitions and develop new service offerings and technologies. As a result, we
expect to incur net losses in 2001 and potentially in future years, and we will
need to generate significant revenues to achieve profitability. While we do not
enter into contracts for which we expect to incur a loss, and although we
estimate and model each of our client contracts to be individually profitable,
due to our rapid growth, the expense of creating our company, and other factors
described in this report, we cannot be certain that we will ever operate
profitably, or that we can sustain or increase profitability on a quarterly or
annual basis in the future.

   We anticipate rapid growth and until our operating income covers our cash
needs we may need to raise additional funds through public or private debt or
equity financings in order to address unanticipated operating issues, finance
acquisitions, new client contracts with capital investment requirements, and
other strategic opportunities, and maintain adequate cash balances to satisfy
the expectations of prospective clients. We expect our current funds to satisfy
our working capital needs for the next 12 months. We are unable to predict our
working capital requirements beyond 12 months because our capital needs will
vary depending upon obtaining new client contracts or expansion of relationships
with existing clients, business opportunities and potential acquisitions, among
other factors. If we are required to raise additional funds through the issuance
of equity securities, the percentage ownership of our existing stockholders
would be reduced. Further, such equity securities may have rights, preferences
or privileges senior to those of our common stock. We cannot be certain that we
will be able to raise additional funds on favorable terms, or at all. If we are
unable to obtain additional funds, we may be unable to fund our operations or
strategic initiatives.


                                       10
<PAGE>   12


TO SUCCEED WE MUST HIRE, ASSIMILATE AND RETAIN KEY MANAGEMENT PERSONNEL AND
LARGE NUMBERS OF NEW EMPLOYEES, OPEN NEW CLIENT SERVICE CENTERS, ASSIMILATE OUR
CLIENTS' PERSONNEL AND SYSTEMS AND EXPAND OUR OWN SYSTEMS AND CONTROLS.

   To achieve sustainable profitability, we must extend our service model across
many client organizations and gain critical mass in the size and breadth of our
operations. Our ability to achieve rapid growth depends upon the following
essential elements:

     -  Current markets for skilled employees are competitive, and we must be
        able to hire, train and retain key management personnel and large
        numbers of human resources specialists, web and Internet technologists
        and programmers, business development and process management specialists
        and technical and customer support personnel.

     -  We currently operate three large-scale client service centers, in North
        Carolina, Scotland and Texas. We also manage more limited service center
        operations in the Los Angeles, California area. These centers are
        designed to handle our existing client demands, but we must open new
        client service centers in new geographic locations to handle significant
        additional growth in our business. We must devote substantial financial
        and management resources to launch and operate these centers
        successfully, and we may not select appropriate locations for these
        centers, open them in time to meet our client service commitments or
        manage them profitably.

     -  As we assume responsibility for the existing HR departments of our
        clients, we must be able to assimilate HR personnel from these clients
        and integrate disparate systems, procedures, controls and
        infrastructures.

     -  We will need to improve our financial and management controls, reporting
        systems and operating systems to accommodate growth. If we do not manage
        growth effectively, our ability to perform under our contracts may be
        jeopardized and our reputation may be harmed.

OUR QUARTERLY REVENUES AND OPERATING RESULTS ARE VOLATILE AND MAY CAUSE OUR
STOCK PRICE TO FLUCTUATE.

   Our quarterly operating results have varied in the past and are likely to
vary significantly in the future. It is possible that in some future quarter or
quarters our operating results will be below the expectations of public market
analysts or investors. If so, the market price of our common stock may decline
significantly. Factors that may cause our results to fluctuate include:

     -  the growth of the market for our HR services and our ability to obtain
        new client contracts;

     -  our ability to continue to execute successfully on client contracts;

     -  the length of the sales and integration cycle for our new clients;

     -  cancellations or reductions in the scope of our contracts;

     -  delays in transitioning various client processes to our infrastructure;

     -  our ability to develop and implement additional service offerings and
        technologies;

     -  the introduction of comprehensive HR services by new and emerging
        competitors;

     -  changes in our pricing policies or those of our competitors;

     -  our ability to manage costs, including personnel costs, support services
        costs and third party vendor costs; and

     -  the timing and cost of anticipated openings or expansions of client
        service centers.

   We have in the past acquired assets and hired personnel from our clients and
issued securities in connection with new contract signings. We expect to
continue these practices in the future. Client asset acquisitions and securities
issuances may result in amortization expense. In addition, rationalizing
headcount following transition of client processes to our systems may result in
severance expense. As our business evolves we may from time to time incur
"business optimization costs" relating to the implementation of new organization
structures, technologies, processes and other changes in our business. These
expenses will reduce our reported earnings.


                                       11
<PAGE>   13


WE COULD EXPERIENCE DAMAGES, SERVICE INTERRUPTIONS OR FAILURES AT OUR CLIENT
SERVICE CENTERS OR IN OUR COMPUTER AND TELECOMMUNICATIONS SYSTEMS.

   Our business could be interrupted by damage to or disruption of our client
service centers, computer and telecommunications equipment and software systems
from fire, power loss, hardware or software malfunctions, penetration by
computer hackers, computer viruses, natural disasters and other causes. Our
clients' businesses may be harmed by any system or equipment failure we
experience. As a result of any of the foregoing, our relationship with our
clients may be adversely affected, we may lose clients, our ability to attract
new clients may be adversely affected and we could be exposed to liability. We
cannot be certain that we will be able to route calls and other operations from
an affected center to another in the event service is disrupted. In addition, in
the event of widespread damage or failures at our facilities, we cannot
guarantee that the disaster recovery plans we have in place will protect our
business.

WE ARE SUBJECT TO RISKS ASSOCIATED WITH OUR INTERNATIONAL OPERATIONS.

   Our business strategy requires us to expand internationally as we broaden the
geographic scope of services we deliver to our clients from United States and
United Kingdom operations to foreign operations and as we take on additional
large, multinational clients. We will face risks in doing business abroad that
include the following:

     -  changing regulatory requirements;

     -  legal uncertainty regarding foreign laws, tariffs and other trade
        barriers;

     -  political instability;

     -  international currency issues, including fluctuations in currency
        exchange rates;

     -  cultural differences;

     -  designing and operating web sites and other service delivery components
        in foreign languages; and

     -  differing technology standards and Internet regulations that may affect
        access to and operation of our web sites and our clients' web sites.

   In the future, we expect to use overseas vendors to assist in our business,
including to provide services to our clients overseas and to take advantage of
lower overseas labor costs for some support functions. It may be difficult for
us to manage overseas vendors and enforce our rights against them in any
disputes, and replacing overseas vendors may involve delay and expense.

WE DEPEND ON OUR SENIOR MANAGEMENT TEAM, A NUMBER OF MEMBERS OF WHICH HAVE
RECENTLY JOINED US, AND IF THEY ARE UNABLE OR UNWILLING TO CONTINUE IN THEIR
PRESENT POSITIONS, THESE EXECUTIVES WOULD BE DIFFICULT TO REPLACE AND OUR
BUSINESS COULD BE HARMED.

   We believe that our success is dependent upon our senior management team and
our senior executives' leadership skills. The loss of any of these individuals
or an inability to attract, retain and maintain qualified personnel could
adversely effect us. A number of our senior management, including our Chief
Financial Officer and Chief Operating Officer, joined us in 2000 or 2001. Due to
the competitive nature of our industry, we may not be able to retain all of our
senior managers. If one or more members of our senior management team were
unable or unwilling to continue in their present positions, these executives
would be difficult to replace and our business could be harmed.

   Each of our senior executive's employment is "at will," which means that the
executive's employment with us may be terminated by either us or the executive
at any time, for any reason without cause or advance notice.

THE MARKET FOR OUR SERVICES AND OUR REVENUE GROWTH DEPENDS ON OUR ABILITY TO USE
THE INTERNET AS A MEANS OF DELIVERING HUMAN RESOURCES SERVICES.

   We rely on the Internet as a mechanism for delivering our services to our
clients and achieving efficiencies in our service model, and this reliance
exposes us to various risks.


                                       12
<PAGE>   14



     -  We use public networks to transmit and store extremely confidential
        information about our clients and their employees, such as compensation,
        medical information and social security numbers. We may be required to
        expend significant capital and other resources to address security
        breaches. We cannot be certain that our security measures will be
        adequate and security breaches could disrupt our operations, damage our
        reputation and expose us to litigation and possible liability.

     -  Our target clients may not be receptive to human resources services
        delivered over the Internet because of concerns over transaction
        security, user privacy, the reliability and quality of Internet service
        and other reasons. In addition, growth in Internet traffic may cause
        performance and reliability to decline. Interruptions in Internet
        service and infrastructure delays could interfere with our ability to
        use the Internet to support our Exult eHR service, which would impair
        our revenue growth and results of operations.

     -  Laws and regulations may be adopted relating to Internet user privacy,
        pricing, usage fees and taxes, content, distribution and characteristics
        and quality of products and services. This could decrease the popularity
        or impede the expansion of the Internet and decrease demand for our
        services. Moreover, the applicability of existing laws to the Internet
        is uncertain with regard to many important issues, including property
        ownership, intellectual property, export of encryption technology, libel
        and personal privacy. The application of laws and regulations from
        jurisdictions whose laws do not currently apply to our business, or the
        application of existing laws and regulations to the Internet and other
        online services, could also harm our business.

WE MUST KEEP OUR COMPUTING AND COMMUNICATIONS INFRASTRUCTURE ON PACE WITH
CHANGING TECHNOLOGIES.

   Our success depends on our sophisticated computer, Internet and
telecommunications systems. We have invested significantly in our technological
infrastructure and anticipate that it will be necessary to continue to do so in
the future to remain competitive. These technologies are evolving rapidly and
are characterized by short product life cycles, which require us to anticipate
technological changes and developments. Our success in delivering services
cost-effectively and creating processes that are consistent with HR best
practices for our clients depends, in part, upon our ability to adapt our
processes to incorporate new and improved software applications, communications
systems and other technologies and devices. If we fail to adapt to technological
developments, our clients may experience service implementation delays or our
services may become non-competitive or obsolete.

WE RELY ON THIRD-PARTY VENDORS FOR SOFTWARE. IF THEIR PRODUCTS ARE NOT AVAILABLE
OR ARE INADEQUATE, OUR BUSINESS COULD BE SERIOUSLY HARMED.

   Our service delivery capability incorporates and relies on software owned by
third parties that we license directly or use through existing license
arrangements between our clients and the vendor. If these vendors change or fail
to maintain a product that we are using, or if these agreements are terminated
or not renewed, we might have to delay or discontinue our services until
equivalent technology can be found, licensed and installed.

THE MARKETS WE SERVE ARE HIGHLY COMPETITIVE AND OUR COMPETITORS MAY HAVE MUCH
GREATER RESOURCES TO COMMIT TO GROWTH, NEW TECHNOLOGY AND MARKETING.

   Our current and potential competitors include in-house HR departments of
large multinational corporations, as well as other third parties that provide
discrete or combined HR and information technology functions, including
consulting and process outsourcing divisions of Big Five accounting firms and
other consulting firms, information technology outsourcing companies and
transaction processing companies such as benefits administrators. In addition,
we expect that the predicted growth of the HR outsourcing market will attract
other consulting firms, transaction processing companies and outsourcers and
motivate competitors to assume responsibility for broad integration of HR
processes.

   Several of our competitors have substantially greater financial, technical
and marketing resources, larger customer bases, greater name recognition and
more established relationships with their customers and key product and service
suppliers than we do. Our competitors may be able to:

     -  develop and expand their delivery infrastructure and service offerings
        more quickly;

     -  adapt better to new or emerging technologies and changing client needs;

     -  take advantage of acquisitions and other opportunities more readily;


                                       13
<PAGE>   15

     -  devote greater resources to the marketing and sale of their services;
        and

     -  adopt more aggressive pricing policies.

   Some of our competitors may also be able or willing to provide clients with
additional benefits at lower overall costs. In addition, we believe there will
be future consolidation in our market, which could increase competition in ways
that may be adverse to us.

WE OPERATE IN A COMPLEX REGULATORY ENVIRONMENT, AND FAILURE TO COMPLY WITH
APPLICABLE LAWS AND REGULATIONS COULD ADVERSELY AFFECT OUR BUSINESS.

   Corporate human resources operations are subject to a number of laws and
regulations, including those applicable to payroll practices, benefits
administration, employment practices and data privacy. Because our clients have
employees in states across the United States and in various countries around the
world, we must perform our services in compliance with the legal and regulatory
requirements of multiple jurisdictions. Some of these laws and regulations may
be difficult to ascertain or interpret, may change, and may be inconsistent with
our business practices. Violation of laws and regulations could subject us to
fines and penalties, damage our reputation, constitute breach of our client
contracts and impair our ability to do business in various jurisdictions or
according to our established processes.

   The European Commission's Directive on Data Privacy limits transfer of
personal data outside the European Union. In order to receive personal data
about our clients' European employees and fulfill our service commitments, we
have elected to comply with the Safe Harbor Principles established by the United
States Department of Commerce, in collaboration with the European Commission, to
provide "adequate protection" for personal data about European Union residents.
Because we process HR data, we are required by the Safe Harbor Principles to
submit to the jurisdiction of the European Union Data Protection Authorities
(DPAs). Specifically, we must cooperate with the DPAs in the investigation and
resolution of complaints brought under the Safe Harbor Principles by European
citizens and comply with any corrective advice and remedial or compensatory
measures they dictate. In addition, operation under the Safe Harbor Principles
subjects us to the jurisdiction of the Federal Trade Commission. If we fail to
process personal data in accordance with these principles, we could be subject
to legal penalties under the Federal Trade Commission Act and foreign privacy
laws. We could also lose our ability to move personal data from the European
Union to the United States, which would significantly impair our ability to
fulfill our contractual commitments to our clients. We expect to have to comply
with similar laws of other foreign jurisdictions in which we do business in the
future.

WE MAY UNDERTAKE ACQUISITIONS WHICH MAY LIMIT OUR ABILITY TO MANAGE AND MAINTAIN
OUR BUSINESS, MAY RESULT IN ADVERSE ACCOUNTING TREATMENT AND MAY BE DIFFICULT TO
INTEGRATE INTO OUR BUSINESS.

   We expect to pursue acquisitions under appropriate circumstances. We cannot
provide any assurance that we will be able to complete any acquisitions, or that
any acquisitions we may complete will enhance our business. Any acquisition we
do complete could subject us to a number of risks, including:

     -  diversion of our management's attention;

     -  amortization of intangible assets adversely affecting our reported
        results of operations;

     -  inability to integrate the acquired company and its employees into our
        organization effectively, and to retain key personnel of the acquired
        business;

     -  inability to retain the acquired company's customers; and

     -  exposure to legal claims for activities of the acquired business prior
        to acquisition.

   Client satisfaction or performance problems with an acquired business also
could affect our reputation as a whole. In addition, any acquired business could
significantly underperform relative to our expectations.

WE MUST PROTECT OUR INTELLECTUAL PROPERTY AND AVOID INFRINGING UPON THE
INTELLECTUAL PROPERTY RIGHTS OF OTHERS.

   We may not be able to detect or deter unauthorized use of our intellectual
property. If third parties infringe upon or misappropriate our trade secrets,
copyrights, trademarks, service marks, trade names or proprietary information,
our business could be seriously


                                       14
<PAGE>   16

harmed. In addition, although we believe that our proprietary rights do not
infringe upon the intellectual property rights of others, other parties may
assert that we have violated their intellectual property rights. These claims,
even if not true, could result in significant legal and other costs and may be a
distraction to management. In addition, protection of intellectual property in
many foreign countries is weaker and less reliable than in the United States. If
our business expands into foreign countries, risks associated with protecting
our intellectual property will increase.

OUR EXECUTIVE OFFICERS, DIRECTORS AND THEIR AFFILIATES CONTROL THE COMPANY.

   Our executive officers, directors and their respective affiliates
beneficially own approximately 60% of our outstanding common stock. As a result,
these stockholders, acting together, have the ability to control matters
requiring stockholder approval, including the election of directors and mergers,
consolidations and sales of all or substantially all of our assets. These
stockholders may have interests that differ from other investors and they may
approve actions that other investors vote against or reject actions that other
investors have voted to approve. In addition, this concentration of ownership
may also have the effect of preventing, discouraging or deferring a change in
control of Exult, which, in turn, could depress the market price of our common
stock.

OUR STOCK PRICE IS LIKELY TO BE HIGHLY VOLATILE.

   The price at which our common stock trades has fluctuated significantly and
is likely to continue to be highly volatile. From our IPO in June 2000 through
June 30, 2001, the sales price of our stock, as reported on the Nasdaq National
Market, has ranged from a low of $7.00 to a high of $19.85. We are a relatively
new company with no record of profits, and we utilize the Internet and a
technology infrastructure to deliver our services. The share prices for other
companies with similar characteristics have at times increased to levels that
bore no relationship to their operating performance, and at other times have
declined dramatically, even without apparent changes in their business.

   In addition, the stock market in general has from time to time experienced
significant price and volume fluctuations that have affected the market prices
for companies like ours. In the past, this kind of market price volatility has
often resulted in securities class action litigation against companies
comparable to ours. Securities litigation could result in substantial costs and
divert our management's attention and resources.

SUBSTANTIAL SALES OF OUR COMMON STOCK BY OUR EXISTING INVESTORS COULD CAUSE OUR
STOCK PRICE TO DECLINE.

   As of August 7, 2001, of our 102,262,358 outstanding shares, only 14,300,000
have been sold publicly by the company, and our stockholders have sold only a
relatively small number of privately issued shares. Following the expiration of
the 90-day lockup agreements between the underwriters for our recently completed
offering and Exult, our directors, our executive officers and the selling
stockholders, substantially all of our outstanding shares will be available for
sale in the public market, subject in some cases to compliance with the volume
and other limitations of Rule 144.

   The majority of our outstanding shares are in the hands of their original
purchasers. These investors may seek to sell their shares, and sales of large
numbers of shares in the same time period could cause the market price of our
common stock to decline significantly. These sales also might make it more
difficult for us to sell securities in the future at a time and price that we
deem appropriate.

OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD DETER A TAKEOVER EFFORT.

   Provisions of our certificate of incorporation and bylaws, including those
that provide for a classified board of directors, authorized but unissued shares
of common and preferred stock and notice requirements for stockholder meetings,
and Delaware law regarding the ability to conduct specific types of mergers
within specified time periods, could make it more difficult for a third party to
acquire us, even if doing so would provide our stockholders with a premium to
the market price of their common stock. A classified board of directors may
inhibit acquisitions in general, and a tender offer not endorsed by our board of
directors in particular, since only one-third of our directors are reelected
annually, thereby requiring two annual meetings before a majority of our
directors could be replaced. The authorization of undesignated preferred stock
gives our board of directors the ability to issue preferred stock with voting or
other rights or preferences that could impede the success of any attempt to
change control of the company. If a change in control or change in management is
delayed or prevented, the market price of our common stock could decline.


                                       15
<PAGE>   17

                              RESULTS OF OPERATIONS

   In view of the rapidly evolving nature of our business and our limited
operating history, we believe that period to period comparisons of our operating
results, including our revenue, gross loss and expenses as a percentage of
revenue, should not be relied upon as an indication of our future performance.
The following table sets forth statement of operations data expressed as a
percentage of revenue for the periods indicated:

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED --              SIX MONTHS ENDED --
                                                         ------------------------------    ------------------------------
                                                         JUNE 30, 2000    JUNE 30, 2001    JUNE 30, 2000    JUNE 30, 2001
                                                         -------------    -------------    -------------    -------------
<S>                                                      <C>              <C>              <C>              <C>
        Revenue .....................................          100.0%           100.0%           100.0%           100.0%
        Cost of revenue .............................          151.7            113.1            132.0            118.4
                                                           ---------        ---------        ---------        ---------
        Gross loss ..................................          (51.7)           (13.1)           (32.0)           (18.4)
                                                           ---------        ---------        ---------        ---------
        Expenses:
          Product development .......................           19.1              1.3             17.2              2.8
          Selling, general and administrative(1) ....           93.0             21.2            120.9             18.4
          Depreciation and amortization .............           22.9              4.0             25.9              5.7
                                                           ---------        ---------        ---------        ---------
             Total expenses .........................          135.0             26.5            164.0             26.9
                                                           ---------        ---------        ---------        ---------
        Loss from operations ........................         (186.7)           (39.6)          (196.0)           (45.3)
        Interest income, net ........................           17.8              1.0             16.3              1.6
                                                           ---------        ---------        ---------        ---------
        Net loss ....................................         (168.9)%          (38.6)%         (179.7)%          (43.7)%
                                                           =========        =========        =========        =========
</TABLE>

        (1) Includes $7.3 million of business optimization costs in the 2001
            periods. Excluding such costs, selling, general and administrative
            expense was 9.8% and 11.7%, respectively, of revenue.

THREE MONTHS ENDED JUNE 30, 2000 AND 2001

   REVENUE. Revenue for the three months ended June 30, 2001 was $64.3 million
as compared to $8.2 million for the three-month period ended June 30, 2000. We
began to provide services under our process management contracts during the
first six months of 2000, generating $5.3 million, or 65.4% of revenue from our
then three process management clients for the three-month period ended June 30,
2000. With the addition of two new process management clients during the latter
half of 2000, revenue from our five process management clients was $59.4
million, or 92.4% of revenue, for the three months ended June 30, 2001. The
balance of revenue for the 2000 and 2001 periods was derived primarily from
consulting clients. As our process management business expands, we expect the
relative contribution of revenue derived from consulting clients to continue to
decrease.

   The revenue increase for the three months ended June 30, 2001 principally
resulted from the continued transition of service responsibility to Exult under
our initial three process management contracts, as well as revenue generated
from the addition of the two new process management clients. For the three
months ended June 30, 2000 and 2001, one process management client accounted for
31.6% and 45.4%, respectively, of revenue. A second process management client
accounted for no revenue in the 2000 period and 42.6% of revenue in the 2001
period. For the three months ended June 30, 2001, no other client accounted for
more than 10.0% of revenue.

   COST OF REVENUE. Our cost of revenue for the three months ended June 30, 2000
and 2001, was $12.4 million, or 151.7% of revenue, and $72.8 million, or 113.1%
of revenue, respectively. Cost of revenue consists primarily of expenses
associated with third-party vendors that we manage who provide services for our
clients within the scope of our contracts, compensation and benefits paid to our
employees who are directly involved in providing our services, computer and
communications equipment costs and services, and facilities costs. The increase
in the cost of revenue for the three months ended June 30, 2001 principally
resulted from the continued transition of service responsibility to Exult under
our five process management contracts and the continuing expansion of our
infrastructure and service capacity. We operated one client service center
during the first six months of 2000, opened a second in the latter half of 2000
and began operating our third center during the first quarter of 2001. We have
incurred, and may continue to incur, negative gross margins as we continue to
transition and transform our clients' HR processes.

   PRODUCT DEVELOPMENT EXPENSE. Product development expense for the three
months ended June 30, 2000 and 2001, was $1.6 million, or 19.1% of revenue, and
$817,000, or 1.3% of revenue, respectively. Product development expense consists
primarily of consultant costs and the compensation of our employees who are
directly associated with the development of our product features and Internet
software and capabilities. During the quarter ended June 30, 2001, we
capitalized $1.6 million of related expenditures


                                       16
<PAGE>   18


resulting in a total product development effort of $2.4 million for the period.
No such amounts were capitalized in the 2000 period. The increase in the overall
product development effort of $2.4 million as compared to $1.6 million was
primarily related to the hiring of consultants and employees.

   SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense for the three months ended June 30, 2000 and 2001, was
$7.6 million, or 93.0% of revenue, and $13.6 million, or 21.2% of revenue,
respectively. Selling, general and administrative expense generally consists of
compensation for employees engaged in marketing, promoting and selling our
services, and for management and administrative personnel. Selling, general and
administrative expense also includes third-party consulting and marketing
expenditures, as well as facilities and office costs, and legal, accounting and
recruiting fees and expenses. Also included in selling, general and
administrative expense for the three months ended June 30, 2001 were business
optimization costs, consisting of severance charges of $3.4 million (including
non-cash option acceleration charges of $2.2 million), certain wind-up costs
resulting in a $1.7 million charge (including severance costs of $1.0 million)
associated with the consolidation of a secondary processing center into our
primary operating centers and a $2.2 million non-cash charge arising from the
write-off of an intangible asset acquired from Gunn Partners, Inc. We call these
charges "business optimization costs" because they reflect our pursuit of
enhanced efficiency and profitability as our operating scale increases and our
business progresses toward operational maturity. We may incur similar business
optimization costs from time to time as we implement new organization
structures, technologies, processes and other changes in our business.

   Exclusive of these charges of $7.3 million, selling, general and
administrative expense for the three months ended June 30, 2001 was $6.3
million, or 9.8% of revenue. Excluding these charges, the decrease in amount and
percentage of revenue for the three months ended June 30, 2001 primarily
resulted from the deployment of personnel and other resources to direct client
activities, at which time the costs associated with such employees were included
in cost of revenue.

   DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization expense
for the three months ended June 30, 2000 and 2001, was $1.9 million, or 22.9% of
revenue, and $2.6 million, or 4.0% of revenue, respectively. Included in the
2000 and 2001 amounts was $486,000 and $1.5 million, respectively, of
depreciation and amortization expense from property and equipment. Also included
in the 2000 and 2001 amounts was intangible asset amortization of $1.1 million
and $778,000, respectively, and $325,000 and $285,000, respectively, of deferred
compensation amortization. The increase in depreciation and amortization from
property and equipment reflects the continuing build out of our infrastructure
and service delivery capabilities.

   INTEREST INCOME, NET. Interest income, net for the three months ended June
30, 2000 and 2001 consisted of interest income of $1.7 million and $861,000,
respectively, partially offset by interest expense of $203,000 and $194,000,
respectively. Interest income is generated primarily from short-term investing
of cash in excess of current requirements. Interest expense is associated with
certain capitalized leases and the debt incurred to purchase the Gunn Partners,
Inc. assets in November 1999. The decrease in interest income in the 2001 period
as compared to the 2000 period is principally the result of a lesser amount of
cash available for such investment activities in the 2001 period.

   INCOME TAXES. We have incurred losses since we were founded in 1998,
resulting in federal and state net operating loss carryforwards which expire
beginning in 2020 and 2008, respectively. A full valuation allowance has been
provided against the tax benefit generated by the net operating losses because
of the uncertainty of realizing the deferred tax assets.

   NET LOSS. The foregoing resulted in a net loss for the three-month periods
ended June 30, 2000 and 2001, of $13.8 million, or $0.40 per basic and diluted
share, and $24.8 million, or $0.27 per basic and diluted share, respectively.
For the three months ended June 30, 2000, the loss per basic and diluted share,
assuming the conversion of all of the then outstanding shares of preferred
stock, would have been $0.18. For the three months ended June 30, 2001, the net
loss, exclusive of the $7.3 million of severance, wind-up and intangible asset
write-off charges discussed in the selling, general and administrative expense
section above, was $17.5 million, or $0.19 per basic and diluted share. We
expect to continue to incur losses until at least the first half of 2002.

SIX MONTHS ENDED JUNE 30, 2000 AND 2001

   REVENUE. Revenue for the six months ended June 30, 2001 was $107.8 million
as compared to $13.7 million for the six-month period ended June 30, 2000. We
began to provide services under our process management contracts during the
first six months of 2000, generating $7.9 million, or 57.4% of revenue from
three process management clients. With the addition of two new process
management clients during the latter half of 2000, revenue from our five process
management clients was $99.6 million, or 92.4% of revenue, for the six months
ended June 30, 2001. The balance of revenue for the 2000 and 2001 periods was
derived primarily from


                                       17
<PAGE>   19


consulting clients. As our process management business expands, we expect the
relative contribution of revenue derived from consulting clients to continue to
decrease.

   The revenue increase for the six months ended June 30, 2001 principally
resulted from the continued transition of service responsibility to Exult under
our initial three process management contracts, as well as revenue generated
from the addition of two new process management clients. For the six months
ended June 30, 2000 and 2001, one process management client accounted for 21.6%
and 51.0%, respectively, of revenue. A second process management client
accounted for no revenue in the 2000 period and 36.3% of revenue in the 2001
period. For the six months ended June 30, 2001, no other client accounted for
more than 10.0% of revenue.

   COST OF REVENUE. Our cost of revenue for the six months ended June 30, 2000
and 2001, was $18.1 million, or 132.0% of revenue, and $127.6 million, or 118.4%
of revenue, respectively. Cost of revenue consists primarily of expenses
associated with third-party vendors that we manage who provide services for our
clients within the scope of our contracts, compensation and benefits paid to our
employees who are directly involved in providing our services, computer and
communications equipment costs and services, and facilities costs. The increase
in the cost of revenue for the six months ended June 30, 2001 principally
resulted from the continued transition of service responsibility to Exult under
our five process management contracts and the continuing expansion of our
infrastructure and service capacity. We operated one client service center
during the first six months of 2000, opened a second in the latter half of 2000
and began operating our third center during the first quarter of 2001. We have
incurred, and may continue to incur, negative gross margins as we continue to
transition and transform our clients' HR processes.

   PRODUCT DEVELOPMENT EXPENSE. Product development expense for the six months
ended June 30, 2000 and 2001, was $2.4 million, or 17.2% of revenue, and $3.0
million, or 2.8% of revenue, respectively. Product development expense consists
primarily of consultant costs and the compensation of our employees who are
directly associated with the development of our product features and Internet
software and capabilities. The increase in product development expense was
primarily related to the hiring of consultants and employees.

   SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense for the six months ended June 30, 2000 and 2001, was
$16.6 million, or 120.9% of revenue, and $19.9 million, or 18.4% of revenue,
respectively. Selling, general and administrative expense generally consists of
compensation for employees engaged in marketing, promoting and selling our
services, and for management and administrative personnel. Selling, general and
administrative expense also includes third-party consulting and marketing
expenditures, as well as facilities and office costs, and legal, accounting and
recruiting fees and expenses. Also included in selling, general and
administrative expense for the six months ended June 30, 2001 were business
optimization costs, consisting of severance charges of $3.4 million (including
non-cash option acceleration charges of $2.2 million), certain wind-up costs
resulting in a $1.7 million charge (including severance costs of $1.0 million)
associated with the consolidation of a secondary processing center into our
primary operating centers and a $2.2 million non-cash charge arising from the
write-off of an intangible asset acquired from Gunn Partners, Inc. We call these
charges "business optimization costs" because they reflect our pursuit of
enhanced efficiency and profitability as our operating scale increases and our
business progresses toward operational maturity. We may incur similar business
optimization costs from time to time as we implement new organization
structures, technologies, processes and other changes in our business.

   Exclusive of these charges of $7.3 million, selling, general and
administrative expense for the six months ended June 30, 2001 was $12.6 million,
or 11.7% of revenue. Excluding these charges, the decrease in amount and
percentage of revenue for the six months ended June 30, 2001 primarily resulted
from the deployment of personnel and other resources to direct client
activities, at which time the costs associated with such employees were included
in cost of revenue.

   DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization expense
for the six months ended June 30, 2000 and 2001, was $3.6 million, or 25.9% of
revenue, and $6.1 million, or 5.7% of revenue, respectively. Included in the
2000 and 2001 amounts was $836,000 and $3.7 million, respectively, of
depreciation and amortization expense from property and equipment. Also included
in the 2000 and 2001 amounts was intangible asset amortization of $2.1 million
and $1.8 million, respectively, and $600,000 and $571,000, respectively, of
deferred compensation amortization. The increase in depreciation and
amortization from property and equipment reflects the continuing build out of
our infrastructure and service delivery capabilities.

   INTEREST INCOME, NET. Interest income, net for the six months ended June 30,
2000 and 2001 consisted of interest income of $2.6 million and $2.1 million,
respectively, partially offset by interest expense of $408,000 and $378,000,
respectively. Interest income is generated primarily from short-term investing
of cash in excess of current requirements. Interest expense is associated with
certain capitalized leases and the debt incurred to purchase the Gunn Partners,
Inc. assets in November 1999.


                                       18
<PAGE>   20



   INCOME TAXES. We have incurred losses since we were founded in 1998,
resulting in federal and state net operating loss carryforwards which expire
beginning in 2020 and 2008, respectively. A full valuation allowance has been
provided against the tax benefit generated by the net operating losses because
of the uncertainty of realizing the deferred tax assets.

   NET LOSS. The foregoing resulted in a net loss for the six-month periods
ended June 30, 2000 and 2001, of $24.7 million, or $1.11 per basic and diluted
share, and $47.1 million, or $0.51 per basic and diluted share, respectively.
For the six months ended June 30, 2000, the loss per basic and diluted share,
assuming the conversion of all of the then outstanding shares of preferred
stock, would have been $0.34. For the six months ended June 30, 2001, the net
loss, exclusive of the $7.3 million of severance, wind-up and intangible asset
write-off charges discussed in the selling, general and administrative expenses
section above, was $39.8 million, or $0.43 per basic and diluted share. We
expect to continue to incur losses until at least the first half of 2002.

LIQUIDITY AND CAPITAL RESOURCES

   Since our inception in October 1998, we have financed our operations
primarily with equity contributions including private placement sales of our
capital stock for consideration of approximately $1.0 million in 1998, $55.1
million in 1999, $161.3 million in 2000 and $20.0 million in the six months
ended June 30, 2001; the net proceeds from our initial public offering of $56.7
million in June 2000; and, to a lesser extent, by cash generated from our
business and the exercise of stock options and warrants. The $161.3 million from
equity contributions in 2000 included non-cash items of $29.9 million from
warrants issued in connection with the sale of common stock and $44.0 million of
indebtedness owed to us that was subsequently satisfied with prepaid rent and an
intangible asset in connection with one of our business process management
contracts. The intangible asset is being amortized as a reduction of revenue
over the life of the contract.

   Net cash used in operating activities was $21.5 million and $26.1 million for
the six months ended June 30, 2000 and 2001, respectively. We obtained our first
three process management contracts in December 1999 and January 2000 and began
generating revenue from these contracts during the first quarter of 2000. We
obtained two additional process management contracts during the second half of
2000 and began generating revenue from both of these agreements by the first
quarter of 2001. During the six-month periods ended June 30, 2000 and 2001, we
continued using operating cash to pursue additional business opportunities and
the development of our corporate infrastructure. We also expended operating cash
in support of revenue generated by our process management contracts and to fund
the transition and transformation costs associated with these process management
contracts. Cash used in investing activities was $12.6 million in the 2000
period and $10.6 million in the 2001 period and was used to construct and expand
our client service centers and our internal systems. We generated $130.7 million
in cash from financing activities during the six months ended June 30, 2000
primarily from private placements of our stock and the initial public offering
of our common stock. During the six months ended June 30, 2001, we generated
$22.1 million in cash primarily from the private placement of our stock and the
exercise of stock options and purchases of common stock under our employee stock
purchase plan.

   We expect to generate negative operating cash flow for at least the remainder
of 2001 as we continue to incur losses from operations. We expect to continue
our investments in property and equipment to support the expansion and
renovation of our facilities, including our existing client service centers, and
to purchase related computer and other equipment necessary to support our client
contracts and growth. In addition, from time to time in the ordinary course of
business, we evaluate potential acquisitions of related businesses, assets,
services and technologies. Such acquisitions, if completed, may require
significant cash expenditures.

   In August 2001, the Company completed a public offering of its Common Stock
issuing 8,000,000 shares generating net consideration, after the underwriting
discount and estimated offering costs, of approximately $100 million. We believe
that the funds generated from this offering, together with our current cash on
hand will be sufficient to satisfy our working capital requirements for at least
the next 12 months.

RECENT ACCOUNTING PRONOUNCEMENTS

   In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133 is effective for
fiscal years beginning after June 15, 2000. SFAS No. 133 requires that all
derivative instruments be recorded on the balance sheet at their fair value.
Changes in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income (loss) depending on whether a derivative
is designed as part of a hedge transaction and, if so, the type of hedge
transaction involved. We adopted SFAS No. 133 on January 1, 2001. The adoption
of SFAS No. 133 did not have a material impact on our consolidated financial
position or results of operations as we do not currently hold any derivative
financial instruments.


                                       19
<PAGE>   21


   In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 addresses
financial accounting and reporting for business combinations and is effective
for all business combinations after June 30, 2001. SFAS No. 142 addresses
financial accounting and reporting for acquired goodwill and other intangible
assets and is effective for fiscal years beginning after December 15, 2001, with
early adoption permitted in certain instances for entities with fiscal years
beginning after March 15, 2001. The Company is in the process of determining the
expected impact on earnings and intangible assets upon adoption.



                                       20
<PAGE>   22



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

   Not applicable.



                                       21
<PAGE>   23



                          PART II. OTHER INFORMATION.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

(c)     On June 12, 2001, we sold 1,538,461 shares of Common Stock to Automatic
        Data Processing, Inc. for an aggregate purchase price of $19,999,993, or
        $13.00 per share, in cash. This transaction was exempt from registration
        under the Securities Act of 1933 pursuant to Section 4(2) thereof.

        During the period from April 1, 2001 through June 30, 2001, we issued an
        aggregate of 547,646 shares of Common Stock to seventy-four current and
        former employees and one consultant for an aggregate purchase price of
        $996,748 upon the exercise of stock options. Also during the same
        period, we sold 23,885 shares of Common Stock to SSI (U.S.) Inc. for an
        aggregate purchase price of $37,499 upon exercise of a warrant. These
        transactions were exempt from registration under the Securities Act of
        1933 pursuant to Section 4(2) thereof (for the warrant transaction) and
        Rule 701 thereunder (for the option transactions).

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

(a)     The Annual Meeting of Stockholders was held on May 17, 2001.

(b)     Three Class 1 directors were elected to serve for a term of three years
        ending at the 2004 annual meeting of stockholders. The three Class I
        directors are Mark F. Dzialga, Michael A. Miles and Thomas J. Neff.
        Continuing directors include three Class 2 directors, John R. Oltman, A.
        Michael Spence and Josh S. Weston, and three Class 3 directors, J.
        Michael Cline, Steven A. Denning and James C. Madden, V.

(c)     The election of three Class 1 directors:

<TABLE>
<CAPTION>
                                         For         Against/Broker Non-Votes         Abstain
                                      ----------     ------------------------        ---------
<S>                                   <C>            <C>                             <C>
            Mark F. Dzialga           68,610,445              --                     1,167,059
            Michael A. Miles          69,769,540              --                         7,964
            Thomas J. Neff            69,757,745              --                        19,759
</TABLE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a)     Exhibits.

        The following Exhibits are incorporated herein by reference.

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                             DESCRIPTION
       -------                            -----------
<S>                <C>
        2.1*       Asset Purchase Agreement by and among Exult, Inc., Gunn
                   Partners, Inc., the shareholders of Gunn Partners, Inc. and
                   Michael Gibson dated as of November 22, 1999.

        3.1*       Fourth Amended and Restated Certificate of Incorporation of
                   Exult, Inc.

        3.2*       Amended and Restated Bylaws of Exult, Inc.

        10.31**    Common Stock Purchase Agreement by and between Exult, Inc.
                   and Automatic Data Processing, Inc. dated as of June 11,
                   2001.
</TABLE>

----------

*    Previously filed with the Company's Registration Statement on Form S-1
     Registration No. 333-31754, and incorporated herein by reference.

**   Confidential treatment is being sought with respect to certain portions of
     this agreement. Such portions have been omitted from this filing and filed
     separately with the Securities and Exchange Commission.

(b)     Reports on Form 8-K.

        None.


                                       22
<PAGE>   24


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1934, as amended, the
undersigned has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 13th day of August, 2001.

                                 EXULT, INC.


                                 By: /s/        JAMES C. MADDEN, V
                                     -------------------------------------------
                                                James C. Madden, V
                                      Chief Executive Officer, President, and
                                               Chairman of the Board
                                           (principal executive officer)


                                 By: /s/           MICHAEL F. HENN
                                     -------------------------------------------
                                                   Michael F. Henn
                                       Executive Vice President, Treasurer and
                                               Chief Financial Officer
                                            (principal financial officer)


                                       23
<PAGE>   25


                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                             DESCRIPTION
       -------                            -----------
<S>                <C>
        2.1*       Asset Purchase Agreement by and among Exult, Inc., Gunn
                   Partners, Inc., the shareholders of Gunn Partners, Inc. and
                   Michael Gibson dated as of November 22, 1999.

        3.1*       Fourth Amended and Restated Certificate of Incorporation of
                   Exult, Inc.

        3.2*       Amended and Restated Bylaws of Exult, Inc.

        10.31**    Common Stock Purchase Agreement by and between Exult, Inc.
                   and Automatic Data Processing, Inc. dated as of June 11,
                   2001.
</TABLE>


----------

*    Previously filed with the Company's Registration Statement on Form S-1
     Registration No. 333-31754, and incorporated herein by reference.

**   Confidential treatment is being sought with respect to certain portions of
     this agreement. Such portions have been omitted from this filing and filed
     separately with the Securities and Exchange Commission.


                                       24