<PAGE>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549
 
                                   FORM 10-Q
 
(MARK ONE)
 
  /X/    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
         SECURITIES EXCHANGE ACT OF 1934
 
                 FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 1999
                                       OR
 
  / /    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
         SECURITIES EXCHANGE ACT OF 1934
 
        FOR THE TRANSITION PERIOD FROM ______________ TO ______________
 
                        COMMISSION FILE NUMBER: 0-20735
 
                                 RESTRAC, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
                            ------------------------
 
                  DELAWARE                             04-2935271
      (State or other jurisdiction of       (IRS Employer Identification No.)
       incorporation or organization)
 
             91 HARTWELL AVENUE
               LEXINGTON, MA                              02421
  (Address of principal executive offices)             (zip code)
 
                                 (781) 869-5000
                        (REGISTRANT'S TELEPHONE NUMBER)
 
    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 such shorter period that the Registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
 
                               Yes /X/    No / /
 
    Indicate the number of shares outstanding of each of the issuer' s classes
of common stock as of the latest practicable date:
 
                              TITLE OF EACH CLASS
 
 Common stock, $.01 par value, shares outstanding at April 30, 1999: 10,083,388
                                    shares.
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                                 RESTRAC, INC.
                                     INDEX
 
<TABLE>
<CAPTION>
                                                                                                                  PAGE
                                                                                                                  -----
<S>        <C>                                                                                                 <C>
 
PART I--FINANCIAL INFORMATION
 
Item 1.    Consolidated Financial Statements.................................................................
 
           Consolidated Balance Sheets at March 31, 1999 and September 30, 1998..............................           3
 
           Consolidated Statements of Operations for the three and six months ended March 31, 1999 and March
           31, 1998..........................................................................................           4
 
           Consolidated Statements of Cash Flows for the six months ended March 31, 1999 and March 31,
           1998..............................................................................................           5
 
           Notes to Consolidated Financial Statements........................................................           6
 
Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.............          10
 
Item 3.    Quantitative and Qualitative Disclosure About Market Risk.........................................          18
 
PART II--OTHER INFORMATION
 
Item 1.    Legal Proceedings.................................................................................          19
 
Item 2.    Changes in Securities and Use of Proceeds.........................................................          19
 
Item 3.    Defaults upon Senior Securities...................................................................          19
 
Item 4.    Submission of Matters to a Vote of Security Holders...............................................          19
 
Item 5.    Other Information.................................................................................          19
 
Item 6.    Exhibits and Reports on Form 8-K..................................................................          19
 
PART III--SIGNATURES.........................................................................................          20
 
Exhibit #27.1................................................................................................          21
</TABLE>
<PAGE>
PART I--FINANCIAL INFORMATION
 
    Item 1. Financial Statements
 
                                 RESTRAC, INC.
 
                          CONSOLIDATED BALANCE SHEETS
 
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                                        MARCH 31,   SEPTEMBER 30,
                                                                                          1999          1998
                                                                                       -----------  -------------
<S>                                                                                    <C>          <C>
                                                                                       (UNAUDITED)
                                       ASSETS
Current Assets:
  Cash and cash equivalents..........................................................   $     399     $   9,772
  Short-term investments.............................................................       7,088         6,664
  Accounts and installments receivable, less allowance for doubtful accounts of $400
    at March 31, 1999 and September 30, 1998.........................................       4,836         7,282
  Other current assets...............................................................       2,046         1,445
  Refundable income taxes............................................................         310           135
  Deferred income taxes..............................................................       1,468           900
                                                                                       -----------  -------------
      Total current assets...........................................................      16,147        26,198
  Long-term installments receivable, net.............................................         514           581
  Property and equipment, net........................................................       3,289         2,967
  Long-term investments..............................................................         762           893
  Junglee investment, net............................................................      12,759            --
  Other assets, net..................................................................         553           792
                                                                                       -----------  -------------
      TOTAL ASSETS...................................................................   $  34,024     $  31,431
                                                                                       -----------  -------------
                                                                                       -----------  -------------
                        LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current Liabilities:
  Current portion of capital lease obligations.......................................   $      54     $     131
  Accounts payable...................................................................       1,715         1,799
  Accrued expenses...................................................................       2,900         3,272
  Deferred revenue...................................................................       5,899         5,481
  Accrued income taxes...............................................................          40           211
                                                                                       -----------  -------------
      Total current liabilities......................................................      10,608        10,894
                                                                                       -----------  -------------
  Deferred income taxes..............................................................          19            19
                                                                                       -----------  -------------
  Deferred rent......................................................................         207           195
                                                                                       -----------  -------------
                                                                                       -----------  -------------
  Stockholders' Equity:
    Preferred stock, $.01 par value--Authorized--5,000,000 shares, Issued and
      outstanding--none..............................................................          --            --
    Common stock, $.01 par value--Authorized--30,000,000 shares, Issued--10,718,516
      shares at March 31, 1999, 9,022,674 shares at September 30, 1998...............         107            90
    Additional paid-in capital.......................................................      28,092        19,502
    Treasury stock, at cost..........................................................        (831)         (831)
    Retained (deficit) earnings......................................................      (4,178)        1,562
                                                                                       -----------  -------------
      Total stockholders' equity.....................................................      23,190        20,323
                                                                                       -----------  -------------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.....................................   $  34,024     $  31,431
                                                                                       -----------  -------------
                                                                                       -----------  -------------
</TABLE>
 
  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                   STATEMENTS
 
                                       3
<PAGE>
                                 RESTRAC, INC.
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
 
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED            SIX MONTHS ENDED
                                                                   MARCH 31,                   MARCH 31,
                                                          ---------------------------  --------------------------
<S>                                                       <C>            <C>           <C>           <C>
                                                              1999           1998          1999          1998
                                                          -------------  ------------  ------------  ------------
Revenue:
  Product revenue.......................................  $       2,036  $      4,142  $      4,536  $      8,164
  Services revenue......................................          4,387         3,634         8,289         6,609
                                                          -------------  ------------  ------------  ------------
      Total revenue.....................................          6,423         7,776        12,825        14,773
                                                          -------------  ------------  ------------  ------------
Cost of Revenue:
  Product revenue.......................................            169           179           396           304
  Services revenue......................................          2,370         2,350         4,516         4,421
                                                          -------------  ------------  ------------  ------------
      Total cost of revenue.............................          2,539         2,529         4,912         4,725
                                                          -------------  ------------  ------------  ------------
Gross margin............................................          3,884         5,247         7,913        10,048
                                                          -------------  ------------  ------------  ------------
Operating Expenses:
  Research and development..............................          1,976         1,201         3,401         2,466
  Sales and marketing...................................          2,935         2,469         5,962         5,035
  General and administrative............................          1,450         1,340         2,583         2,282
  Amortization of Junglee investment....................          1,914            --         2,552            --
                                                          -------------  ------------  ------------  ------------
      Total operating expenses..........................          8,275         5,010        14,498         9,783
                                                          -------------  ------------  ------------  ------------
(Loss) income from operations...........................         (4,391)          237        (6,585)          265
Other income, net.......................................            116           136           277           278
                                                          -------------  ------------  ------------  ------------
(Loss) income before (benefit) provision for income
  taxes.................................................         (4,275)          373        (6,308)          543
(Benefit) provision for income taxes....................           (385)          149          (568)          217
                                                          -------------  ------------  ------------  ------------
Net (loss) income.......................................  $      (3,890) $        224  $     (5,740) $        326
                                                          -------------  ------------  ------------  ------------
                                                          -------------  ------------  ------------  ------------
Basic and diluted net (loss) income per common share....  $        (.39) $        .03  $       (.60) $        .04
                                                          -------------  ------------  ------------  ------------
                                                          -------------  ------------  ------------  ------------
Basic weighted average number of common shares
  outstanding...........................................     10,029,280     8,262,639     9,577,972     8,231,778
                                                          -------------  ------------  ------------  ------------
                                                          -------------  ------------  ------------  ------------
Diluted weighted average number of common shares
  outstanding...........................................     10,029,280     8,497,632     9,577,972     8,517,267
                                                          -------------  ------------  ------------  ------------
                                                          -------------  ------------  ------------  ------------
</TABLE>
 
  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.
 
                                       4
<PAGE>
                                 RESTRAC, INC.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                 (IN THOUSANDS)
 
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                                                  SIX MONTHS ENDED
                                                                                                     MARCH 31,
                                                                                                --------------------
<S>                                                                                             <C>        <C>
                                                                                                  1999       1998
                                                                                                ---------  ---------
Cash Flows from Operating Activities:
  Net (loss) income...........................................................................  $  (5,740) $     326
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating
  activities--
  Depreciation and amortization...............................................................      3,544        868
  Deferred income taxes.......................................................................       (568)        --
  Deferred rent...............................................................................         12         11
  Changes in assets and liabilities--
    Accounts and installments receivable, net.................................................      2,446     (1,888)
    Other current assets......................................................................       (601)      (402)
    Refundable income taxes...................................................................       (175)      (112)
    Long-term installments receivable.........................................................         67         --
    Accounts payable..........................................................................        (84)       595
    Accrued expenses..........................................................................       (372)       (79)
    Deferred revenue..........................................................................        418        751
    Accrued income taxes......................................................................       (171)       217
                                                                                                ---------  ---------
      Net cash (used in) provided by operating activities.....................................     (1,224)       287
                                                                                                ---------  ---------
Cash Flows from Investing Activities:
  Investment in Junglee.......................................................................     (6,782)        --
  Purchases of property and equipment.........................................................     (1,314)      (581)
  Maturities and purchases of short-term investments, net.....................................       (424)     2,282
  Maturities and purchases of long-term investments, net......................................        131     (2,584)
  Change in other assets......................................................................        239         (3)
                                                                                                ---------  ---------
      Net cash used in investing activities...................................................     (8,150)      (886)
                                                                                                ---------  ---------
Cash Flows from Financing Activities:
  Payments of capital lease obligations.......................................................        (77)       (70)
  Proceeds from exercise of common stock options..............................................         19        108
  Proceeds from employee stock purchase plan stock issuance...................................         59         75
                                                                                                ---------  ---------
      Net cash provided by financing activities...............................................          1        113
                                                                                                ---------  ---------
Net decrease in Cash and Cash Equivalents.....................................................     (9,373)      (486)
                                                                                                ---------  ---------
Cash and Cash Equivalents, beginning of period................................................      9,772      5,745
                                                                                                ---------  ---------
Cash and Cash Equivalents, end of period......................................................  $     399  $   5,259
                                                                                                ---------  ---------
                                                                                                ---------  ---------
Supplemental Disclosure of Cash Flow Information:
  Cash paid during the period for
    Interest..................................................................................  $       5  $      11
                                                                                                ---------  ---------
    Income taxes..............................................................................  $     330  $     111
                                                                                                ---------  ---------
Supplemental Schedule of Noncash Financing Activities Issuance of Junglee Stock...............  $   8,529  $      --
                                                                                                ---------  ---------
                                                                                                ---------  ---------
</TABLE>
 
  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.
 
                                       5
<PAGE>
                                 RESTRAC, INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                                 MARCH 31, 1999
 
(1) BASIS OF PRESENTATION
 
    The accompanying consolidated financial statements include the accounts of
Restrac, Inc. and its wholly-owned subsidiary, Restrac Securities Corporation,
collectively referred to in these Notes to Consolidated Financial Statements as
"Restrac" or "the Company". All intercompany accounts and transactions have been
eliminated in consolidation.
 
    The consolidated financial statements of the Company presented herein,
without audit except for balance sheet information at September 30, 1998, have
been prepared pursuant to the rules of the Securities and Exchange Commission
for quarterly reports on Form 10-Q and do not include all of the information and
footnote disclosures required by generally accepted accounting principles. These
statements should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended September 30, 1998 ("Fiscal
1998") included in the Company's Form 10-K filed with the Securities and
Exchange Commission on December 29, 1998.
 
    The consolidated balance sheet as of March 31, 1999, the consolidated
statements of operations for the three and six month periods ended March 31,
1999 and 1998, and the consolidated statements of cash flows for the six month
periods ended March 31, 1999 and 1998, are unaudited but, in the opinion of
management, include all adjustments (consisting solely of normal, recurring
adjustments) necessary for a fair presentation of results for these interim
periods.
 
    The consolidated results of operations for the three and six month periods
ended March 31, 1999 are not necessarily indicative of the results to be
expected for the fiscal year ending September 30, 1999 ("Fiscal 1999").
 
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
    The accompanying consolidated financial statements reflect the application
of certain significant accounting policies described below and elsewhere in the
notes to the Fiscal 1998 consolidated financial statements referenced above.
 
    (A) REVENUE RECOGNITION
 
    Product revenue includes software license fees. Services revenue includes
customer maintenance fees and fees for training, installation, consulting,
scanning, job posting services and RESTRAC WEBHIRE. The Company recognizes
product and services revenue in accordance with the provisions of Statement of
Position No. 97-2, SOFTWARE REVENUE RECOGNITION.
 
    Product revenue from software license fees is recognized upon delivery
provided there are no significant Company obligations remaining and
collectibility of the revenue is probable. If an acceptance period is allowed,
revenue is recognized upon the earlier of the customer acceptance or the
expiration of the acceptance period, as defined in the applicable software
license agreement.
 
    Installments receivable represent the present value of future payments
related to the financing of noncancelable term license agreements that provide
for payment in installments over a five-year period. A portion of each
installment is recognized as interest income in the accompanying consolidated
statements of operations.
 
    Services revenue from customer maintenance fees for postcontract support is
recognized ratably over the maintenance term, which is typically 12 months. When
customer maintenance fees are included in an
 
                                       6
<PAGE>
                                 RESTRAC, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                                 MARCH 31, 1999
 
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
initial software license fee, the Company allocates approximately 15-17% of the
software license fee to the first year's maintenance. The amount allocated to
customer maintenance fees for the first year is comparable to customer
maintenance fees charged separately by the Company. Services revenue from
training, installation, consulting, resume scanning and job posting is
recognized as the related services are performed. Services revenue from RESTRAC
WEBHIRE is recognized ratably over the service term.
 
    Deferred revenue represents payments received by the Company in advance of
product delivery or service performance.
 
    (B) NET (LOSS) INCOME PER SHARE
 
    SFAS No. 128, EARNINGS PER SHARE, establishes standards for computing and
presenting earnings per share and applies to entities with publicly held common
stock or potential common stock. In accordance with SFAS No. 128, basic net
(loss) income per share for the three and six month periods ended March 31, 1999
and March 31, 1998 is calculated by dividing net (loss) income by the weighted
average number of common shares outstanding for those periods.
 
    Diluted earnings per share includes the effect of dilutive securities. As a
net loss is presented for the three and six month periods ended March 31, 1999,
the loss per share was based only on the weighted average number of common
shares outstanding. Common equivalent shares outstanding during the 1999 period
were not used as their inclusion would have been anti-dilutive.
 
    The following table reconciles the weighted average common shares
outstanding to the shares used in computation of diluted weighted average common
shares outstanding:
 
<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED        SIX MONTHS ENDED
                                                                      MARCH 31,                MARCH 31,
                                                               ------------------------  ----------------------
                                                                   1999         1998        1999        1998
                                                               ------------  ----------  ----------  ----------
<S>                                                            <C>           <C>         <C>         <C>
Weighted average common shares outstanding...................    10,029,280   8,262,639   9,577,972   8,231,778
Dilutive effect of options...................................            --     234,993          --     285,489
                                                               ------------  ----------  ----------  ----------
Diluted weighted average common shares outstanding...........    10,029,280   8,497,632   9,577,972   8,517,267
</TABLE>
 
    For both the three and six month periods ended March 31, 1999, all 1,377,747
potential common shares were excluded from the above calculation as their effect
would have been anti-dilutive due to the Company's net loss in those periods.
For the three and six month periods ended March 31, 1998, 284,984 and 243,820
weighted shares, respectively, have been excluded, as their effect would have
been anti-dilutive.
 
    (C) CASH AND CASH EQUIVALENTS
 
    Cash equivalents are recorded at amortized cost and consist of highly liquid
investments with original maturities of three months or less.
 
    (D) SHORT- AND LONG- TERM INVESTMENTS
 
    Short-term investments consist of investments with original maturities
between three and twelve months. Long-term investments consist of investments
that will mature greater than twelve months from
 
                                       7
<PAGE>
                                 RESTRAC, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                                 MARCH 31, 1999
 
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
the balance sheet date. The Company classifies these short- and long-term
investments as held-to-maturity, and accordingly, they are carried at amortized
cost, which approximates market. These investments consist of municipal debt
securities.
 
    The Company does not use derivative financial instruments in its investment
portfolio. The Company places its investments in instruments that meet high
quality standards, as specified in the Company's investment policy guidelines;
the policy also limits the amount of credit exposure to any one issue, issuer
and type of investment.
 
3) JUNGLEE INVESTMENT
 
    On November 18, 1998, the Company acquired certain assets and assumed
certain obligations of the Junglee Employment Services business of Amazon.com.
In exchange for cash of $6 million and 1,670,273 shares of Restrac common stock
valued at $8.5 million, Restrac received exclusive rights to Junglee's online
recruitment technologies. Restrac also acquired Junglee's Internet production
sites and assumed management and development of the employer and career site
business relationships established by Junglee Corp. ("Junglee"). Restrac did not
retain any Junglee personnel in connection with the transaction. The investment
is being amortized over 2 years.
 
4) BUSINESS SEGMENT INFORMATION
 
    Effective for the year ended September 30, 1998, the Company adopted SFAS
131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION, which
requires disclosure of financial and descriptive information about the Company's
reportable operating segments. The operating segments reported below are the
segments for which separate financial information is available and for which
operating profit/loss amounts are evaluated regularly by senior management in
deciding how to allocate resources and in assessing performance.
 
    The Company has two reportable segments: enterprise software solutions and
internet and transaction-based solutions, the latter of which started to emerge
in fiscal 1997 with the offering of outsourced services (e.g., resume scanning,
acknowledgement letters) and the research and development activities undertaken
for this segment. The Internet and transaction-based solutions segment provides
outsourced management of private candidate pools via RESTRAC WEBHIRE,
subscription services to public pools and job-posting sites, the job-posting
services initiated with the Junglee transaction, resume scanning, reference
checking and other fee-based staffing functions. The enterprise software
solutions segment provides perpetual licenses to the Company's software products
and the related maintenance, training, implementation and consulting services in
support of such licenses.
 
    The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. Expenses related to general
corporate functions such as Information Technology, Finance and Human Resources
and general and administrative costs such as depreciation, rent and utilities
are allocated to the reportable segments based on relative headcount as a basis
of relative usage. Income tax provision (benefit) is allocated to the reportable
segments in deriving segment profit (loss) based on each segment's pro rata
income or loss before income tax provision (benefit). The Company has no
intersegment sales and transfers, and does not allocate assets to the operating
segments.
 
                                       8
<PAGE>
                                 RESTRAC, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                                 MARCH 31, 1999
 
4) BUSINESS SEGMENT INFORMATION (CONTINUED)
    The Company's reportable segments are strategic business units that offer
different solutions tailored to a customer's needs. They are managed separately
because each business requires different technology and sales and marketing
strategies.
 
<TABLE>
<CAPTION>
                                                                             THREE MONTHS ENDED MARCH 31, 1999:
                                                                    ----------------------------------------------------
                                                                    INTERNET AND  ENTERPRISE
                                                                    TRANSACTIONS   SOFTWARE       OTHER     CONSOLIDATED
                                                                    ------------  -----------  -----------  ------------
<S>                                                                 <C>           <C>          <C>          <C>
Total Revenue.....................................................   $    1,183    $   5,240    $      --    $    6,423
Research & Development............................................   $      926    $   1,050    $      --    $    1,976
Depreciation and Amortization.....................................   $    2,051    $     393    $      --    $    2,444
Other Income, Net.................................................   $       --    $      --    $     116    $      116
Segment Profit (Loss).............................................   $   (3,692)   $    (303)   $     105    $   (3,890)
</TABLE>
 
<TABLE>
<CAPTION>
                                                                              THREE MONTHS ENDED MARCH 31, 1998:
                                                                    ------------------------------------------------------
                                                                    INTERNET AND   ENTERPRISE
                                                                    TRANSACTIONS    SOFTWARE       OTHER     CONSOLIDATED
                                                                    -------------  -----------  -----------  -------------
<S>                                                                 <C>            <C>          <C>          <C>
Total Revenue.....................................................    $     468     $   7,308    $      --     $   7,776
Research & Development............................................    $     202     $     999    $      --     $   1,201
Depreciation and Amortization.....................................    $      57     $     386    $      --     $     443
Other Income, Net.................................................    $      --     $      --    $     136     $     136
Segment Profit (Loss).............................................    $    (347)    $     441    $     130     $     224
</TABLE>
 
<TABLE>
<CAPTION>
                                                                              SIX MONTHS ENDED MARCH 31, 1999:
                                                                    ----------------------------------------------------
                                                                    INTERNET AND  ENTERPRISE
                                                                    TRANSACTIONS   SOFTWARE       OTHER     CONSOLIDATED
                                                                    ------------  -----------  -----------  ------------
<S>                                                                 <C>           <C>          <C>          <C>
Total Revenue.....................................................   $    2,007    $  10,818    $      --    $   12,825
Research & Development............................................   $    1,406    $   1,995    $      --    $    3,401
Depreciation and Amortization.....................................   $    2,767    $     777    $      --    $    3,544
Other Income, Net.................................................   $       --    $      --    $     277    $      277
Segment Profit (Loss).............................................   $   (5,566)   $    (425)   $     251    $   (5,740)
</TABLE>
 
<TABLE>
<CAPTION>
                                                                              SIX MONTHS ENDED MARCH 31, 1998:
                                                                    -----------------------------------------------------
                                                                    INTERNET AND   ENTERPRISE
                                                                    TRANSACTIONS    SOFTWARE       OTHER     CONSOLIDATED
                                                                    -------------  -----------  -----------  ------------
<S>                                                                 <C>            <C>          <C>          <C>
Total Revenue.....................................................    $     739     $  14,034    $      --    $   14,773
Research & Development............................................    $     427     $   2,039    $      --    $    2,466
Depreciation and Amortization.....................................    $     112     $     756    $      --    $      868
Other Income, Net.................................................    $      --     $      --    $     278    $      278
Segment Profit (Loss).............................................    $    (874)    $     984    $     216    $      326
</TABLE>
 
                                       9
<PAGE>
                                 RESTRAC, INC.
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
            FOR THE THREE AND SIX MONTH PERIODS ENDED MARCH 31, 1999
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS
 
    This report contains forward looking statements that involve risks and
uncertainties. The statements contained in this report that are not purely
historical are forward looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities and
Exchange Act of 1934, as amended. Forward looking statements include, without
limitation, statements containing the words "Anticipates", "Believes",
"Expects", "Intends", "Future", and words of similar import which express
management's belief, expectations or intentions regarding the Company's future
performance. All forward looking statements included in this report are based on
information available to the Company on the date hereof, and the Company has no
obligation to update any such forward looking statements. The Company's actual
results could differ materially from its historical operating results and from
those anticipated in these forward looking statements as a result of certain
factors, including, without limitation, the factors described under "Factors
Affecting Future Operating Results" included at the end of this Item 2. You
should carefully review each of the factors set forth therein, and you should be
aware that there may be other factors that could cause these differences.
 
CONSOLIDATED RESULTS OF OPERATIONS
(IN THOUSANDS)
 
    REVENUE
 
    Total revenue for the three and six month periods ended March 31, 1999 was
$6,423 and $12,825 compared to $7,776 and $14,773 for the three and six month
periods ended March 31, 1998, representing decreases of 17% and 13%,
respectively.
 
    PRODUCT REVENUE.  Product revenue, which relates to the enterprise software
solutions segment, was $2,036 for the three months ended March 31, 1999 compared
to $4,142 for the three months ended March 31, 1998. For the six months ended
March 31, 1999, product revenue was $4,536 compared to $8,164 for the comparable
1998 period. Protracted sales cycles resulting from the transition to an
Internet/intranet product line and competitive pressures were the primary
contributors to this reduction. Because the Company's product revenue consists
of a small number of large dollar transactions, wide fluctuations can be
experienced from period to period. Such fluctuations are not necessarily
indicative of future results.
 
    SERVICES REVENUE.  Services revenue increased 21% to $4,387 for the three
months ended March 31, 1999 from $3,634 for the three months ended March 31,
1998. For the six months ended March 31, 1999, services revenue increased 25% to
$8,289 from $6,609 for the comparable 1998 period. The increase for both periods
was attributable to the greater than 150% growth in the emerging Internet and
transaction revenue segment as well as increases in maintenance stemming from
the growth in the installed customer base. The second fiscal quarter increase
was partially offset by a slow-down in traditional consulting services in the
enterprise software solutions segment, which have been impacted by the product
revenue reductions in the first half.
 
    COST OF REVENUE
 
    COST OF PRODUCT REVENUE.  Cost of product revenue represented 8% and 9% of
total product revenue for the three and six months ended March 31, 1999,
respectively, as compared to 4% for both the three and six months ended March
31, 1998. The increase as a percentage of product revenue is due primarily to
 
                                       10
<PAGE>
                                 RESTRAC, INC.
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
      FOR THE THREE AND SIX MONTH PERIODS ENDED MARCH 31, 1999 (CONTINUED)
 
increased costs in royalties due under third party licensing arrangements for
the RESTRAC HIRE FOR INTRANET product.
 
    COST OF SERVICES REVENUE.  For the three and six month periods ended March
31, 1999, 61% and 65%, respectively, of cost of services was attributed to the
enterprise software segment, with the remainder associated with the Internet and
transaction-based solutions segment. This compares to 70% and 74%, respectively,
of cost of services attributed to the enterprise software segment for the three
and six month periods ended March 31, 1998. Cost of services revenue increased
1% to $2,370 for the three months ended March 31, 1999 from $2,350 for the three
months ended March 31, 1998. For the six months ended March 31, 1999, cost of
services revenue of $4,516 increased 2% from $4,421 for the comparable 1998
period. The increase in absolute dollars is principally attributable to costs
associated with RESTRAC WEBHIRE and the introduction of services in connection
with the JUNGLEE transaction partially offset by personnel cost savings in the
enterprise software segment. Cost of services revenue decreased as a percentage
of services revenue to 54% for the three and six month periods ended March 31,
1999 from 65% and 67%, respectively, for the comparable Fiscal 1998 periods. The
decrease was principally due to the ramp-up in Internet and transaction-based
revenues during the first half of Fiscal 1999.
 
    OPERATING EXPENSES
 
    RESEARCH AND DEVELOPMENT.  Research and development expenses were $1,976 or
31% of total revenue for the three months ended March 31, 1999 as compared to
$1,201 or 15% of total revenue for the comparable Fiscal 1998 period. For the
six month period ended March 31, 1999, research and development expenses were
$3,401 or 27% of total revenue as compared to $2,466 or 17% of total revenue for
the comparable Fiscal 1998 period. This increase is primarily due to increases
in both personnel and consulting expenses in support of the Company's new and
existing product development initiatives. The Internet and transaction-based
solutions segment accounted for 47% and 41% of total research and development
expenses for the three and six month periods ended March 31, 1999, as compared
to 17% for the comparable Fiscal 1998 periods. All of the Company's research and
development costs have been expensed as incurred.
 
    SALES AND MARKETING.  Sales and marketing expenses were $2,935 or 46% of
total revenue and $5,962 or 46% of total revenue for the three and six month
periods ended March 31, 1999, respectively, as compared to $2,469 or 32% of
total revenue and $5,035 or 34% of total revenue for the comparable Fiscal 1998
periods. The increase in absolute dollars is due primarily to expansion of the
RESTRAC WEBHIRE sales force. The Internet and transaction-based solutions
segment accounted for 39% and 35% of total sales and marketing expenses for the
three and six month periods ended March 31, 1999, respectively, as compared to
11% and 12% of total sales and marketing expenses for the comparable Fiscal 1998
periods. The Company expects that sales and marketing expenses may vary from
quarter to quarter as a percentage of total revenue.
 
    GENERAL AND ADMINISTRATIVE.  General and administrative expenses were $1,450
or 23% of total revenue and $2,583 or 20% of total revenue for the three and six
month periods ended March 31, 1999, respectively, as compared to $1,340 or 17%
of total revenue and $2,282 or 15% of total revenue for the comparable Fiscal
1998 periods. The absolute dollar increase for the three and six month periods
of Fiscal 1999 as compared to Fiscal 1998 is the result of personnel increases
in support of the Company's infrastructure.
 
                                       11
<PAGE>
                                 RESTRAC, INC.
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
      FOR THE THREE AND SIX MONTH PERIODS ENDED MARCH 31, 1999 (CONTINUED)
 
    OTHER INCOME, NET
 
    Other income decreased to $116 for the three month period ended March 31,
1999 from $136 for the comparable Fiscal 1998 period. The decrease is primarily
attributable to reduced returns on investments due to lower average combined
cash and cash equivalents and short- and long- investment balances partially
offset by the interest received on installment sales. The Company expects to
continue to yield investment income on its average balance of combined cash and
cash equivalents and short- and long-term investments at an average rate
consistent with that experienced for the first half of Fiscal 1999.
 
    (BENEFIT) PROVISION FOR INCOME TAXES
 
    The Company's effective tax rate for both the three and six month periods
ended March 31, 1999 was (9%) as compared to 40% for both the three and six
month periods of Fiscal 1998. The effective tax rate represents the Company's
estimate of the rate expected to be applicable for the full fiscal year. The
change in the effective tax rate relates primarily to the Company's taking a
conservative view in recognizing tax benefits generated in Fiscal 1999 which
will be realized against taxable income earned in future years.
 
LIQUIDITY AND CAPITAL RESOURCES
(IN THOUSANDS)
 
    At March 31, 1999, the Company had cash and cash equivalents and short- and
long-term investments of $8,249, a decrease of $9,080 from $17,329 at September
30, 1998. Working capital was $5,539 at March 31, 1999 as compared to $15,304 at
September 30, 1998, a decrease of $9,765. The reductions were due principally to
cash outlays in connection with the Junglee transaction.
 
    Cash used in operating activities was $1,224 during the six month period
ended March 31, 1999. Use of cash in operating activities consisted mainly of
the net loss for the six month period of $5,740, the offsetting effects of
depreciation and amortization of $3,544 and growth in deferred revenue of $418
and the timing of receipts and disbursements, resulting in prepayment of certain
expenses, decreases in accounts and installments receivable and fluctuations in
certain liabilities.
 
    The Company used $8,150 in investing activities during the first half of
Fiscal 1999, principally for the investment in Junglee of $6,782 and the
purchase of property and equipment of $1,314 (primarily computer equipment).
 
    To date, the Company has not invested in derivative securities or any other
financial instruments that involve a high level of complexity or risk. Cash has
been, and the Company contemplates that it will continue to be, invested in
interest-bearing, investment grade securities.
 
    From time to time, the Company may evaluate potential acquisitions of
products, businesses and technologies that may complement or expand the
Company's business. The Company currently does not have any understandings,
commitments or agreements with respect to any such acquisitions. Any such
transactions consummated may use a portion of the Company's working capital or
require the issuance of equity or debt.
 
    The Company believes that its current cash and cash equivalent and
short-term investment balances and any cash provided by future operations will
be sufficient to meet its working capital expenditure requirements for Fiscal
1999. Although operating activities may provide cash in certain periods,
operating and investing activities may use cash in other periods. Consequently,
any future growth may require the Company to obtain additional equity or debt
financing.
 
                                       12
<PAGE>
                                 RESTRAC, INC.
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
      FOR THE THREE AND SIX MONTH PERIODS ENDED MARCH 31, 1999 (CONTINUED)
 
IMPACT OF YEAR 2000 ISSUE
 
    The following paragraphs in this section include "Year 2000 readiness
disclosure" within the meaning of the Year 2000 Information and Readiness
Disclosure Act.
 
    The Year 2000 issue results from computer programs written with two digits
rather than four to define the applicable year. Any computer programs that have
date-sensitive software and are not Year 2000 compliant may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result in a
system failure or miscalculations causing disruptions of operations, including,
among other things, a temporary inability to process transactions, send invoices
or engage in similar normal business activities.
 
    The Company has attempted to make an assessment with regard to whether its
own internal information systems are Year 2000 compliant. In particular, the
Company has upgraded its accounting (excluding payroll) and customer management
systems with systems that are warranted by the vendors to be Year 2000
compliant. In addition, the Company plans to seek assurances from its existing
vendors whose systems are not warranted to be Year 2000 compliant that such
systems are Year 2000 compliant. Currently, the Company does not anticipate
purchasing additional systems. The Company does not separately track the
internal costs incurred for Year 2000 projects. Although the Company does not
believe that any additional Year 2000 compliance-related costs will be
significant, there can be no such assurance. Any failure of third-party
equipment or software comprising any part of the Company's systems to operate
properly with regard to Year 2000 and thereafter could require the Company to
incur unanticipated expenses to address associated problems. The Company has
received assurances that all material embedded systems included in the Company's
products are Year 2000 compliant.
 
    The Company believes, based on an internal assessment, that the current
versions of its software products that are licensed to customers are Year 2000
compliant. Software that is used in the Company's service offerings is expected
to be compliant by the end of Fiscal 1999. The Company limits its contractual
warrantees on Year 2000 compliance to objective performance standards that the
Company has tested, and the Company makes no warrantees for nonconformance if
the Company's software products are combined with other software or data that
are not conducive to accurately calculating, comparing or sequencing date and
time data between the twentieth and twenty-first centuries. The Company has no
plan to ascertain whether the internal systems and products of its customers are
Year 2000 compliant. Although the Company has not been involved in any
litigation or proceeding to date involving its products or services related to
Year 2000 issues, there can be no assurance that the Company will not in the
future be required to defend its products or services or to negotiate
resolutions of claims based on Year 2000 issues.
 
    The Company does not have any specific contingency plans if any Year 2000
problems develop with respect to the Company's embedded systems, systems
acquired from vendors or systems used by third parties with whom the Company has
a mutual relationship. Contingency plans will be developed if it appears the
Company or its key vendors will not be Year 2000 compliant, and such
non-compliance is expected to have a material adverse impact on the Company's
operations.
 
    Year 2000 issues may affect the purchasing patterns of customers and
potential customers in a variety of ways. Many companies are expending
significant resources to replace or remedy their current hardware and software
systems for Year 2000 compliance. These expenditures may result in reduced funds
available to purchase software products such as those offered by the Company.
The Company does not believe that there is any practical way to ascertain the
extent of, and has no plan to address problems associated with such a reduction
in purchasing resources of its customers. Any such reduction could, however,
result in a material adverse effect on the Company's business, operating results
and financial condition. The Year
 
                                       13
<PAGE>
                                 RESTRAC, INC.
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
      FOR THE THREE AND SIX MONTH PERIODS ENDED MARCH 31, 1999 (CONTINUED)
 
2000 issue is pervasive and complex, as virtually every computer operation will
be affected in some way. Consequently, no assurance can be given that Year 2000
compliance can be achieved without significant additional costs.
 
FACTORS AFFECTING FUTURE OPERATING RESULTS
 
    The Company operates in a dynamic and rapidly changing environment that
involves risks and uncertainties. The following section lists some, but not all,
of these risks and uncertainties which may have a material adverse effect on the
Company's business, financial condition or results of operations. This section
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto, and Management's Discussions and Analysis of Financial Condition
and Results of Operations for the years ended September 30, 1998, 1997 and 1996
and for the quarters ended March 31, 1999 and 1998.
 
    POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
 
    The Company's results of operations have been, and may in the future be,
subject to significant quarterly fluctuations, due to a variety of factors,
including the relatively lengthy sales cycle for the Company's products, the
relatively large size of a typical product sale, the timing of contracts, the
introduction of new products by the Company or its competitors, capital spending
patterns of customers, the Company's sales incentive strategy (which is based in
part on annual sales targets) and general economic conditions. A substantial
portion of the Company's sales often occurs during the last few weeks of each
quarter; therefore, any delays in orders or shipments are more likely to result
in revenue not being recognized until the following quarter. The Company's
current expense levels are based in part on its expectations of future revenue
and, as a result, net income for a given period could be disproportionately
affected by any reduction in revenue. There can be no assurance that the Company
will be able to achieve significant revenue, that the level of revenue in the
future will not decrease from past levels or that in some future quarter the
Company's revenue or operating results will not be below the expectations of
stock market securities analysts and investors. In such event, the Company's
profitability and price of its Common Stock would likely be materially and
adversely affected.
 
    EMERGING MARKETS
 
    The Company's future success is substantially dependent on broader
recognition of the potential benefits afforded by automated staffing software
and services and the growth in demand for such solutions. It is difficult to
assess the size of the market, the customer demands that will evolve, and the
competition that may emerge. There can be no assurance that the market for
automated staffing software and services will continue to grow or that the
introduction of new technologies or services will not render the Company's
existing software and services obsolete or unmarketable.
 
    The market for automated staffing solutions is undergoing rapid changes
including continuing advances in technology and changes in customer requirements
and preferences. These market dynamics have been amplified by the emergence of
the Internet as a communications medium for staffing solutions. The Company's
future success will depend in significant part on its ability to continually
improve the performance, features and reliability of its software and services
in response to the evolving demands of the marketplace and competitive product
offerings, and there can be no assurance that the Company will be successful in
doing so. In addition, an element of the Company's business strategy is the
advancement of products, functionalities and other staffing solutions that
capitalize on the increasing use of the Internet and corporate intranets. There
can be no assurance that the Company will be successful in developing and
 
                                       14
<PAGE>
                                 RESTRAC, INC.
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
      FOR THE THREE AND SIX MONTH PERIODS ENDED MARCH 31, 1999 (CONTINUED)
 
marketing products that will keep pace with technological changes in the market
or new technologies introduced by competitors or that it will satisfy evolving
consumer preferences. Maturation of Internet and intranet-based products,
functionalities and other staffing solutions will also depend on increased
acceptance of the Internet for staffing solutions and the development of the
necessary infrastructure to facilitate commercial applications on the Internet.
There can be no assurance of such acceptance or infrastructure development.
Failure to develop and introduce new products, functionalities and other
staffing solutions in a timely fashion could have a material adverse effect on
the Company's business, financial condition and results of operations.
 
    RISK OF NEW PRODUCT INTRODUCTIONS; RISK OF PRODUCT DEFECTS
 
    As the marketplace for staffing solutions continues to evolve, the Company
plans to develop and introduce new products and services to enable it to
effectively address the changing needs of that market. There is no guarantee
that the Company will be able to develop new products or services or that such
solutions will achieve market acceptance or, if market acceptance is achieved
that the Company will be able to maintain such acceptance for a significant
period of time. Any inability of the Company to quickly develop products and
services that address changes in technology or customer demands may require the
Company to substantially increase development expenditures or result in loss of
market share to a competitor.
 
    Products as complex as those offered by the Company may contain undetected
errors when first introduced or when new versions are released. The Company has
in the past discovered software errors in certain of its product offerings after
their introduction. There can be no assurance that, despite testing by the
Company errors will not occur in new products or releases after commencement of
commercial shipments, resulting in adverse publicity, in loss of or delay in
market acceptance, or in claims by the customer against the Company, which could
have a material adverse effect on the Company's business, financial condition
and results of operations.
 
    DEPENDENCE ON PRINCIPAL PRODUCT
 
    The Company currently derives most of its revenue from its RESTRAC HIRE
(including HIRE FOR INTRANET) product. As a result, any factor adversely
affecting sales of this product would have a material adverse effect on the
Company. The future success of the Company also depends, in part, on achieving
broader market acceptance of RESTRAC HIRE, as well as the ability to continue to
enhance RESTRAC HIRE to meet the evolving needs of its customers. Moreover, the
Company anticipates that its existing and new competitors will introduce
additional competitive products. This competition may reduce future market
acceptance of RESTRAC HIRE. The market acceptance of the Company's software is
difficult to estimate due in large measure to the effect of new products,
applications or product enhancements, technological changes in the marketplace
for staffing solutions and future competition. There can be no assurance that
the Company will maintain and expand acceptance of RESTRAC HIRE. The failure of
the Company to maintain and expand its market acceptance as a result of
competition, technological change or other factors would have a material adverse
effect on the Company's business, financial condition and results of operations.
 
    COMPETITION
 
    The marketplace for staffing solutions is intensely competitive and is
rapidly changing. The Company encounters direct competition from a number of
companies providing staffing solutions, including (i) other human resource
staffing software companies, (ii) providers of general human resource
information
 
                                       15
<PAGE>
                                 RESTRAC, INC.
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
      FOR THE THREE AND SIX MONTH PERIODS ENDED MARCH 31, 1999 (CONTINUED)
 
systems, (iii) agencies providing or sourcing full-time, contract and temporary
labor, (iv) information systems departments of potential prospects that develop
custom software, (v) providers of other client/ server other client/server
application software or document management systems and (vi) Internet-based
staffing solution providers.
 
    Competition may increase from new market entrants or through consolidations
in the software industry and/or cooperative relationships among companies.
Although the Company believes that at the present time its products are
competitively priced, an increase in competition could result in price
reductions and loss of market share. Such competition and any resulting price
reductions could have a material adverse effect on the Company's business,
financial condition, and results of operations.
 
    DEPENDENCE ON KEY PERSONNEL
 
    The Company's future success depends to a significant extent on its senior
management and other key employees. The Company also believes that its future
success will depend in large part on its ability to attract and retain
additional key employees. Competition for such personnel in the computer
software industry is intense, and there can be no assurance that the Company
will be successful in attracting and training such personnel.
 
    DEPENDENCE ON THIRD PARTIES
 
    A key element of the Company's business strategy is to develop relationships
with leading industry organizations in order to increase the Company's market
presence, expand distribution channels and broaden the Company's product line.
The Company believes that its continued success depends in large part on its
ability to maintain such relationships and cultivate additional relationships.
There can be no assurance that the Company's existing strategic partners or
future strategic partners will not develop and market products in direct
competition with the Company or otherwise discontinue their relationships with
the Company, or that the Company will be able to successfully develop additional
strategic relationships.
 
    In addition, certain technology incorporated in the Company's software is
licensed from third parties on a nonexclusive basis. The termination of any of
such licenses, or the failure of the third party licensers to adequately
maintain or update their products, could result in delay in the Company's
ability to ship certain of its products while it seeks to implement technology
offered by alternative sources. In addition, any required replacement licenses
could prove more costly than the Company's current license relationships and
might not provide technology as powerful and functional as the third-party
technology currently licensed by the Company. Also, any such delay, to the
extent it becomes extended or occurs at or near the end of a fiscal quarter,
could have a material adverse effect on the Company's results of operations for
that quarter. While it may be necessary or desirable in the future to obtain
other licenses relating to one or more of the Company's products or relating to
current or future technologies, there can be no assurance that the Company will
be able to do so on commercially reasonable terms or at all.
 
    MANAGEMENT OF CHANGE
 
    The evolution of the Company's business and expansion of the Company's
customer base has resulted in substantial growth in the number of its employees
and the scope of its operations, resulting in increased responsibility for
management personnel. The Company's future results of operations will depend on
the ability of its officers and other key employees to continue to implement its
operational, customer support, and financial control systems and to expand,
train, and manage its employee base. There can be no
 
                                       16
<PAGE>
                                 RESTRAC, INC.
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
      FOR THE THREE AND SIX MONTH PERIODS ENDED MARCH 31, 1999 (CONTINUED)
 
assurance that the Company will be able to manage any future expansion
successfully, and any inability to do so would have a material adverse effect on
the Company's business, financial condition and results of operations.
 
    RELIANCE ON SINGLE CLIENT INTERFACE AND SINGLE SERVER PLATFORM
 
    At the present time, the Company supports client (workstation) platforms
utilizing Microsoft's Windows family of software products, including Windows 95,
Windows 98 and Windows NT. If Microsoft were to fundamentally change the
architecture of its software product such that users of the Company's software
applications experienced significant performance degradation or were rendered
incompatible with future versions of Microsoft's Windows Operating System, the
Company's business, financial condition and results of operations could be
materially adversely effected. If a new client platform or other interface were
to gain broad acceptance in the marketplace, there can be no assurance that the
Company's architecture would be compatible with such an interface.
 
    Certain of the Company's products exclusively operate on Microsoft's NT
Server and Internet Information Server (IIS) platforms. If Microsoft were to
fundamentally change the architecture of its server product such that users of
the Company's software applications experienced significant performance
degradation or were rendered incompatible with future versions of Microsoft's NT
Server or IIS, the Company's business, financial condition and results of
operations could be materially adversely effected. If a new type of server were
to gain broad acceptance in the marketplace, there can be no assurance that the
Company's architecture would be compatible with such a server.
 
    LIMITED PROTECTION OF INTELLECTUAL PROPERTY AND DEPENDENCE ON PROPRIETARY
     RIGHTS; RISK OF LITIGATION
 
    The Company relies on a combination of copyright and trade secret laws,
employee and third party non-disclosure agreements and other methods to protect
its proprietary rights. There can be no assurance that the measures taken by the
Company to protect its proprietary rights will be adequate to prevent
misappropriation of its technology or independent development by others of
similar technology. The Company's inability to protect its proprietary rights
would have a material adverse effect on the Company's business, financial
condition and results of operations.
 
    As the number of human resource application software products and services
in the industry increases and the functionality of these solutions further
overlaps, software developers and publishers may increasingly become subject to
infringement claims. There can be no assurance that third parties will not
assert infringement claims against the Company in the future with respect to
current or future products. Although the Company is not currently the subject of
any intellectual property litigation, there has been substantial litigation
regarding copyright, patent and other intellectual property rights involving
computer software companies. Any claims or litigation, with or without merit,
could be costly and could result in a diversion of management's attention, which
could have a material adverse effect on the Company's business, financial
condition and results of operations. Adverse determinations in such claims or
litigation may require the Company to obtain a license and/or pay damages, which
could also have a material adverse effect on the Company's business, financial
condition and results of operations.
 
    PRODUCT LIABILITY
 
    Although the Company has not experienced any product liability claims to
date, the sale and support of products by the Company and the incorporation of
products from other companies may entail the risk of
 
                                       17
<PAGE>
                                 RESTRAC, INC.
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
      FOR THE THREE AND SIX MONTH PERIODS ENDED MARCH 31, 1999 (CONTINUED)
 
product liability claims. The Company's license agreements with its customers
typically contain provisions intended to limit the Company's exposure to such
claims, but such provisions may not be effective in limiting the Company's
exposure. A successful product liability action brought against the Company
could adversely effect the Company's business, financial condition and results
of operations.
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 
    Information relating to quantitative and qualitative disclosure about market
risk is set forth under the caption "Short- and Long- Term Investments" in Note
2(d) of the Notes to Consolidated Financial Statements. The Company does not
have material foreign currency risks.
 
                                       18
<PAGE>
                                 RESTRAC, INC.
 
PART II--OTHER INFORMATION:
 
ITEM 1. LEGAL PROCEEDINGS
 
    The Company is not involved in any pending legal proceedings other than
those arising in the ordinary course of the Company's business. Management
believes that the resolution of these matters will not materially affect the
Company's business or the financial condition of the Company.
 
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
 
    None
 
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
 
    None
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    Annual Stockholders' Meeting on March 17, 1999: At the annual meeting of the
Company's stockholders, 8,025,978 shares, or 80% of the Company's outstanding
common stock as of the record date of February 2, 1999, voted on the following
matters;
 
        1   The election of Lars D. Perkins and J. Paul Costello as Class III
    Directors to serve until the Annual Meeting of Stockholders following the
    close of the Company's 2001 Fiscal Year and until their successors are duly
    elected and qualified. Shares were voted as follows:
 
<TABLE>
<CAPTION>
NOMINEE                                                                     FOR       WITHHELD
-----------------------------------------------------------------------  ----------  -----------
<S>                                                                      <C>         <C>
Lars D. Perkins........................................................   8,006,578      19,400
J. Paul Costello.......................................................   8,006,578      19,400
</TABLE>
 
        2   The election of Kavitark R. Shriram as a Class I Director to serve
    until the Annual Meeting of Stockholders following the close of the
    Company's 1999 Fiscal Year and until his successor is duly elected and
    qualified. Shares were voted as follows:
 
<TABLE>
<CAPTION>
NOMINEE                                                                     FOR       WITHHELD
-----------------------------------------------------------------------  ----------  -----------
<S>                                                                      <C>         <C>
Kavitark R. Shriram....................................................   8,008,078      17,900
</TABLE>
 
ITEM 5. OTHER INFORMATION
 
    None
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 
    (a) Exhibits furnished as Exhibits hereto:
 
<TABLE>
<CAPTION>
EXHIBIT NO.    DESCRIPTION
-------------  ---------------------------------------------------------------------------------
<C>            <S>
       27.1    Financial Data Schedule Pursuant to Regulation S-X Article 5
</TABLE>
 
    (b) No reports on Form 8-K were filed by the Company during the quarter
ended March 31, 1999.
 
                                       19
<PAGE>
                                 RESTRAC, INC.
 
PART III--SIGNATURES
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
 
                                RESTRAC, INC.
 
Date: May 14, 1999
                                           /s/ LARS D. PERKINS
                                ------------------------------------------
                                             Lars D. Perkins
                                         CHIEF EXECUTIVE OFFICER
 
                                           /s/ CYNTHIA G. EADES
                                ------------------------------------------
                                             Cynthia G. Eades
                                         CHIEF FINANCIAL OFFICER
 
                                       20