<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, DC 20549
 
                                FORM 10-K
 
                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED
                               DECEMBER 31, 1997
 
                        COMMISSION FILE NO.: 000-22035
  
                        METRO INFORMATION SERVICES, INC.
            (Exact name of registrant as specified in its charter)
 
<TABLE>
<CAPTION>
<S>                                                            <C>

       VIRGINIA                                                54-1112301
(State of incorporation)                                       (I.R.S. employer identification number)
 
POST OFFICE BOX 8888 VIRGINIA BEACH, VIRGINIA                  23450
(Address of principal executive office)                        (Zip code)
 
Registrant's telephone number, including area code:            (757) 486-1900
 
Securities registered pursuant to Section 12(b) of the Act:    NONE
 
Securities registered pursuant to Section 12(g) of the Act:    COMMON STOCK, $0.01 PAR VALUE
 
</TABLE>

    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 / /
 
    The aggregate market value of the registrant's Common Stock held by 
non-affiliates as of January 30, 1998 was approximately $182 million, based 
on the average of the high and low prices of the registrant's Common Stock on 
The Nasdaq Stock Market on such date.
 
    As of January 30, 1998, the registrant had issued and outstanding 
14,821,704 shares of Common Stock, $0.01 par value.
 
    Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K is not contained herein, and will not be 
contained, to the best of registrant's knowledge, in definitive proxy or 
information statements incorporated by reference in Part III of this Form 
10-K or any amendment to this Form 10-K. / /
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                                    Page 1

<PAGE>
                        METRO INFORMATION SERVICES, INC.
                                1997 FORM 10-K
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               PAGE
                                                                                                            ---------
<S>      <C>      <C>                                                                                       <C>
PART I

         Item 1.  Business.................................................................................       3
         Item 2.  Properties...............................................................................      10
         Item 3.  Legal Proceedings........................................................................      10
         Item 4.  Submission of Matters to a Vote of Security Holders......................................      11
         Executive Officers of the Registrant..............................................................      11

PART II

         Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters....................      12
         Item 6.  Selected Financial Data..................................................................      14
         Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations....      15
         Item 7A. Quantitative and Qualitative Disclosures about Market Risk...............................      25
         Item 8.  Financial Statements and Supplementary Data..............................................      26
         Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.....      41

PART III

         Item 10. Directors and Executive Officers of the Registrant; Section 16(a) Beneficial 
                    Ownership Reporting Compliance.........................................................      41
         Item 11. Executive Compensation...................................................................      41
         Item 12. Security Ownership of Certain Beneficial Owners and Management...........................      45
         Item 13. Certain Relationships and Related Transactions...........................................      46

PART IV

         Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..........................      47
</TABLE>

                                     Page 2

<PAGE>

PART I
 
ITEM 1. BUSINESS
 
    This Report contains forward-looking statements as defined in the Private 
Securities Litigation Reform Act of 1995. For this purpose, any statements 
contained in this Report that are not statements of historical fact are 
forward-looking statements. Without limiting the foregoing, the words 
"believes," "anticipates," "plans," "expects" and similar expressions are 
intended to identify forward-looking statements. The important factors 
discussed in "Management's Discussion and Analysis of Financial Condition and 
Results of Operations--Factors Associated with Future Operations" among 
others, could cause actual results to differ materially from those indicated 
by forward-looking statements made in this Report and those presented 
elsewhere by management from time to time. Please refer to the cautionary 
statement that appears at the beginning of "Management's Discussion and 
Analysis of Financial Condition and Results of Operations" for more 
information.
 
DESCRIPTION OF THE BUSINESS
 
    Metro Information Services, Inc. ("Metro" or the "Company") was 
incorporated July 1, 1979 in Virginia. The Company's headquarters is located 
in Virginia Beach, Virginia.
 
    Metro provides a wide range of information technology ("IT") consulting 
and custom software development services through 30 offices in the United 
States and Puerto Rico. The Company's more than 1,700 consultants, 
approximately 66% of whom are salaried, work with clients' internal IT 
departments on all aspects of computer systems and applications development. 
Services performed by Metro include application systems development and 
maintenance, IT architecture and engineering, systems consulting, project 
outsourcing and general support services. The Company supports all major 
computer technology platforms (mainframe, mid-range, client/server and 
network environments) and supports client projects using a broad range of 
software applications. For example, the Company implements SAP's 
client/server software, custom develops Oracle, Informix, DB2, Visual Basic 
and C++ applications, implements and supports Windows NT, Novell and UNIX 
based network environments and supports numerous other application 
environments.
 
DEVELOPMENT OF THE BUSINESS
 
    Over the last five years Metro has experienced continual growth. On 
December 31, 1992, the Company had 14 offices and 548 full-time consultants. 
Since December 31, 1992, Metro has grown its revenue at a compound annual 
growth rate of 28%. This growth was aided by a strong economy, increased use 
of and reliance on IT, significant changes in computer technologies, the 
migration from centralized mainframe computer systems to distributed 
client/server environments and a trend among corporate America towards 
outsourcing IT services due to the shortage of in-house expertise and 
resources to address the variety and complexity of IT projects. During the 
last three years, the Company accelerated its rate of new office openings 
from one office per year to as many as four offices per year. The Company 
also invested heavily in computerized systems custom designed for Metro's 
approach to the IT services industry and communications systems to enhance 
the flow of information within the Company. On July 1, 1997, Metro completed 
its first acquisitions, adding offices in Columbia, South Carolina and Kansas 
City, Missouri. At the end of 1997, the Company had grown to 29 offices 
located in 15 states and Puerto Rico and more than 1,700 full-time 
consultants. The Company opened its 30th office in January 1998.
 
    Metro was a privately-owned company until January 29, 1997, when the 
Company consummated an initial public offering of 3,100,000 shares of its 
Common Stock at a price of $16.00 per share. In the offering, 2,300,000 
shares were issued by the Company and 800,000 shares were sold by a 
shareholder of the Company. On February 3, 1997, the several underwriters of 
the initial public offering exercised their over-allotment option, purchasing 
465,000 shares of Common Stock from several other shareholders of the Company 
at a price of $16.00 per share. The net proceeds to the Company from the 
offering were $33,144,000. In connection with the public offering, the 
Company terminated its S corporation election resulting in the Company 
becoming fully subject to federal and state income taxes effective January 1, 
1997. On January 20, 1997, the Company distributed $9,000,000 to its 
shareholders, 

                                   Page 3

<PAGE>

approximating the estimated aggregate undistributed amount of income on which 
the Company's shareholders were required to pay income taxes for tax years 
1987 through 1996.
 
    The Company's shares are listed on The Nasdaq Stock Market under the 
symbol "MISI."
 
INDUSTRY OVERVIEW
 
    Rapid technological advances have accelerated the growth of the IT 
industry in recent years. These advances include more powerful and less 
expensive computer technology, the transition from mainframe computer systems 
to open and distributed computing environments and the advent of capabilities 
such as relational databases, imaging and software development productivity 
tools. These advances have expanded the benefits that users can derive from 
computer-based information systems and improved the price-to-performance 
ratios of such systems. As a result, an increasing number of companies are 
employing IT in new ways, often to gain competitive advantages in the 
marketplace, and IT services have become an important component of their 
long-term growth strategies. The same advances that have enhanced the 
benefits of computer systems have rendered the development and implementation 
of such systems increasingly complex. In addition, there is a shortage of IT 
consultants qualified to support these systems. Accordingly, organizations 
are turning to IT services firms such as Metro to develop, support and 
strengthen their internal IT departments and systems. In October 1997, 
Dataquest, an industry research organization, estimated that in 1996 the size 
of the IT professional services market in the United States, consisting of 
consulting services, development and integration services, education and 
training and management services, was $73 billion. Dataquest estimates that 
this market will grow at a compound annual rate of 15%, reaching $148 billion 
by 2001.
 
BUSINESS STRATEGY
 
    The key components of the Company's business strategy are:
 
    ATTRACT, DEVELOP AND RETAIN QUALIFIED CONSULTANTS. The Company seeks to 
attract, develop and retain qualified consultants by focusing primarily on IT 
services, providing leadership and management support through effective and 
open communication, developing consultants through professional and technical 
training and education programs, providing challenging project opportunities 
with significant client responsibility and offering competitive compensation 
and benefits that recognize the individual needs of each consultant. The 
Company maintains a proprietary database of current, prospective and former 
consultants to help it identify and recruit qualified consultants. In 
addition, the Company's presence in 30 metropolitan markets enhances the 
Company's ability to match consultants' desired locations and technical 
abilities with client needs. Metro recognizes that its success can be 
sustained only through the efforts and quality of its consultants. To this 
end, management provides responsive technical and professional support, 
promotes a sense of responsibility and rewards quality performance through 
numerous incentive programs and awards.
 
    BUILD LONG-TERM PARTNERSHIPS WITH CLIENTS. The Company's goal is to have 
its clients view Metro as an extension of their IT departments and as a 
long-term partner that is able to fulfill their IT services requirements. As 
a result, the Company emphasizes a partnership approach to its clients, 
rather than a one-time project or assignment approach. To develop these 
relationships, the Company spends a significant amount of time and resources 
tracking and anticipating the needs of its clients. The Company works to 
maintain close communications with its clients during and at the conclusion 
of each project with a view to achieving quality results and assessing future 
opportunities.
 
    The Company serves clients operating in a wide variety of industries 
including communications, distribution, retail, financial services, 
government (state and local only), healthcare, IT services, manufacturing, 
transportation, leisure and utilities. In 1995, 1996 and 1997, the Company 
provided IT consultants to approximately 266, 324 and 396 clients, 
respectively (excluding clients that generated less than $25,000 in revenue 
during such year). In each of 1995, 1996 and 1997, at least 85% of the 
Company's revenue came from clients who were clients in the prior year.
 
    The Company's 10 largest clients by revenue in 1997 had each been a client
for over five years, while the Company's three largest clients for 1997 had each
been a client for over 10 years. The Company's 10 largest clients accounted for
approximately 33.4%, 29.1% and 29.8% of the Company's revenue in 1995, 1996 and
1997, respectively. 

                                 Page 4

<PAGE>

The Company's largest client accounted for approximately 6.8%, 6.5% and 5.8% 
of the Company's revenue in 1995, 1996 and 1997, respectively.
 
    PROVIDE A WIDE RANGE OF VALUE-ADDED IT SERVICES. The Company's 
consultants provide a wide range of IT services including planning, managing, 
building, implementing and maintaining IT systems. The Company supports all 
major computer technology platforms (mainframe, mid-range, client/server and 
network environments) and supports projects using a broad range of software 
applications. For example, the Company implements SAP's client/server 
software, custom develops Oracle, Informix, DB2, Visual Basic and C++ 
applications, implements and supports Windows NT, Novell and UNIX based 
network environments and supports numerous other application environments. 
The Company continually seeks to broaden its services in the changing IT 
market by providing its consultants with exposure to emerging technologies 
and by hiring consultants with diverse IT backgrounds and skills.
 
    PROVIDE HIGH-QUALITY, COST-EFFECTIVE SERVICES. The Company is dedicated 
to providing its clients with the highest possible level of service at what 
the Company believes is the "best value." The Company believes its 
experienced consultants and proprietary systems allow the Company to deliver 
high-quality, on-schedule services to its clients in a cost-effective and 
efficient manner and that the quality of its services has been a 
differentiating factor that has helped it successfully expand. The Company's 
dedication to quality services and client satisfaction has resulted in 
special recognition from clients. The Company's operating procedures and 
quality assurance programs are ISO 9002 registered. The Company believes ISO 
registration, an international standard for quality assurance and consistency 
in operating procedures, enhances its reputation and helps it achieve 
preferred vendor status with clients. The Company expects that many potential 
and existing clients will require evidence of ISO registration in the future.
 
    LEVERAGE PROPRIETARY SYSTEMS.  The Company's internally designed and 
developed proprietary business systems are used to support and enhance its 
recruiting, marketing, training, consultant productivity, client scheduling 
and client servicing processes. For example, Metro's Staff Sourcing Network 
provides the Company with the ability to identify and hire qualified 
consultants on a nationwide basis and match their skills and desired work 
locations with an appropriate office in a time-critical manner. The Company's 
scheduling system allows it to efficiently manage contract renewals and bill 
rate increases and anticipate clients' needs for IT consultants and services. 
These proprietary systems permit timely sharing of information on a 
Company-wide basis.
 
GROWTH STRATEGY
 
    The Company has competed successfully in the rapidly changing IT 
environment and has capitalized on the growing demand for IT services. The 
Company's success is evidenced by the fact that the Company's revenue has 
increased at a compound annual growth rate of 30% over the last 10 years and 
28% over the last five years. Revenue grew 33.9% for 1997 compared to 1996. 
Until July 1, 1997, all of this growth was achieved through internal growth. 
On July 1, 1997, the Company completed two acquisitions. The Company intends 
to augment internal growth with selective acquisitions. See "Management's 
Discussion and Analysis of Financial Condition and Results of Operations-- 
Overview."
 
    The Company's growth strategy consists of three primary components:
 
    DEVELOP AND EXPAND CLIENT BASE.  By providing a wide range of 
high-quality services, the Company has historically expanded the scope of its 
client relationships through additional assignments and by providing 
additional services within client organizations. In addition, because many of 
the Company's clients have offices throughout the United States, the Company 
strives to leverage these relationships by providing IT services in multiple 
locations. In addition to increasing sales with existing clients, the Company 
seeks to develop new client relationships in each office.
 
    OPEN NEW OFFICES.  The Company anticipates that it will open three to 
five offices annually for the next several years. During 1997, the Company 
opened four new offices. In January 1998, the Company opened one new office. 
The Company has developed a national expansion strategy and has successfully 
replicated its business model in its newly opened offices. Historically, new 
offices opened by the Company have generally achieved monthly operating 
income within six to 12 months and cumulative operating income within 18 to 
24 months. The Company's office network 

                                 Page 5

<PAGE>

establishes a local presence in each market and demonstrates its commitment 
to each local market thereby enhancing its ability to attract skilled, local 
consultants for local assignments and assignments in its other offices.
 
    SELECTIVELY ACQUIRE BUSINESSES.  The Company's strategy is to supplement 
its internal growth through selective acquisitions. The Company seeks out 
"best reputation" IT services firms in new geographic markets to reduce 
start-up costs and in markets Metro currently serves, provide business 
synergies and increase market penetration. The Company also considers 
specialty consulting practices and new IT services that the Company can 
cross-sell to its existing client base. In identifying potential acquisition 
candidates, the Company seeks firms with a culture, client base, geographic 
presence and technical expertise complementary to its own. The Company 
strives to improve the acquired firm's profitability by implementing the 
Company's business strategies and proprietary business systems. The Company 
currently has no agreements, understandings or commitments with respect to 
any potential acquisitions.
 
SERVICES
 
    IT services are primarily provided by the Company through supplemental IT 
services arrangements and, to a lesser extent, through project outsourcing 
services arrangements. Substantially all services are billed on a time and 
materials basis. For 1997, the Company estimates that supplemental IT 
services accounted for more than 90% and project outsourcing services 
accounted for less than 10% of the Company's revenue.
 
    The Company offers IT services in five major service areas: application 
systems development and maintenance, IT architecture and engineering, systems 
consulting, project outsourcing and general support services. Application 
systems development and maintenance services include consultant support of 
projects on all major technology platforms including mainframe, mid-range, 
client/server, object oriented, network and desktop computing environments. 
IT architecture and engineering services include the support of major systems 
foundations and operating systems. Systems consulting services include a 
variety of strategic business services such as information systems and IT 
planning. Project outsourcing services include full project services that 
generally require a higher level of responsibility. General support services 
include a variety of services such as help desks, call center support, 
technical training and documentation and technical writing. As of December 
31, 1997, approximately 70% of the Company's consultants were working in the 
application systems development and maintenance services area, 7% in IT 
architecture and engineering services, 5% in systems consulting services, 4% 
in project outsourcing services and 14% in general support services. These 
percentages change daily as consultant assignments change. Due to the 
variation in bill rates in these service areas, these percentages do not 
necessarily correspond to the percentage of revenue from each service area. 
The Company estimates that, on December 31, 1997, approximately 13% of its 
consultants were involved in providing Year 2000 ("Y2K") related IT services. 
See, "--Year 2000 Issues."
 
SALES AND MARKETING
 
    The Company's marketing objective is to develop long-term partnership 
relationships with existing and new clients that will lead to the Company 
becoming the preferred provider of IT services. The Company's primary 
marketing approach is to introduce prospective clients to Metro's 
capabilities and to learn about prospective clients' IT environments through 
personal appointments with information systems managers, purchasing or human 
resources managers and chief information officers. Other sales and marketing 
methods include client referrals, networking, attending trade shows and 
alliances with other vendors. The Company divides its sales and marketing 
effort between new client acquisition and existing client development. At 
December 31, 1997, the Company employed 20 individuals performing new client 
acquisition functions and 37 individuals performing client development 
functions. In addition to the Company's primary marketing approach, the 
Company also has targeted marketing initiatives for Y2K services, project 
outsourcing and managed services/vendor on premise IT services.
 
CLIENT SUPPORT STRUCTURE
 
    Clients are the focus of the Company's client support structure, which
provides each client with "layers of support" from the Company. The first layer
of client support is the IT consultants who work at client sites on assignments
generally lasting six to 12 months. The next layer of support is each office's
Leadership Team which includes: (i) marketing account representatives, (ii)
client services coordinators, (iii) professional staff recruiters, 

                                  Page 6
<PAGE>

(iv) staff support and training coordinators and (v) a director who leads the 
office Leadership Team, all of whom are supported by administrative 
assistants. Most office directors were promoted from within the Company and 
have an appreciation for the Company's culture. Having a strong 
core-leadership team that has "grown up" with the Company allows Metro to 
maintain its focus on supporting consultants and servicing clients.
 
    The Corporate Support Group furnishes a "layer of support" for the 
Company's offices through its President and Chief Executive Officer, John H. 
Fain, Chief Operating Officer, Andrew J. Downing, and Chief Financial 
Officer, Robert J. Eveleigh, working in conjunction with the Vice Presidents 
of Operations ("VPOs") and the Quality Operations, Information Services, 
Finance and Human Resources Departments. The Corporate Support Group performs 
as many back office functions as possible at the corporate headquarters to 
allow the offices to focus primarily on client service and consultant support.
 
    EXECUTIVE MANAGEMENT.  During 1997, the Executive Management Team 
consisted of Mr. Fain, Mr. Downing, Mr. Eveleigh and three VPOs. In January 
1998, the Company increased the number of VPOs to five by promoting two of 
its office directors. Each VPO typically supports a group of five to 10 
offices.
 
    QUALITY OPERATIONS.  The Quality Operations Department coordinates the 
Company's recruiting process and is responsible for its ISO 9002 registration 
and compliance. ISO is an international standard for quality assurance and 
consistency in operating procedures. The Company anticipates that many of its 
existing and prospective clients will soon require their IT services vendors' 
processes are ISO registered.
 
    INFORMATION SERVICES.  The Information Services Department supports 
systems operations, office telecommunications and internal applications 
systems development and support. The Company has committed significant 
resources to the development of its recruiting systems to improve the 
database search capabilities, ease data entry via scanning and imaging, ease 
remote access to the database and implement a workgroup concept for using the 
system.
 
    FINANCE.  The Finance Department is responsible primarily for financial 
reporting, general accounting, time entry and reporting, billing, accounts 
receivable, payroll, facilities acquisition and administration, risk 
management and monitoring contract performance.
 
    HUMAN RESOURCES.  The Human Resources Department develops and refines 
policies and procedures, administers personnel benefits and coordinates staff 
hiring, training and development. The Human Resources Department has also 
established a benefits help desk designed to respond quickly and accurately 
to employee questions.
 
INTELLECTUAL PROPERTY
 
    In accordance with industry practice, contracts between the Company and 
its clients normally provide that all intellectual property created for a 
client belongs exclusively to that client. Intellectual property used by the 
Company to operate its business is owned by or licensed to the Company. The 
Company relies on trade secret laws to protect its proprietary software. The 
Company attempts to protect its trade secrets and other proprietary 
information through agreements with employees and consultants. The Company 
does not hold any patents and does not have any patent applications pending. 
There can be no assurance that the steps taken by the Company to protect its 
proprietary technology will be adequate to deter misappropriation of its 
proprietary rights or third party development of similar proprietary software.
 
    Metro Information Services-SM- is a registered service mark of the 
Company. Other than Metro Information Services-SM-, the Company does not own 
any registered service marks.
 
SEASONALITY
 
    Metro's operating results are adversely affected when client facilities 
close due to holidays or inclement weather. The Company generally experiences 
a certain amount of seasonality in the fourth quarter due to the number of 
holidays and closings of client facilities during that quarter. Further, the 
Company generally experiences lower operating results in 

                                   Page 7

<PAGE>

the first quarter due in part to the timing of unemployment and FICA tax 
accruals and delays in clients' contract renewal related to clients' budget 
approval processes.
 
COMPETITION
 
    The IT services industry is extremely competitive and highly fragmented. 
The Company believes there are thousands of competitors in the United States 
alone, many of which are privately owned. Although the market is 
consolidating, management believes no one company is dominant. The Company's 
competitors include general IT services firms, temporary staffing and 
personnel placement companies, general management consulting firms, major 
accounting firms, divisions of large hardware and software companies and 
niche providers of IT services. Some of the Company's competitors possess 
substantially greater resources, greater name recognition and a more 
established client base than the Company. In addition, the services offered 
by the Company have been and continue to be provided by client personnel. The 
Company believes that the significant competitive factors in the sale of its 
services include quality of consultant services, availability of consultants, 
price, breadth of services offered and reputation.
 
    As a result of intense competition, IT services engagements frequently 
are subject to pricing pressure. Clients also require vendors to provide 
services in multiple locations. Competition for contracts for many of Metro's 
services takes the form of competitive bidding in response to requests for 
proposals and quotes.
 
    Prime Vendors present an additional competitive challenge. To reduce the 
number of their IT service providers, certain businesses are beginning to use 
a limited number of vendors and, in some cases, a single vendor (collectively 
"Prime Vendors"). Prime Vendors enter into contractual arrangements with 
clients to fill their IT services needs either directly or through 
subcontractors. Because these Prime Vendors generally are given the first 
opportunity to fill a client's consultant needs, the industry trend toward 
the use of Prime Vendors may give the Company fewer opportunities to place 
consultants. In those circumstances where the Prime Vendor subcontracts with 
the Company to provide consultants, the Prime Vendor may place bill rate 
pressure on the Company.
 
    The Company has taken steps, when practical, to become a Prime Vendor of 
IT services for certain clients. The Company has experienced and anticipates 
continued pricing pressure from these clients as a condition to becoming or 
remaining a Prime Vendor. The Company evaluates these situations on an 
individual basis to determine whether these arrangements contribute to the 
overall profitability of the Company.
 
RECRUITING AND HIRING
 
    Because recruiting and hiring qualified consultants is critical to the 
Company's success, the Company spends significant resources and effort to 
locate and retain high-quality consultants. The Company's structured 
recruiting approach is based on: the use of a proprietary resume tracking 
database which allows qualified candidates to be identified based on specific 
client requirements, effective communication between the local offices and 
corporate headquarters which allows all offices to share information and 
match candidates to the appropriate office and client and a strict 
qualification process that utilizes Company-stated standards to qualify 
candidates both on a technical and professional basis.
 
    The Company identifies candidates through a variety of sources, including 
local and national advertising, recruiting agencies, referrals from employees 
and clients, the Internet, career fairs and professional associations. The 
Company believes its national presence and local office network enables it to 
recruit consultants with specialized skill sets, which are generally in 
higher demand and more difficult to locate. Candidate resume information is 
entered into the Company's proprietary database, which allows the Company's 
30 offices equal access to candidate qualifications. Office staff can search 
for candidates based on a variety of search criteria including skill sets, 
experience and location preferences. The Company's Quality Operations 
Department trains new recruiters (through an in-house training program known 
internally as Recruiter University), monitors the recruiting process and 
coordinates the sharing of information among all offices so candidates are 
quickly and efficiently pursued for hire throughout the Company. At December 
31, 1997, the Company had 72 individuals performing recruiting functions.

                                  Page 8

<PAGE>

CONSULTANT TRAINING AND EDUCATION
 
    The Company believes consultant training and education is essential to 
meeting client requirements for ever-changing skills and for retaining 
consultants. In 1997, the Company began to focus on programs that train less 
experienced individuals in new skills to increase the supply of qualified 
consultants. The Company offers a variety of training in technical and 
professional competencies on a Company-wide level, through its Human 
Resources Department and, on an individual office level, through each 
office's training coordinator. The Human Resources Department oversees 
professional and technical training, the licensing of computer-based training 
courses, development or licensing of instructor-led training, utilization of 
corporate training hardware and software and tuition reimbursement. Office 
training coordinators work closely with their office staff to provide 
effective training through the development of training plans, coordination of 
class logistics and the sponsorship of informal special interest training 
sessions. During 1997, approximately 0.7% of revenue was spent on training 
and education.
 
EMPLOYEES
 
    Virtually all of the Company's consultants are employees of the Company 
for federal and state tax purposes. For such individuals, the Company pays 
social security taxes (FICA), federal and state unemployment taxes and 
workers' compensation insurance premiums. The Company has few consultants 
that are independent contractors.
 
    As of December 31, 1997, the Company had 2,074 employees of which 2,010 
were full-time and 64 were part-time (working 30 hours or less in a week). Of 
the 2,010 full-time employees, 1,716 were consultants and 294 were general 
and administrative staff. Of the 1,716 consultants, the Company classifies 
1,133 as Regular Staff Members ("RSMs") and 583 as Associate Staff Members 
("ASMs"). RSMs are entitled to full benefits and substantially all are 
salaried and continue to earn full salary and benefits even if not working 
for a client. The Company markets RSMs to new clients in anticipation of 
completion of current project assignments. ASMs are entitled to only 
statutory benefits and the majority are paid on an hourly basis. In addition 
to statutory benefits, ASMs are permitted to participate in a limited number 
of other benefits, but are required to pay substantially all of the cost of 
these benefits. ASMs are employed only for specific client projects. As a 
result, even though the Company markets most ASMs to new clients in 
anticipation of completion of current project assignments, they are at 
greater risk of not being retained by the Company.
 
    Competition for qualified IT consultants to fill client needs is intense. 
The Company believes that its core philosophy and values, developed at the 
Company's inception, help it attract and retain high-quality IT 
professionals. Consultants sign agreements that limit their ability to 
compete with the Company for a 12-month period after leaving the Company. In 
addition, certain of the Company's agreements limit the client's ability to 
hire employees of the Company working at the client's facility.
 
    The Company completes an annual comprehensive staff survey detailing 
employee satisfaction and areas for improvement. The survey results are 
published in special editions of the Company newsletter, MetroExpress, and 
shared with employees and clients. The survey helps the Company identify 
changing employee needs and desires which the Company believes increases 
employee satisfaction and reduces employee turnover. The Company is not a 
party to any collective bargaining agreements and considers its relationships 
with its employees to be excellent.
 
YEAR 2000 ISSUES
 
    Year 2000 ("Y2K") issues are being addressed by the Company and many of 
its clients, suppliers, vendors and financial institutions. Y2K issues relate 
to the inability of some computer programs to make calculations correctly 
that involve dates after December 31, 1999. Y2K issues have the potential to 
disrupt normal business operations and decrease the profitability of affected 
companies. The Company provides some of its clients with consultants to 
address Y2K issues. The Company estimates that, on December 31, 1997, 
approximately 13% of its consultants were involved in Y2K activities. See, 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations--Year 2000 Issues."

                                  Page 9


<PAGE>

ITEM 2. PROPERTIES
 
    The Company's executive office is located at Reflections II, 200 Golden Oak
Court, Virginia Beach, Virginia 23452. This facility currently serves as the
headquarters for the Corporate Support Group. The Company's headquarters is
located in a leased facility with approximately 22,000 square feet at a current
annual rent of $352,150, and a term expiring in 2001. The Company's 30 offices
aggregate approximately 100,590 square feet and are leased at aggregate current
annual rents of approximately $1,481,000 for various terms, with no lease
commitment extending past the year 2003. In addition, in support of its
geographic expansion plan, the Company occasionally leases residential
apartments for terms of two to six months in those cities where new offices are
located. The Company believes that its properties are adequate for its current
needs. Further, the Company believes that suitable additional or replacement
space will be available when required on terms the Company believes will be
acceptable.
 
The following table sets forth additional information concerning the 
Company's facilities:
 
<TABLE>
<CAPTION>

DATE OPENED/ACQUIRED                   OFFICE LOCATION
--------------------                   ---------------
<S>                                    <C>
July 1979...........................   Tidewater (Virginia Beach), Virginia
September 1982......................   Research Triangle (Raleigh), North Carolina
November 1982.......................   Richmond, Virginia
August 1984.........................   Tampa Bay (Tampa), Florida
November 1984.......................   Charlotte, North Carolina
October 1985........................   Triad (Winston-Salem), North Carolina
March 1987..........................   Atlanta, Georgia
October 1987........................   South Florida (Ft. Lauderdale), Florida
August 1988.........................   Caribbean Islands (Hato Rey), Puerto Rico
August 1989.........................   Orlando (Winter Park), Florida
November 1989.......................   Greenville, South Carolina
March 1990..........................   Roanoke, Virginia
April 1991..........................   Nashville (Brentwood), Tennessee
September 1992......................   Dallas/Ft. Worth (Dallas), Texas
July 1993...........................   Jacksonville, Florida
July 1994 ..........................   Houston, Texas
April 1995..........................   Cincinnati (Fort Mitchell, KY), Ohio
May 1995............................   Chicago (Des Plaines), Illinois
September 1995......................   Phoenix, Arizona
November 1995.......................   Delaware Valley (Wayne), Pennsylvania
April 1996..........................   Puget Sound (Bellevue), Washington
June 1996...........................   Washington, D.C. (Fairfax, VA)
October 1996........................   Columbus (Worthington), Ohio
January 1997........................   Rocky Mountain (Denver), Colorado
April 1997..........................   St. Louis, Missouri
July 1997*..........................   Columbia, South Carolina
July 1997*..........................   Kansas City, Missouri
July 1997...........................   Austin, Texas
September 1997......................   Memphis, Tennessee
January 1998........................   Pittsburgh, Pennsylvania

</TABLE>
 
*   Indicates an office acquired in 1997.
 
ITEM 3. LEGAL PROCEEDINGS
 
    The Company is not a party to any material legal proceedings, other than
ordinary routine litigation incidental to the business.
 
                                  Page 10
<PAGE>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    No matters were submitted to a vote of the Company's security holders during
the fourth quarter of the year ended December 31, 1997.
 
EXECUTIVE OFFICERS OF THE REGISTRANT
 
    The following sets forth information as to each Director, Executive Officers
and other key personnel of Metro, including his or her age, present principal
occupation, other business experience during the last five years, directorships
in other publicly-held companies, membership on committees of the Board of
Directors and period of service with Metro.
 
DIRECTORS AND CERTAIN EXECUTIVE OFFICERS OF THE REGISTRANT
 
    RAY E. BECKER, 61, is founder and President of Consultants to Management,
Inc. of Ellsworth, Maine (management consulting services), and has held those
positions since 1995. From 1985 to 1994, Mr. Becker served in a variety of roles
with Keane, Inc., retiring as Vice President and Western Regional Manager for
Keane in 1994. Mr. Becker has served on Metro's Board of Directors since April
1997. Mr. Becker's term as a director expires at Metro's 1998 Annual Meeting.
Mr. Becker is a member of Metro's Audit Committee and its Compensation
Committee.
 
    ANDREW J. DOWNING, 42, is a Director and Executive Vice President and Chief
Operating Officer of the Company. Between 1983 and July 1996, Mr. Downing served
in various marketing capacities in the Company's Virginia Beach, Virginia
office, as a Regional Vice President and a Vice President of Operations. In July
1996, Mr. Downing became Executive Vice President and Chief Operating Officer of
the Company. Mr. Downing has served on the Board of Directors since January
1997. Mr. Downing's term as a director expires at Metro's 1998 Annual Meeting.
 
    ROBERT J. EVELEIGH, 38, is a Director and Vice President of Finance,
Treasurer and Chief Financial Officer of the Company. Between August 1988 and
January 1997, Mr. Eveleigh was an attorney with Clark & Stant, P.C., the
Company's general counsel. Mr. Eveleigh is also a certified public accountant.
Mr. Eveleigh became Metro's Vice President of Finance, Treasurer and Chief
Financial Officer on January 29, 1997. Mr. Eveleigh has served on Metro's Board
of Directors since January 1997. Mr. Eveleigh's term as a director expires at
Metro's 1999 Annual Meeting.
 
    JOHN H. FAIN, 49, is Chairman of the Board of Directors, President and Chief
Executive Officer of the Company. Mr. Fain is Chairman of Metro's Compensation
Committee and has been a Director since 1979. Mr. Fain's current term as a
director expires at Metro's 2000 Annual Meeting.
 
    A. EUGENE LOVING, Jr., 55, is Chairman of the Board and Chief Executive
Officer of Max Media Properties LLC ("Max"). Mr. Loving has held these positions
with Max and its predecessors since 1991. Mr. Loving has served on the Board of
Directors since April 1997. Mr. Loving's term as a director expires at Metro's
1999 Annual Meeting. Mr. Loving is a member of Metro's Audit Committee and its
Compensation Committee.
 
OTHER EXECUTIVE OFFICERS OF THE REGISTRANT
 
    FRANK B. BRACKEN, JR., 49, is a Vice President of Operations. Mr. Bracken
joined the Company in July 1984 and has served as a Vice President of Operations
since July 1996. He served as Division Director in the Company's Richmond,
Virginia office from January 1996 until being named a Vice President of
Operations. From January 1994 to December 1995, Mr. Bracken served as Metro's
National Account Marketing Director. From July 1984 to December 1993, he served
in various marketing positions in the Company's Richmond, Virginia office.
 
    RONALD D. CHEATHAM, 44, became a Vice President of Operations effective
January 1, 1998. Mr. Cheatham joined the Company in 1993 and served as marketing
account representative until 1995. From 1995 to 1997, he served as director of
Metro's Nashville, Tennessee office.

                                 Page 11
<PAGE>

    RICHARD C. JAECKLE, 52, is a Vice President of Operations. Mr. Jaeckle
joined the Company in 1987 and has served as a Vice President of Operations
since January 1994. From July 1989 to December 1993, he was responsible for the
selection and development of new offices.
 
    MICHAEL G. MARTIN, 42, became a Vice President of Operations effective
January 1, 1998. Mr. Martin joined the Company in 1989 and served as marketing
director of Metro's Winston-Salem, North Carolina office through 1997.
 
    KATHLEEN A. NEFF, 47, is a Vice President of Operations. Ms. Neff joined
Metro in 1980 and from January 1983 to December 1995, she served as the
Technical Director of the Company's Richmond, Virginia office. She was named to
her current position in January 1996.
 
CERTAIN KEY PERSONNEL
 
    BRADLEY B. BRESEMEN, 47, is Director of Quality Operations. He has served in
this position since he joined the Company in April 1995. Before joining Metro,
Mr. Breseman spent 22 years with A.B. Dick Company in various capacities, last
serving as Vice President, Service and Distribution.
 
    STEVEN A. LURUS, 42, is Secretary, Director of Finance and Chief Accounting
Officer of the Company. Mr. Lurus joined Metro in 1984 as Controller and became
Director of Finance in 1986. In 1991, he was named Secretary and Treasurer. In
1997, Mr. Lurus resigned his position as Treasurer to accommodate Mr. Eveleigh
being named Treasurer. Mr. Lurus is a certified public accountant.
 
    MARILYNN C. MOSCHEL, 50, is Director of Human Resources. She has served in
this position since she joined Metro in 1988. Before joining the Company, she
served as Director of Marketing and Human Resources for Goodman & Company CPA's.
 
    R. LAWRENCE WHITLEY, 37, is Director of Information Services. From September
1988, when he joined the Company, through March 1989, Mr. Whitley was an
Information Systems Consultant working on the Company's recruiting systems. From
April 1989 through June 1992, he served as the Manager of Information Services
and, in July 1992, was named to his current position.
 
PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
    MARKET.  The Company completed its initial public offering of stock on 
January 29, 1997. The Company's Common Stock, $0.01 par value, trades on The 
Nasdaq Stock Market under the symbol "MISI." Before January 29, 1997, there 
was no established market for the Company's stock.
 
The following table sets forth the quarterly range of high and low trade 
price per share of the Company's Common Stock since January 29, 1997 as 
reported by The Nasdaq Stock Market:
 
<TABLE>
<CAPTION>

1997:                                        HIGH        LOW
-----                                      ---------  ---------
<S>                                        <C>        <C>
First Quarter............................  $  20.750  $  12.500
Second Quarter...........................  $  20.500  $  12.500
Third Quarter............................  $  24.000  $  16.625
Fourth Quarter...........................  $  29.250  $  20.625

</TABLE>
 
    HOLDERS.  The Company estimates that there were approximately 3,000 holders
of the Company's Common Stock on January 30, 1998.
 
    DIVIDENDS.  In 1987, the Company became an S corporation for federal and
certain state income tax purposes. As such, the Company's income was allocated
and taxable to the Company's individual shareholders, rather than to the
Company. Between 1987 and December 31, 1996, the Company declared and made
quarterly distributions to its 

                                 Page 12
<PAGE>

shareholders, generally in amounts in excess of amounts needed by the 
shareholders to pay the taxes on the income allocated to them. Total 
distributions paid to shareholders during the year ended December 31, 1996 
were $5.1 million. In addition, on January 20, 1997, the Company distributed 
to its shareholders $9.0 million, approximating the estimated aggregate 
undistributed amount of income on which the shareholders were required to pay 
income taxes for tax years 1987 through 1996. No other amounts were 
distributed to shareholders during 1997. In connection with the January 29, 
1997 initial public offering, the Company terminated its S corporation 
election on January 1, 1997.
 
    The Company currently anticipates that all of its earnings will be retained
for development and expansion of the Company's business and does not anticipate
paying any cash dividends in the foreseeable future. The payment of dividends is
subject to the discretion of the Board of Directors and will depend on the
Company's results of operations, financial position, capital requirements,
general business conditions, restrictions imposed by financing arrangements
(including, without limitation, the Company's credit facilities), legal and
regulatory restrictions on the payment of dividends and other factors the Board
of Directors deems relevant. See, "Management Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."
 
    USE OF PROCEEDS FROM REGISTERED SECURITIES. The effective date of the
Company's Securities Act registration statement on Form S-1 was January 29,
1997. The Commission file number is 000-22035. Between the effective date and
December 31, 1997, the expenses incurred in connection with the issuance and
distribution of the securities registered were as follows:
 
<TABLE>
<CAPTION>
                                                  
                                                                   AS PREVIOUSLY           
                                                                    REPORTED ON            ADDITIONAL
                                                                     FORM 10-Q         EXPENSES INCURRED    EXPENSES INCURRED
                                                                 FOR PERIOD ENDING         THROUGH           TO DATE AS OF
DIRECT OR INDIRECT PAYMENTS TO OTHERS:                           SEPTEMBER 30, 1997    DECEMBER 31, 1997    DECEMBER 31, 1997
-------------------------------------------------------------  ----------------------  ------------------  -------------------
<S>                                                            <C>                     <C>                  <C>
Underwriting discounts and commissions.......................      $  2,576,000                --             $   2,576,000
Other expenses...............................................         1,080,366                --                 1,080,366
                                                               ----------------------  ------------------  -------------------
Total expenses...............................................      $  3,656,366                --             $   3,656,366
                                                               ----------------------  ------------------  -------------------
                                                               ----------------------  ------------------  -------------------
Net offering proceeds after total expenses above.............                                                 $  33,143,634
                                                                                                           -------------------
                                                                                                           -------------------
</TABLE>
 
Between the effective date and December 31, 1997, net offering proceeds of
$33,143,634 were used for the following purposes:
 
<TABLE>
<CAPTION>
                                                          AS PREVIOUSLY
                                                           REPORTED ON 
                                                            FORM 10-Q                                USE OF PROCEEDS
                                                       FOR THE PERIOD ENDING        CHANGES              THROUGH
DIRECT OR INDIRECT PAYMENTS TO OTHERS:                  SEPTEMBER 30, 1997    IN USE OF PROCEEDS    DECEMBER 31, 1997
-----------------------------------------------------  ---------------------  ---------------------  -----------------
<S>                                                    <C>                    <C>                    <C>
Acquisition of other businesses......................     $    4,352,920               --              $   4,352,920
Repayment of indebtedness............................         11,962,829               --                 11,962,829
Temporary investments:
  Municipal Bonds....................................         16,827,885               --                 16,827,885
                                                       ---------------------  ---------------------  -----------------
Total Use of Proceeds................................     $   33,143,634               --              $  33,143,634
                                                       --------------------  ---------------------  -----------------
                                                       --------------------  ---------------------  -----------------
</TABLE>
 
    The use of proceeds does not represent a material change in the use of
proceeds described in the prospectus. There have been no other changes to the
information provided by the Company on Form SR for the period ended April 30,
1997 or on Form 10-Q for the period ended September 30, 1997.
 
                                  Page 13
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA
 
    The following table contains certain financial and operating data and is
qualified by the more detailed Financial Statements and Notes thereto included
elsewhere in this Report. The Balance Sheet Data as of December 31, 1994, 1995,
1996 and 1997 and the Statements of Income Data for the years ended December 31,
1993, 1994, 1995, 1996 and 1997 were derived from the Company's Financial
Statements and Notes thereto that have been audited by KPMG Peat Marwick LLP,
independent certified public accountants. The Balance Sheet Data as of December
31, 1993 have been derived from the unaudited financial statements of the
Company which, in the opinion of management, have been prepared on the
same basis as the audited financial statements and include all adjustments,
consisting of normal recurring adjustments, which management considers necessary
for a fair presentation of the selected financial data shown. The Operating Data
have been derived from the unaudited internal records of the Company. The
financial data shown below should be read in conjunction with the Financial
Statements and Notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
Report.

<TABLE>
<CAPTION>
                                                                         YEAR ENDED DECEMBER 31,
                                                          -------------------------------------------------------
                                                            1993       1994      1995(1)      1996        1997
                                                          ---------  ---------  ---------  ----------  ----------
                                                                  (In thousands, except per share data)
<S>                                                       <C>        <C>        <C>        <C>         <C>
STATEMENTS OF INCOME DATA:
Revenue.................................................  $  53,344  $  68,669  $  85,904  $  113,963  $  152,578
Cost of revenue.........................................     37,646     48,221     61,074      79,752     106,080
                                                          ---------  ---------  ---------  ----------  ----------
Gross profit............................................     15,698     20,448     24,830      34,211      46,498
                                                          ---------  ---------  ---------  ----------  ----------
Selling, general and administrative expense.............     11,186     14,238     18,970      24,347      30,264
Depreciation and amortization...........................        275        357        537         763       1,158
                                                          ---------  ---------  ---------  ----------  ----------
Total operating expenses................................     11,461     14,595     19,507      25,110      31,422
                                                          ---------  ---------  ---------  ----------  ----------
Operating income........................................      4,237      5,853      5,323       9,101      15,076
Net interest income (expense)...........................          8       (215)      (323)       (260)        729
                                                          ---------  ---------  ---------  ----------  ----------
Income before income taxes..............................      4,245      5,638      5,000       8,841      15,805
Income taxes(2).........................................         --         --         --          --       6,178
                                                          ---------  ---------  ---------  ----------  ----------
Net income..............................................  $   4,245  $   5,638  $   5,000  $    8,841  $    9,627
                                                          ---------  ---------  ---------  ----------  ----------
                                                          ---------  ---------  ---------  ----------  ----------
Income before income taxes..............................  $   4,245  $   5,638  $   5,000  $    8,841  
Pro forma provision for income taxes(2).................      1,698      2,255      2,000       3,536
                                                          ---------  ---------  ---------  ----------  
Pro forma net income(2).................................  $   2,547  $   3,383  $   3,000  $    5,305
                                                          ---------  ---------  ---------  ----------  
                                                          ---------  ---------  ---------  ----------  
Pro forma net income per share--basic and
  diluted(2)............................................                        $    0.24  $     0.42
                                                                                ---------  ----------  
                                                                                ---------  ----------  
Net income per share -- basic and diluted...............                                               $     0.66
                                                                                                       ----------
                                                                                                       ----------
Weighted average shares outstanding:
 Basic..................................................                           12,756      12,762      14,611
 Diluted................................................                           12,756      12,762      14,662
</TABLE>
 
------------------------
 
(1) Includes $770,000 of non-recurring, non-cash compensation expense charged to
    selling, general and administrative expenses accrued in the fourth quarter
    of 1995 for stock issued for services performed by employees in 1995.
 
(2) For the periods 1993 through 1996, the Company was an S corporation for 
    federal and certain state income tax purposes. The pro forma provision 
    for income taxes for each period shown reflects a provision for income 
    taxes, as if the Company was a C corporation for income tax purposes 
    during such periods, at an assumed effective tax rate of 40%. See Note 6 
    of Notes to Financial Statements. Effective January 1, 1997, the Company 
    revoked its S corporation election subjecting it to corporate income 
    taxes at federal, state and local levels.
 
                                     Page 14
<PAGE>

<TABLE>
<CAPTION>
                                                                                 AS OF DECEMBER 31,
                                                              -------------------------------------------------------
                                                                 1993        1994       1995       1996       1997
                                                              -----------  ---------  ---------  ---------  ---------
                                                              (Unaudited)
                                                                       (In thousands, except operating data)
<S>                                                           <C>          <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Working capital.............................................   $   2,649   $   3,724  $   2,368  $   6,369  $  34,560
Total assets................................................      11,356      13,466     19,786     21,572     58,533
Line of credit facilities...................................       3,119       3,596      7,256      2,547         --
Redeemable common stock.....................................         732       1,070      1,404      2,651         --
Total shareholders' equity..................................       3,913       4,425      4,613      8,354     45,128

OPERATING DATA:(1)
Offices.....................................................          15          16         20         23         29
Consultants.................................................         675         838      1,074      1,279      1,716
Total employees.............................................         779         963      1,239      1,493      2,010
</TABLE>
 
------------------------
 
(1) Consultant data include only the Company's full-time consultants and total
    employee data include only the Company's full-time employees.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS
 
    CAUTIONARY STATEMENT UNDER THE "SAFE-HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995: INCLUDED IN THIS REPORT AND OTHER
WRITTEN AND ORAL INFORMATION PRESENTED BY MANAGEMENT FROM TIME TO TIME,
INCLUDING, BUT NOT LIMITED TO, ANNUAL REPORTS TO SHAREHOLDERS, QUARTERLY
SHAREHOLDER LETTERS, FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, NEWS
RELEASES AND INVESTOR PRESENTATIONS, ARE FORWARD-LOOKING STATEMENTS ABOUT
BUSINESS STRATEGIES, MARKET POTENTIAL, FUTURE FINANCIAL PERFORMANCE AND OTHER
MATTERS WHICH REFLECT MANAGEMENT'S EXPECTATIONS AS OF THE DATE MADE. WITHOUT
LIMITING THE FOREGOING, THE WORDS "BELIEVES," "ANTICIPATES," "PLANS," "EXPECTS,"
"SEEKS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. FUTURE EVENTS AND THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THE RESULTS REFLECTED IN THESE FORWARD-LOOKING STATEMENTS. THERE
ARE A NUMBER OF IMPORTANT FACTORS THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.
THESE FACTORS INCLUDE, WITHOUT LIMITATION: THE COMPANY'S ABILITY TO ATTRACT,
DEVELOP AND RETAIN QUALIFIED CONSULTANTS, THE COMPANY'S ABILITY TO OPEN NEW
OFFICES, THE COMPANY'S ABILITY TO EFFECTIVELY IDENTIFY, MANAGE AND INTEGRATE
ACQUISITIONS, CHANGES IN CONSULTANT UTILIZATION AND PRODUCTIVITY RATES, THE
COMPANY'S ABILITY TO ACQUIRE OR DEVELOP ADDITIONAL SERVICE OFFERINGS, CLIENT
DECISIONS TO REDUCE OR INCREASE IT SERVICES OUTSOURCING, EARLY TERMINATION OF
CLIENT CONTRACTS WITHOUT PENALTY, CHANGES IN THE COMPANY'S DEPENDENCE ON
SIGNIFICANT CLIENTS, CHANGES IN GROSS MARGINS DUE TO A VARIETY OF FACTORS
(INCLUDING INCREASED WAGE AND BENEFIT COSTS THAT ARE NOT OFFSET BY BILL RATE
INCREASES), THE TYPES OF SERVICES PERFORMED BY THE COMPANY DURING A PARTICULAR
PERIOD AND COMPETITION. PLEASE REFER TO A DISCUSSION OF THESE AND OTHER FACTORS
IN THIS REPORT, INCLUDING "-RISKS ASSOCIATED WITH FUTURE OPERATIONS" AND THE
COMPANY'S OTHER SECURITIES AND EXCHANGE COMMISSION FILINGS. THE COMPANY
DISCLAIMS ANY INTENT OR OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS,
WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
 
    THE FOLLOWING SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS
AND NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT. THE COMPANY'S FISCAL YEAR
ENDS ON DECEMBER 31.
 
OVERVIEW
 
    Metro Information Services, Inc. ("Metro" or the "Company") provides a wide
range of information technology ("IT") consulting and custom software
development services through 30 offices in the United States and Puerto Rico.
The Company's more than 1,700 consultants, 66% of whom were salaried on December
31, 1997, work with clients' internal IT departments on all aspects of computer
systems and applications development. Services performed by Metro include
application systems development and maintenance, IT architecture and
engineering, systems consulting, project outsourcing and general support
services. The Company supports all major computer technology platforms
(mainframe, mid-range, client/ server and network environments) and supports
client projects using a broad range of software applications. For example, the
Company implements SAP's client/server software, custom develops Oracle,
Informix, 

                                   Page 15
<PAGE>

DB2, Visual Basic and C++ applications, implements and supports Windows NT, 
Novell and UNIX based network environments and supports numerous other 
application environments.
 
    Metro's clients operate in a wide variety of industries including
communications, distribution, retail, financial services, government (state and
local only), healthcare, information technology, manufacturing, transportation,
leisure and utilities. The Company emphasizes long-term relationships with its
clients rather than one-time projects or assignments. During the year ended
December 31, 1997, the Company performed IT services for 396 clients (excluding
clients that generated less than $25,000 in revenue during the year).
 
    Revenue growth is derived primarily from increases in the number of
consultants placed with existing and new clients. The number of full-time
consultants grew from 1,074 at December 31, 1995 to 1,279 at December 31, 1996
and to 1,716 at December 31, 1997, including consultants gained through
acquisitions. In addition, over the same period, the Company increased the
average bill rates charged to clients for consultants to keep pace with the
increased costs of consultants.
 
    Metro's revenue grew 25.1% in 1995 to $85.9 million, 32.7% in 1996 to $114.0
million and 33.9% in 1997 to $152.6 million. In 1995, 1996 and 1997, the
Company's 10 largest clients accounted for approximately 33.4%, 29.1% and 29.8%,
respectively, of the Company's revenue and its largest client accounted for
approximately 6.8%, 6.5% and 5.8%, respectively, of revenue.
 
    Revenue growth has been achieved almost entirely through internal growth,
although 1997 revenue growth includes revenue from two acquisitions. Without
these acquisitions the growth rate for 1997 would have been approximately 31.0%.
Between January 1, 1995 and December 31, 1997, the Company opened 11 new offices
and acquired two new offices. New offices opened by the Company have generally
produced monthly operating losses or marginal operating income for six to 12
months and have required 18 to 24 months to reach cumulative operating income.
In addition, to support its growth strategy, the Company continues to invest in
its proprietary business systems and its communications network.
 
    On July 1, 1997, the Company completed the acquisition of two information
technology services companies. The Company acquired the business operations of
Data Systems Technology, Inc., which had offices in Columbia and Greenville,
South Carolina, for $133,930 with up to an additional $366,070 contingency
payment due in the third quarter of 1998, assuming certain operating income
targets are attained by the acquired business. The Company also acquired the
business operations of Kansas City-based J2, Inc., d.b.a. DP Career Associates
(DPCA). The purchase price for DPCA is $5.2 million, $3.9 million of which was
paid July 1, 1997 and $1.3 million of which is due in the first quarter of 1998
as a result of the acquired business attaining certain gross profit targets.
 
    The Company's past financial performance should not be relied on as an
indication of future performance. Period-to-period comparisons of the Company's
financial results are not necessarily meaningful indicators of future
performance.
 
                                       Page 16

<PAGE>

RESULTS OF OPERATIONS
 
    FOR PURPOSES OF THE FOLLOWING DISCUSSION, A MATURE OFFICE IS ONE THAT WAS 
OWNED BY THE COMPANY FOR AT LEAST 12 MONTHS AT THE BEGINNING OF THE EARLIER 
PERIOD BEING COMPARED AND A NEW OFFICE IS ONE THAT WAS OPENED OR ACQUIRED 
THEREAFTER.
 
    The following tables set forth, for the periods indicated, the percentage 
of revenue and the percentage change from the prior period of certain items 
reflected in the Company's statements of income:

<TABLE>
<CAPTION>
                                                                     PERCENTAGE OF REVENUE
                                                               ---------------------------------
                                                                     YEAR ENDED DECEMBER 31,
                                                               ---------------------------------
                                                                  1995(1)      1996       1997
                                                               -----------  ---------  ---------
<S>                                                            <C>          <C>        <C>
Revenue......................................................       100.0%      100.0%     100.0%
Cost of revenue..............................................        71.1        70.0       69.5
                                                                    -----   ---------  ---------
Gross profit.................................................        28.9        30.0       30.5
                                                                    -----   ---------  ---------
Selling, general and administrative expenses.................        22.1        21.3       19.8
Depreciation and amortization expense........................         0.6         0.7        0.8
                                                                    -----   ---------  ---------
Total operating expenses.....................................        22.7        22.0       20.6
                                                                    -----   ---------  ---------
Operating income.............................................         6.2         8.0        9.9
Net interest income (expense)................................        (0.4)       (0.2)       0.5
                                                                    -----   ---------  ---------
Income before income taxes...................................         5.8         7.8       10.4
Pro forma provision for income taxes(2)......................         2.3         3.1
                                                                    -----   ---------
Pro forma net income(2)......................................         3.5%        4.7%
                                                                    -----   ---------
                                                                    -----   ---------
Income taxes(2)..............................................                                4.1
                                                                                       ---------
Net income(2)................................................                                6.3%
                                                                                       ---------
                                                                                       ---------
</TABLE>
 
<TABLE>
<CAPTION>
                                                                        PERCENTAGE CHANGES
                                                       ----------------------------------------------------
                                                                     YEAR ENDED DECEMBER 31,
                                                       ----------------------------------------------------
<S>                                                    <C>                          <C>
                                                        1996 COMPARED TO 1995(3)     1997 COMPARED TO 1996
                                                       ---------------------------  -----------------------
Revenue..............................................             32.7%                      33.9%
Cost of revenue......................................             30.6                       33.0
Gross profit.........................................             37.8                       35.9
Selling, general and administrative expenses.........             28.3                       24.3
Depreciation and amortization expense................             42.2                       51.6
Total operating expenses.............................             28.7                       25.1
Operating income.....................................             71.0                       65.7
Net interest income (expense)(4).....................            (19.7)                       N/M
Income before income taxes...........................             76.8                       78.8
Pro forma provision for income taxes(2)..............             76.8                       74.7
Pro forma net income(2)..............................             76.8                       81.5
</TABLE>
 
------------------------
 
(1) Includes $770,000 of non-recurring, non-cash compensation expense charged to
    selling, general and administrative expenses accrued in the fourth quarter
    of 1995 for stock issued for services performed by employees in 1995.
    Excluding the effect of such expense, the percentage of revenue of: selling,
    general and administrative expenses would have been 21.2%, total operating
    expenses would have been 21.8%, operating income would have been 7.1%,
    income before income taxes would have been 6.7%, pro forma provision for 
    income taxes would have been 2.7% and pro forma net income would have 
    been 4.0%.
 
(2) For 1995 and 1996, the Company was an S corporation for federal and certain
    state income tax purposes. The pro forma provision for income taxes for
    these years reflects a provision for income taxes as if the Company were a C
    corporation for all income tax purposes during such period, at an assumed
    effective tax rate of 40%. See Note 6 of Notes to Financial Statements.
    Effective as of January 1, 1997, the Company revoked its S corporation
    election subjecting it to corporate income taxes at federal, state and local
    levels. Accordingly percentage of revenue amounts for 1997 are computed
    using actual 1997 figures. Percentage changes for 1997 compared to 1996 are
    computed using actual 1997 figures and pro forma 1996 figures.
 

                                    Page 17

<PAGE>

(3) Includes $770,000 of non-recurring, non-cash compensation expense charged to
    selling, general and administrative expenses accrued in the fourth quarter
    of 1995 for stock issued for services performed by employees in 1995.
    Excluding the effect of such expense, the percentage change in: selling,
    general and administrative expenses would have been 33.8%, total operating
    expenses would have been 34.0%, operating income would have been 49.4% and
    income before income taxes, pro forma provision for income taxes and pro
    forma net income would have been 53.2%.
 
(4) N/M--Not Meaningful.
 
    1997 COMPARED TO 1996
 
    REVENUE.  Revenue increased $38.6 million, or 33.9%, to $152.6 million 
for 1997 from $114.0 million for 1996. This increase is primarily a result of 
increased billings to existing clients, the addition of new clients 
(including clients gained through acquisitions) and increased bill rates 
charged for the Company's consultants. As of December 31, 1997, compared to 
December 31, 1996, the total number of full-time consultants increased to 
1,716 from 1,279, respectively, and clients (excluding clients that generated 
less than $25,000 in revenue during such year) increased to 396 from 324, 
respectively. Revenue from the Company's 16 mature offices increased $25.1 
million, or 23.4%, from the earlier period and the 13 new offices (including 
two acquired offices) accounted for the remaining $13.5 million increase in 
revenue.
 
    COST OF REVENUE.  Cost of revenue increased $26.3 million, or 33.0%, to 
$106.1 million for 1997 from $79.8 million for 1996. Cost of revenue 
increased primarily due to compensation and benefits associated with growth 
in the number of consultants. As a percentage of revenue, cost of revenue 
decreased to 69.5% for 1997 from 70.0% for 1996 primarily because of bill 
rates to clients increasing faster than pay rates to consultants during the 
period.
 
    GROSS PROFIT.  Gross profit increased $12.3 million, or 35.9%, to $46.5 
million for 1997 from $34.2 million for 1996. As a percentage of revenue, 
gross profit increased to 30.5% for 1997 from 30.0% for 1996.
 
    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and 
administrative expenses increased $6.0 million, or 24.3%, to $30.3 million 
for 1997 from $24.3 million for 1996. This increase is due primarily to costs 
associated with recently opened offices, growth of administrative staff in 
mature offices, hiring additional corporate staff to support the increased 
number of offices and development of the Company's proprietary business 
systems. As a percentage of revenue, selling, general and administrative 
expenses decreased to 19.8% for 1997 from 21.3% for 1996.
 
    DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased 
$395,000, or 51.6%, to $1,158,000 for 1997 from $763,000 for 1996. This 
increase is primarily attributable to depreciation on additions to computer 
equipment and software and, to a lesser extent, amortization of goodwill 
related to the Company's recent acquisitions. As a percentage of revenue, 
depreciation and amortization increased to 0.8% for 1997 from 0.7% for 1996.
 
    OPERATING INCOME.  Operating income increased $6.0 million, or 65.7%, to 
$15.1 million for 1997 from $9.1 million for 1996. As a percentage of 
revenue, operating income increased to 9.9% for 1997 from 8.0% for 1996. The 
improvement in operating income margin is in part the result of the Company's 
centralization of administrative functions and leverage obtained from the 
Company's proprietary business systems.
 
    NET INTEREST INCOME (EXPENSE). Net interest income (expense) increased by 
$989,000 to $729,000 of interest income for 1997 from $260,000 of interest 
expense for 1996. This change reflects a decrease in the average level of 
borrowings during the period and investment of a portion of the proceeds of 
the Company's January 1997 initial public offering of Common Stock in 
interest bearing instruments.
 
    INCOME BEFORE INCOME TAXES. Income before income taxes increased $7.0 
million, or 78.8%, to $15.8 million for 1997 from $8.8 million for 1996. As a 
percentage of revenue, income before income taxes increased to 10.4% for 1997 
from 7.8% for 1996.


                                    Page 18

<PAGE>
 
    INCOME TAXES.  In 1996, the Company was an S corporation for federal and 
certain state income tax purposes. The income statement for 1996 includes a 
pro forma provision for income taxes as if the Company was subject to federal 
and state income taxes at an assumed effective rate of 40%. The Company's 
effective tax rate for 1997 was 39.1%. Income taxes increased $2.7 million or 
74.7%, to $6.2 million for 1997 from pro forma income taxes of $3.5 million 
for 1996. As a percentage of revenue, income taxes increased to 4.1% for 1997 
from the pro forma amount of 3.1% for 1996. Income taxes for 1997 include a 
one-time reduction in income tax expense of $125,000, which represents the 
cumulative effect of the Company converting from an S corporation to a C 
corporation effective January 1, 1997. Excluding the $125,000 one-time 
reduction in income taxes, income taxes for 1997 would have increased $2.8 
million, or 78.2%, to $6.3 million and the Company's effective tax rate would 
have been 39.9%.
 
    NET INCOME.  Net income increased $4.3 million, or 81.5%, to $9.6 million 
for 1997 from pro forma net income of $5.3 million for 1996. As a percentage 
of revenue, net income increased to 6.3% for 1997 from the pro forma amount 
of 4.7% for 1996.
 
    EARNINGS PER SHARE.  Diluted earnings per share increased $0.24, or 
57.1%, to $0.66 for 1997 from pro forma earnings per share of $0.42 for 1996. 
Excluding the $125,000 one-time credit described under "Income taxes' above, 
diluted earnings per share for 1997 would have increased $0.23, or 54.8%, to 
$0.65.

    1996 COMPARED TO 1995
 
    REVENUE.  Revenue increased $28.1 million, or 32.7%, to $114.0 million 
for 1996 from $85.9 million for 1995. This increase is primarily a result of 
increased billings to existing clients, the addition of new clients and 
increased bill rates charged for the Company's consultants. As of December 
31, 1996 compared to December 31, 1995, the total number of full-time 
consultants increased to 1,279 from 1,074, respectively, and clients 
(excluding clients that generated less than $25,000 in revenue during such 
year) increased to 324 from 266, respectively. Revenue from the Company's 15 
mature offices increased $20.7 million, or 24.6%, from the earlier period and 
the eight new offices accounted for the remaining $7.4 million increase in 
revenue.
 
    COST OF REVENUE.  Cost of revenue increased $18.7 million, or 30.6%, to 
$79.8 million for 1996 from $61.1 million for 1995. Cost of revenue increased 
primarily due to compensation and benefits associated with growth in the 
number of consultants. As a percentage of revenue, cost of revenue decreased 
to 70.0% for 1996 from 71.1% for 1995 primarily because of bill rates to 
clients increasing faster than pay rates to consultants during the period.
 
    GROSS PROFIT.  Gross profit increased $9.4 million, or 37.8%, to $34.2 
million for 1996 from $24.8 million for 1995. As a percentage of revenue, 
gross profit increased to 30.0% for 1996 from 28.9% for 1995.
 
    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and 
administrative expenses increased $5.3 million, or 28.3%, to $24.3 million 
for 1996 from $19.0 million for 1995. This increase is due primarily to costs 
associated with recently opened offices, growth of administrative staff in 
mature offices, hiring additional corporate staff to support the increased 
number of offices and development of the Company's proprietary business 
systems. As a percentage of revenue, selling, general and administrative 
expenses decreased to 21.3% for 1996 from 22.1% for 1995. Selling, general 
and administrative expenses for 1995, however, include a non-recurring 
$770,000 non-cash compensation expense accrued in the fourth quarter of 1995 
for stock issued for services performed by employees in 1995. Excluding the 
non-recurring $770,000 charge, selling, general and administrative expenses 
for 1996 would have increased $6.1 million, or 33.8%, from $18.2 million for 
1995 and, as a percentage of revenue, would have increased to 21.3% for 1996 
from 21.2% for 1995.
 
    DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased 
$227,000, or 42.2%, to $763,000 for 1996 from $537,000 for 1995. This 
increase is primarily attributable to depreciation on additions to computer 
equipment and software. As a percentage of revenue, depreciation and 
amortization increased to 0.7% for 1996 from 0.6% for 1995.
 
    OPERATING INCOME.  Operating income increased $3.8 million, or 71.0%, to
$9.1 million for 1996 from $5.3 million for 1995. As a percentage of revenue,
operating income increased to 8.0% for 1996 from 6.2% for 1995. Excluding the

                                    Page 19

<PAGE>

$770,000 charge to selling, general and administrative expenses, operating 
income would have been $6.1 million for 1995 and, as a percentage of revenue, 
would have been 7.1% for 1995.
 
    NET INTEREST INCOME (EXPENSE). Net interest expense decreased by $63,000 
to $260,000 for 1996 from $323,000 for 1995. This decrease reflects a 
decrease in the average level of borrowings during the period.
 
    INCOME BEFORE INCOME TAXES. Income before income taxes increased $3.8 
million, or 76.8%, to $8.8 million for 1996 from $5.0 million for 1995. As a 
percentage of revenue, income before income taxes increased to 7.8% for 1996 
from 5.8% for 1995. Excluding the $770,000 charge to selling, general and 
administrative expenses, income before income taxes for 1995 would have 
increased $3.1 million, or 53.2%, to $5.8 million and, as a percentage of 
revenue, would have been 6.7% for 1995.
 
    INCOME TAXES.  In 1996 and 1995, the Company was an S corporation for 
federal and certain state income tax purposes. The income statements for 1996 
and 1995 include a pro forma provision for income taxes as if the Company was 
subject to federal and state income taxes at an assumed effective rate of 
40%. Pro forma income taxes increased $1.5 million or 76.8%, to $3.5 million 
for 1996 from pro forma income taxes of $2.0 million for 1995. As a 
percentage of revenue, pro forma income taxes increased to 3.1% for 1996 from 
the pro forma amount of 2.3% for 1995.
 
    NET INCOME.  Pro forma net income increased $2.3 million, or 76.8%, to 
$5.3 million for 1996 from pro forma net income of $3.0 million for 1995. As 
a percentage of revenue, net income increased to 4.7% for 1996 from the pro 
forma amount of 3.5% for 1995.
 
    EARNINGS PER SHARE.  Pro forma earnings per share increased $0.18, or 
75.0%, to $0.42 for 1996 from pro forma earnings per share of $0.24 for 1995.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    In January 1997, the Company completed an initial public offering of 
3,100,000 shares of its Common Stock at a price of $16.00 per share. Of the 
3,100,000 shares, 2,300,000 shares were issued and sold by the Company and 
800,000 shares were sold by a shareholder of the Company. Shortly thereafter, 
the representatives of the several underwriters exercised their 
over-allotment option resulting in the sale of 465,000 shares by other 
shareholders of the Company. The net proceeds to the Company were 
approximately $33,144,000. The Company did not receive any of the proceeds 
from the sale of shares by the selling shareholders. During the third quarter 
of 1997, the Company used $4,352,920 of the proceeds from the initial public 
offering for the acquisitions of Data Systems Technology, Inc. and DP Career 
Associates described in Note 2 of Notes to Financial Statements.
 
    On September 30, 1997, the Company made its first quarterly sale of stock 
under the Metro Information Services, Inc. Employee Stock Purchase Plan (the 
"ESPP") and sold 10,000 shares of Common Stock for $167,350. On December 31, 
1997, the Company sold 9,984 shares of Common Stock to the ESPP for $184,587. 
The ESPP is described in Note 8 of Notes to Financial Statements.
 
    During 1997, the Company funded its operations from cash generated by 
operations and, to a lesser extent, from borrowings under the Company's 
revolving credit facilities. These borrowings were repaid with proceeds from 
the initial public offering. Net cash provided by operations was $6,681,000 
for 1997 and consisted primarily of net income of $9,627,000 and, excluding 
the effects of acquisitions, increases in accounts receivable of $7,203,000, 
accounts payable of $1,591,000 and accrued compensation and benefits of 
$1,650,000. The increases in accounts receivable, accounts payable, and 
accrued compensation and benefits are primarily due to the revenue growth 
experienced during 1997. The Company's working capital was $34,560,000 at 
December 31, 1997 compared to $6,369,000 at December 31, 1996.
 
    The Company has $39,900,000 of credit facilities provided in equal amounts
by three banks, all of which is available. The facilities have a five-year
maturity, which may be extended each year for an additional year. If the
facilities are not extended, principal on one of the facilities must be repaid
in four equal annual installments while the other two facilities require
principal repayment at the end of four years. Until that time interest only is
payable monthly. Two of the facilities allow the Company to select among prime
rate and London Interbank Offered Rate 

                                    Page 20

<PAGE>

(LIBOR) based interest rates while the third has only LIBOR based interest 
rates. All of the facilities have interest rates, which increase as the 
balance outstanding under the facilities increases. At December 31, 1997, no 
amounts were outstanding under the facilities. The Company has selected a 
30-day LIBOR based rate and, if any borrowings were outstanding under the 
facilities at December 31, 1997, the rate on such borrowings would have borne 
interest rates ranging from 6.1% to 6.6%. The facilities also contain fees, 
ranging from 0.125% to 0.3125% annually, which are charged on the unused 
portion of the facilities. The facilities are collateralized by accounts 
receivable of the Company.
 
    The credit facilities contain several covenants, including one requiring 
the maintenance of a certain tangible net worth ratio, which limit the amount 
of dividends that can be paid. The covenants also impose limits on incurring 
additional debt and require a certain debt service coverage ratio to be 
maintained. Amounts advanced under the facilities can be used for 
acquisitions and general working capital purposes.
 
    The Company believes that the net proceeds from its initial public 
offering, combined with available funds under its credit facilities and cash 
flows from operations will be adequate to meet its needs for working capital 
and capital expenditures for at least the next two years. Any significant 
acquisitions, however, may require additional debt and equity financing.
 
SEASONALITY
 
    Metro's operating results are adversely affected when client facilities 
close due to holidays or inclement weather. The Company generally experiences 
a certain amount of seasonality in the fourth quarter due to the number of 
holidays and closings of client facilities during that quarter. Further, the 
Company generally experiences lower operating results in the first quarter 
due in part to the timing of unemployment and FICA tax accruals and delays in 
clients' contract renewals related to clients' budget approval processes.
 
INFLATION
 
    Due to the high demand for IT services and a shortage of qualified IT 
consultants, wage inflation in the IT services industry surpassed normal wage 
inflation during 1997. If this trend continues, it could have a material 
adverse effect on the Company's business, operating results and financial 
condition if the Company is unable to pass increased payroll costs on to its 
clients. The Company attempts to obtain bill rate increases from clients to 
offset these increases whenever possible. The Company expects to obtain bill 
rate increases in 1998 to offset pay rate increases in 1998, although there 
can be no assurance that this will occur. Average pay rates for 1997 
increased 5.3% over average pay rates for 1996. Average pay rates for 1996 
increased 5.4% over average pay rates for 1995. The Company expects average 
pay rate increases in 1998 will equal or exceed these percentages.
 
YEAR 2000 ISSUES
 
    The Company relies heavily on computer systems to run its business, 
including, without limitation, recruiting, candidate tracking, payroll, human 
resources, benefits and financial accounting systems. Many of these systems 
use dates to make computations necessary to process information accurately. 
Until recently computer programs used a two-digit date to indicate a year. 
For example, the year 1958 is indicated in these programs by the digits "58." 
As the year 2000 approaches, these programs will need to make computations 
involving 2000 and later years. Programs that use only a two-digit year may 
misinterpret the year 2000 for the year 1900, resulting in an incorrect 
calculation.
 
    Almost all companies using computerized systems face year 2000 ("Y2K") 
issues. The Company believes that Y2K issues involve the risk that the 
Company's computerized systems and those of its clients, suppliers, vendors, 
financial institutions and others will be disrupted or fail. The Company has 
also identified as a risk the possible loss of revenue when consultants on 
Y2K assignments complete their assignments. These risks are discussed below.
 
    INTERNAL RISKS.  Fixing the Y2K problem in the Company's systems involves 
ongoing evaluations of the Company's computerized systems, identifying the 
affected systems and fixing or replacing them. The Company completed an 
initial evaluation of its systems in 1997. The Company's initial evaluation 
indicated that its proprietary 


                                    Page 21

<PAGE>

systems are Y2K compliant. The Company is implementing other systems which it 
believes are Y2K compliant. See "-New Systems Implementation."
 
    EXTERNAL RISKS.  The Company does not regularly transmit or receive 
financial information from clients, suppliers, vendors or financial 
institutions. In those circumstances where information is being exchanged 
electronically, the Company believes that these clients, suppliers, vendors 
and financial institutions are taking steps to address their Y2K issues in a 
timely fashion. As a result, the Company does not expect Y2K issues to cause 
a material adverse effect in this area.
 
    A greater risk is posed if the Company's clients, suppliers, vendors and 
financial institutions are not Y2K compliant and their noncompliance causes a 
material disruption to their businesses. These disruptions could include, 
among other things: a client's inability to process payments to the Company; 
a financial institution's inability to process checks drawn on the Company's 
bank accounts, accept deposits or process wire transfers; a client's, 
supplier's, vendor's or financial institution's business failure; an 
interruption in deliveries of computer equipment and other supplies from 
vendors; a loss of voice and data connections the Company uses to share 
information; and other interruptions to the normal conduct of business by the 
Company, the nature and extent of which the Company cannot foresee. The 
Company is unable to determine the nature, length or effect such 
interruptions, if any, may have on the Company.
 
    BUSINESS RISKS.  As an IT services company, the Company has benefited 
from Y2K issues by providing consultants with the skills necessary to help 
address these issues for its clients. The Company faces the risk of reduced 
business opportunities and revenue as clients resolve their Y2K issues if Y2K 
assignments are not replaced with other assignments. The Company believes 
that when consultants complete Y2K assignments, many of these consultants 
will be re-assigned to perform activities delayed by clients while addressing 
Y2K issues. In other cases, the Company will need to find other assignments 
for these consultants. The Company estimates that, at December 31, 1997, 
approximately 13% of the Company's consultants were involved in Y2K 
assignments.
 
NEW SYSTEMS IMPLEMENTATION
 
    The Company has licensed new human resources, payroll and financial 
accounting software. These systems provide enhanced capabilities and 
integration of information and are believed to be Y2K compliant. A 
combination of Metro employees and outside consultants will be used to 
implement these systems. The Company's current estimate of the cost to 
replace these systems is $1.5 million. The Company expects to capitalize and 
amortize these costs over these systems' useful lives.
 
RECENT ACCOUNTING PRONOUNCEMENTS
 
    In June 1997, the Financial Accounting Standards Board issued Statement 
of Financial Accounting Standards ("SFAS") No. 130, REPORTING COMPREHENSIVE 
INCOME, which establishes standards for reporting and display of 
comprehensive income and its components in financial statements. SFAS No. 130 
is effective for fiscal years beginning after December 15, 1997. In the 
opinion of management, SFAS No. 130 is not expected to have a material impact 
on the Company's financial statements.
 
RISK ASSOCIATED WITH FUTURE OPERATIONS
 
    DEPENDENCE ON QUALIFIED PERSONNEL. The Company's success depends on its 
ability to attract and retain consultants with the technical skills and 
experience required to meet its clients' specific needs. The Company must 
continually identify and recruit technical personnel in each of its markets 
to fill new positions and to replace consultants who have left the Company. 
The IT industry has high consultant turnover rates and the demand for 
consultants has, to date, substantially exceeded supply. This has resulted in 
intense competition for consultants and the Company expects such competition 
for consultants to increase in the future. There can be no assurance that the 
Company will attract and retain the personnel it requires to conduct its 
operations successfully or attract additional personnel for expanded 
operations. Failure to attract and retain such personnel or an increase in 
the Company's 


                                    Page 22

<PAGE>

consultant turnover rate could have a material adverse effect on the 
Company's business, operating results and financial condition.
 
    RISK ASSOCIATED WITH OPENING NEW OFFICES.  The Company recently 
accelerated its office expansion program by opening four new offices in 1995, 
three new offices in 1996 and four new offices in 1997 in geographic markets 
where the Company had no previous presence. In addition, the Company expects 
to open three to five offices annually for the next several years. 
Historically, for approximately six to 12 months after opening, new offices 
have generally produced monthly operating losses or marginal operating income 
and have placed significant demands on the Company's operational, 
administrative and financial resources. In addition, the Company's future 
performance and profitability will depend, in part, on its ability to 
successfully attract and retain qualified personnel to manage the growth and 
operations of the new offices. The opening of additional offices, 
individually or in the aggregate, may have a material adverse effect on the 
Company's business, operating results and financial condition.
 
    RISK ASSOCIATED WITH GROWTH THROUGH ACQUISITIONS.  The Company intends to 
grow, in part, through the acquisition of other IT businesses. The Company's 
acquisition strategy depends on its ability to identify, finance and complete 
acquisitions. There is significant competition for acquisition opportunities 
which may increase the cost of acquisition candidates. Some competitors for 
these candidates have greater resources than the Company. The Company will 
face a variety of additional risks if it completes acquisitions, including 
the inability to integrate the acquired businesses into the Company's 
operations, the inability to achieve expected financial results from the 
acquired businesses, the diversion of management's attention, the inability 
to retain key personnel of the acquired businesses, losses due to liabilities 
and contingencies of the acquired businesses and the adverse impact on net 
income caused by amortization of acquired intangible assets. The Company's 
failure or inability to successfully implement and manage its acquisition 
strategy may have a material adverse effect on the Company's business, 
operating results and financial condition. In addition, the value of Company 
stock held by shareholders at the time of any acquisition may be diluted if 
the Company issues stock to complete any acquisition.
 
    RISK ASSOCIATED WITH NEW SERVICES.  The Company intends to grow, in part, 
through the development or acquisition of IT services beyond the scope of 
services presently provided by the Company. The Company's ability to 
successfully develop new services depends on a number of factors, including 
its ability to identify and effectively integrate new services into the 
Company's existing operating structure. The identification and offering of 
new services in which the Company has no or little experience or expertise 
could result in diversion of management's attention and place 
disproportionate demands on the Company's operational, administrative and 
financial resources. There can be no assurance that the performance of any 
new service offerings, whether acquired or developed by the Company, will 
meet management's expectations or provide the same profit margins as the 
Company's existing operations.
 
    COMPETITION.  The IT services industry is extremely competitive and 
highly fragmented. Although the market is consolidating, management believes 
no one company is dominant. The Company's competitors include general IT 
services firms, temporary staffing and personnel placement companies, general 
management consulting firms, major accounting firms, divisions of large 
hardware and software companies and niche providers of IT services. Some of 
the Company's competitors possess substantially greater resources, greater 
name recognition and a more established client base than the Company. In 
addition, the services offered by the Company have been and continue to be 
provided by clients' in-house personnel. There can be no assurance that the 
Company will be able to compete successfully against existing or new 
competitors as the industry continues to evolve.
 
    TREND TOWARD PRIME VENDORS.  To reduce the number of their IT service 
providers, certain businesses are beginning to use a limited number of 
vendors and, in some cases, a single vendor (collectively, "Prime Vendors"). 
These Prime Vendors fill client needs directly or through subcontractors. 
Metro anticipates that this trend toward Prime Vendors may become 
increasingly common in the marketplace and may result in pricing pressure and 
the loss of business opportunities. There can be no assurance that this trend 
will not lead to reduced gross profit margins and fewer opportunities to 
place consultants and will not have a material adverse effect on the 
Company's business, operating results and financial condition.


                                    Page 23

<PAGE>
 
    The Company has taken steps, when practical, to become a Prime Vendor of 
IT services. In certain cases, the Company experiences pricing pressure from 
clients as a condition to becoming or remaining a Prime Vendor. In other 
cases, the Company experiences demands to provide consultants in multiple 
locations to become or remain a Prime Vendor. Although the Company believes 
it can effectively meet its clients' requirements, there can be no assurance 
that the Company will be able to compete effectively with other Prime Vendors 
or remain a Prime Vendor.
 
    ABSENCE OF LONG-TERM CONTRACTS; DEPENDENCE ON KEY CLIENTS. Substantially 
all of the Company's contracts to perform services may be canceled or 
modified by the Company's clients at will without penalty. Approximately 66% 
of the Company's consultants are salaried employees and unless terminated, 
receive full compensation and benefits even if not engaged in billable work. 
As a result, cancellation or reduction of a contract may result in a loss of 
revenue without a corresponding reduction in cost of revenue. Although the 
Company has a broad client base, the loss of one or more large clients could 
have a material adverse effect on the Company's business, operating results 
and financial condition. In 1995, 1996 and 1997, the Company's 10 largest 
clients accounted for approximately 33.4%, 29.1% and 29.8%, respectively, of 
the Company's revenue and its largest client accounted for approximately 
6.8%, 6.5% and 5.8%, respectively, of revenue.
 
    CONTRACT PERFORMANCE AND PROJECT OUTSOURCING RISKS.  Project outsourcing 
is distinguishable from the Company's core business in that project 
outsourcing requires the Company to assume a greater level of responsibility 
for developing or maintaining systems on behalf of its clients. Many of the 
Company's project outsourcing engagements are critical to the operations of 
its clients' businesses. The Company's failure or inability to complete such 
engagements to its clients' satisfaction could have a material adverse effect 
on its clients' operations and, consequently, may give rise to claims against 
the Company for actual or consequential damages or otherwise damage its 
reputation, any of which could have a material adverse effect on the 
Company's business, operating results and financial condition.
 
    RAPID TECHNOLOGICAL CHANGE.  Rapid technological advances, frequent 
product introductions and enhancements, and changes in client requirements 
characterize the market for IT services. The Company's future success 
depends, in part, on its ability to provide consultants possessing the skills 
to service past, current and next generation products and technologies. These 
factors will require the Company to provide adequately trained personnel to 
address the increasing and evolving needs of its clients. Any failure by the 
Company to anticipate or respond rapidly to technological advances, new 
products and enhancements or changes in client requirements could have a 
material adverse effect on the Company's business, operating results and 
financial condition.
 
    EMPLOYMENT LIABILITY RISKS.  Metro employs and places its consultants and 
other employees at its clients' businesses. Risks associated with this 
activity include possible claims of discrimination and harassment, 
liabilities for errors and omissions by the Company's employees, misuse of 
client proprietary information or intellectual property, injury to Company 
and client employees, misappropriation of client funds, theft of client 
property, other criminal activity, torts and other similar claims. In certain 
circumstances, the Company may be held responsible for the actions of persons 
not under the Company's direct control. Although the Company has not had 
significant problems with respect to such employment liability, there can be 
no assurance that the Company will not experience such problems in the future.
 
    RELIANCE ON TECHNOLOGY AND COMPUTER SYSTEMS.  The Company relies on its 
computer and communications systems, the hub of which is located at its 
corporate headquarters in Virginia Beach, Virginia. Although the Company has 
a disaster recovery plan, temporary or permanent loss of these systems from 
fire, power loss, natural disaster, operating malfunction or any other cause 
could have a material adverse effect on the Company's business, operating 
results and financial condition. The Company's property and business 
interruption insurance may not be adequate to compensate the Company for all 
losses that may occur. In addition, the Company is in the process of 
implementing new human resources, payroll and financial accounting software 
systems. An unsuccessful implementation of these new systems or significant 
delays in their implementation could have a material adverse effect on the 
Company's business operations.
 
    DEPENDENCE ON SENIOR MANAGEMENT.  The continued growth and success of the
Company is largely dependent on the efforts, direction and guidance of its
existing senior management and on its ability to attract and retain qualified


                                    Page 24

<PAGE>

managers. The Company has entered into employment agreements with its 
executive officers, each of which contains provisions limiting these 
employees' rights to compete with the Company and hire its employees. The 
loss of any of the Company's senior management or key personnel and, in 
particular, John H. Fain, President and Chief Executive Officer, or Andrew J. 
Downing, Executive Vice President and Chief Operating Officer, or the 
inability to attract and retain key management personnel in the future, could 
have a material adverse effect on the Company's business, operating results 
and financial condition. The Company carries no key man life insurance on Mr. 
Fain or Mr. Downing.
 
    HEALTH PLAN SELF INSURANCE RISKS.  The Company self-insures a portion of 
its group health and dental plan. On December 31, 1997, 1,384 of the 
Company's 2,074 employees were covered by the group health plan. The Company 
self-insures up to $125,000 of claims per covered employee per year with a 
Company maximum annual aggregate liability of 125% of expected claims as 
computed at the end of each year based on the number of covered persons 
during the year. Self insurance charges may fluctuate materially from quarter 
to quarter and may cause a material adverse effect on the Company's quarterly 
and annual business, operating results and financial condition.
 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
    This section is not applicable to the Company until fiscal years 
beginning after June 15, 1998.


                                    Page 25
 
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors and Shareholders 
Metro Information Services, Inc.:
 
We have audited the accompanying balance sheets of Metro Information 
Services, Inc. as of December 31, 1996 and 1997, and the related statements 
of income, changes in redeemable common stock and shareholders' equity and 
cash flows for each of the years in the three-year period ended December 31, 
1997. These financial statements are the responsibility of the Company's 
management. Our responsibility is to express an opinion on these financial 
statements based upon our audits.
 
We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement. An audit also includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements. 
An audit includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall financial 
statement presentation. We believe that our audits provide a reasonable basis 
for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of Metro Information Services, 
Inc. as of December 31, 1996 and 1997 and the results of its operations and 
its cash flows for each of the years in the three-year period ended December 
31, 1997, in conformity with generally accepted accounting principles. 
 

                                               /s/ KPMG PEAT MARWICK LLP
 

Norfolk, Virginia 
February 2, 1998
 
                                       Page 26

<PAGE>

                        METRO INFORMATION SERVICES, INC.

                               STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                              YEAR ENDED DECEMBER 31,
                                                                   ---------------------------------------------
<S>                                                                <C>            <C>             <C>
                                                                       1995            1996            1997
                                                                   -------------  --------------  --------------
Revenue..........................................................  $  85,904,026  $  113,962,932  $  152,578,107
Cost of revenue..................................................     61,074,051      79,751,603     106,079,583
                                                                   -------------  --------------  --------------
Gross profit.....................................................     24,829,975      34,211,329      46,498,524
                                                                   -------------  --------------  --------------
Selling, general and administrative expenses (Notes 3 and 11)....     18,969,732      24,346,933      30,264,143
Depreciation and amortization....................................        536,986         763,760       1,158,228
                                                                   -------------  --------------  --------------
  Total operating expenses.......................................     19,506,718      25,110,693      31,422,371
                                                                   -------------  --------------  --------------
Operating income.................................................      5,323,257       9,100,636      15,076,153
                                                                   -------------  --------------  --------------
Interest income..................................................         57,440          49,622         788,752
Interest expense.................................................       (380,420)       (309,076)        (60,100)
                                                                   -------------  --------------  --------------
  Net interest income (expense)..................................       (322,980)       (259,454)        728,652
                                                                   -------------  --------------  --------------
Income before income taxes.......................................      5,000,277       8,841,182      15,804,805
Income taxes (Note 6)............................................             --              --       6,177,558
                                                                   -------------  --------------  --------------
Net income.......................................................  $   5,000,277  $    8,841,182  $    9,627,247
                                                                   -------------  --------------  --------------
                                                                   -------------  --------------  --------------
Pro forma income data:
  Income before income taxes.....................................  $   5,000,277  $    8,841,182
  Pro forma provision for income taxes (unaudited) (Note 6)......      2,000,111       3,536,473
                                                                   -------------  --------------
  Pro forma net income (unaudited)...............................  $   3,000,166  $    5,304,709
                                                                   -------------  --------------
                                                                   -------------  --------------
  Pro forma net income per share--basic and diluted (unaudited)
    (Note 7).....................................................  $        0.24  $         0.42
                                                                   -------------  --------------
                                                                   -------------  --------------
  Net income per share--basic and diluted (Note 7).............                                   $         0.66
                                                                                                  --------------
                                                                                                  --------------
Weighted average number of shares of common stock and common
  stock equivalents outstanding (Note 7):
  Basic..........................................................     12,755,789      12,761,685      14,610,888
  Diluted........................................................     12,755,789      12,761,685      14,662,257

</TABLE>
 
                See accompanying notes to financial statements.



                                     Page 27

<PAGE>

                        METRO INFORMATION SERVICES, INC.
 
                                BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                                             DECEMBER 31,
                                                                                     ----------------------------
<S>                                                                                  <C>            <C>
                                                                                         1996           1997
                                                                                     -------------  -------------
ASSETS:
Current assets:
  Cash and cash equivalents........................................................  $     157,372  $  22,028,594
  Accounts receivable less allowance for doubtful accounts of $113,886 and $152,201
    at December 31, 1996 and 1997..................................................     16,665,989     24,136,582
  Prepaid expenses.................................................................        112,281        402,115
  Deferred income taxes (Note 6)...................................................             --        662,687
                                                                                     -------------  -------------
    Total current assets...........................................................     16,935,642     47,229,978

Property and equipment, net (Note 4)...............................................      4,069,816      5,672,548
Goodwill, net (Note 2).............................................................             --      5,327,622
Other assets.......................................................................        566,689        303,067
                                                                                     -------------  -------------
Total assets.......................................................................  $  21,572,147  $  58,533,215
                                                                                     -------------  -------------
                                                                                     -------------  -------------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
  Line of credit facilities (Note 5)...............................................  $   2,547,388  $          --
  Accounts payable.................................................................      1,146,010      4,118,209
  Accrued compensation and benefits................................................      6,873,694      8,551,501
                                                                                     -------------  -------------
    Total current liabilities......................................................     10,567,092     12,669,710
Deferred income taxes (Note 6).....................................................             --        735,632
                                                                                     -------------  -------------
    Total liabilities..............................................................     10,567,092     13,405,342
                                                                                     -------------  -------------
Redeemable common stock (Note 11)..................................................      2,650,893             --
Shareholders' equity:
  Preferred stock, $0.01 par value; authorized 1,000,000 shares; none issued and
    outstanding (Note 11)..........................................................             --             --
  Common stock, $0.01 par value, authorized 50,000,000 shares; issued and
    outstanding 8,768,239 shares at December 31, 1996 and 14,819,984 shares at
    December 31, 1997 (Note 11)....................................................         87,682        148,200
  Paid in capital..................................................................             --     36,085,946
  Retained earnings................................................................      8,266,480      8,893,727
                                                                                     -------------  -------------
    Total shareholders' equity.....................................................      8,354,162     45,127,873
                                                                                     -------------  -------------
Commitments, contingencies and subsequent events (Notes 10 and 14)
Total liabilities and shareholders' equity.........................................  $  21,572,147  $  58,533,215
                                                                                     -------------  -------------
                                                                                     -------------  -------------


</TABLE>
 
                See accompanying notes to financial statements.
 
                                     Page 28

<PAGE>

                        METRO INFORMATION SERVICES, INC.

   STATEMENTS OF CHANGES IN REDEEMABLE COMMON STOCK AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>


                                                                           SHAREHOLDERS' EQUITY
                            REDEEMABLE          -------------------------------------------------------------------------
                           COMMON STOCK                 COMMON STOCK     
                    --------------------------  ----------------------------     PAID IN       RETAINED
                      SHARES        AMOUNT         SHARES         AMOUNT         CAPITAL       EARNINGS         TOTAL
                    -----------  -------------  ------------  --------------  -------------  -------------  -------------
<S>                 <C>          <C>            <C>           <C>             <C>             <C>            <C>            
BALANCE AS OF
  DECEMBER 31,
  1994............    3,202,161  $   1,070,400     8,768,239  $       87,682             --  $   4,337,797  $   4,425,479
Issuance of
  redeemable
  common stock....      242,003        359,421            --              --             --             --            --
Stock
  redemption......      (24,551)       (25,523)           --              --             --        (10,940)      (10,940)
Distributions
  paid............           --             --            --              --             --     (4,801,836)   (4,801,836)
Net income for
  1995............           --             --            --              --             --      5,000,277     5,000,277
                    -----------  -------------  ------------  --------------  -------------  -------------  -------------
BALANCE AS OF
  DECEMBER 31,
  1995............    3,419,613      1,404,298     8,768,239          87,682             --      4,525,298      4,612,980
Issuance of
  redeemable
  common stock....      312,148      1,246,595            --              --             --             --            --
Distributions
  paid............           --             --            --              --             --     (5,100,000)    (5,100,000)
Net income for
  1996............           --             --            --              --             --      8,841,182      8,841,182
                    -----------  -------------  ------------  --------------  -------------  -------------  -------------
BALANCE AS OF
  DECEMBER 31,
  1996............    3,731,761      2,650,893     8,768,239          87,682             --      8,266,480      8,354,162
Release of
  redemption
  feature on
  redeemable
  common stock....   (3,731,761)    (2,650,893)    3,731,761          37,318      2,613,575             --      2,650,893
Distributions
  paid............           --             --            --              --             --     (9,000,000)    (9,000,000)
Net proceeds from
  issuance of
  2,300,000 shares
  of common
  stock...........           --             --     2,300,000          23,000     33,120,634             --     33,143,634
Net proceeds from
  issuance of
  19,984 shares of
  common stock to
  ESPP............           --             --        19,984             200        351,737             --        351,937
Net income for
  1997............           --             --            --              --             --      9,627,247      9,627,247
                    -----------  -------------  ------------  --------------  -------------  -------------  -------------
BALANCE AS OF
  DECEMBER 31,
  1997............           --  $          --    14,819,984   $    148,200  $   36,085,946  $   8,893,727  $  45,127,873 
                    -----------  -------------  -------------  ------------  --------------  -------------  ------------- 
                    -----------  -------------  -------------  ------------  --------------  -------------  ------------- 
</TABLE>
 
                See accompanying notes to financial statements.
 
                                     Page 29

<PAGE>
 

                             METRO INFORMATION SERVICES, INC.
 
                                   STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION> 
                                                                                   YEAR ENDED DECEMBER 31,
                                                                       --------------------------------------------
                                                                            1995         1996             1997
                                                                       ------------  ------------    --------------
<S>                                                                    <C>           <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income..........................................................  $  5,000,277  $  8,841,182  $   9,627,247
  Adjustments to reconcile net income to net cash Provided by
    operating activities:
  Depreciation and amortization--cost of revenue....................              --            --         28,777
  Depreciation and amortization--selling, general and administrative
    expenses..........................................................       536,986       763,760      1,158,228
    Net loss on sale of property and equipment........................         4,839        39,509         45,750
    Deferred taxes....................................................            --            --         72,945
    Changes in operating assets and liabilities increasing
      (decreasing) cash, net of the effects of acquisitions:
    Accounts receivable...............................................    (4,367,288)     (884,450)    (7,203,422)
    Prepaid expenses..................................................       (71,685)      107,962       (289,834)
    Accounts payable..................................................       402,999       189,381      1,591,112
    Accrued compensation and benefits.................................     1,736,083     2,087,054      1,650,251
                                                                        ------------  ------------  -------------
      Net cash provided by operating activities.......................     3,242,211    11,144,398      6,681,054
                                                                        ------------  ------------  -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property and equipment...............................    (1,617,562)   (2,267,638)    (2,701,722)
  Acquisition of businesses, net of cash acquired.....................            --            --     (4,352,920)
  Proceeds from sale of property and equipment........................        16,707         9,779         27,176
  Increase in other assets............................................       (24,399)     (496,045)      (202,398)
                                                                        ------------  ------------  -------------
      Net cash used in investing activities...........................    (1,625,254)   (2,753,904)    (7,229,864)
                                                                        ------------  ------------  -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings (repayments) under line of credit....................     3,659,191    (4,708,234)    (2,547,388)
  Decrease in other assets related to issuance of 2,300,000 shares....            --            --        471,849
  Proceeds from issuance of redeemable common stock...................       359,421       476,595             --
  Redemption of redeemable common stock...............................       (36,463)           --             --
  Proceeds from issuance of 2,300,000 shares..........................            --            --     33,143,634
  Proceeds from issuance of shares to Employee Stock Purchase Plan....            --            --        351,937
  Distributions to shareholders.......................................    (4,801,836)   (5,100,000)    (9,000,000)
  Advances on notes receivable--related parties.......................      (800,000)     (175,000)      (550,000)
  Repayment of notes receivable--related parties......................        19,680     1,156,682        550,000
                                                                        ------------  ------------  -------------
      Net cash provided by (used in) financing activities.............    (1,600,007)   (8,349,957)    22,420,032
                                                                        ------------  ------------  -------------
      Net increase in cash............................................        16,950        40,537     21,871,222

Cash and cash equivalents at beginning of year........................        99,885       116,835        157,372
                                                                        ------------  ------------  -------------
Cash and cash equivalents at end of year..............................  $    116,835  $    157,372  $  22,028,594
                                                                        ------------  ------------  -------------
                                                                        ------------  ------------  -------------
Supplemental disclosure of cash flow information:
  Cash paid for interest..............................................  $    380,420  $    309,076  $      60,100
                                                                        ------------  ------------  -------------
                                                                        ------------  ------------  -------------
  Cash paid for income taxes..........................................  $         --  $         --  $   6,466,602
                                                                        ------------  ------------  -------------
                                                                        ------------  ------------  -------------
</TABLE>
 
    During 1997 non-cash financing activities associated with acquisitions
totaled $1,300,000.
 
                See accompanying notes to financial statements.
 
                                   Page 30
<PAGE>

                        METRO INFORMATION SERVICES, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
    NATURE OF BUSINESS
 
    Metro Information Services, Inc. ("Metro" or the "Company") is an
information technology ("IT") consulting services company providing IT
consultants on a contract basis to organizations with complex IT operations. On
December 31, 1997, the Company had 29 offices in the United States and Puerto
Rico.
 
    REVENUE RECOGNITION AND CONCENTRATION OF CREDIT RISK
 
    The Company derives substantially all of its revenue from consulting
services. Revenue is recognized as services are performed. Concentration of
credit risk with respect to accounts receivable is limited due to the number and
diversity of the Company's client base.
 
    CASH AND CASH EQUIVALENTS
 
    Cash and cash equivalents include all highly liquid debt instruments with
original maturities of three months or less. Cash equivalents at December 31,
1997 consisted of overnight money market investments and seven-day maturity tax
exempt obligations backed by a letter of credit from a bank.
 
    FINANCIAL INSTRUMENTS
 
    The carrying amounts of the Company's financial instruments, primarily
accounts receivable, line of credit facilities, accounts payable and accrued
compensation and benefits, approximate fair value due to the short maturity of
these instruments.
 
    PROPERTY AND EQUIPMENT
 
    Property and equipment are stated at cost. Depreciation on property and
equipment is calculated on the straight-line method over their estimated useful
lives. Depreciation on leasehold improvements is calculated on the straight-line
method over the lesser of the length of the lease term or their estimated useful
lives.
 
    GOODWILL
 
    Goodwill represents the excess of cost over fair value of net assets
purchased in acquisitions and is amortized on a straight-line basis over the
expected benefit period, generally 30 years. Management periodically assesses
whether there has been a permanent impairment in the value of goodwill. The
amount of such impairment is determined by comparing anticipated future cash
flows to the carrying value of the related goodwill.
 
    INCOME TAXES AND PRO FORMA INCOME TAXES
 
    Before January 1, 1997, the Company, with the consent of its shareholders,
was taxed under the provisions of Subchapter S of the Internal Revenue Code of
1986, which provides that, in lieu of corporate income taxes, the shareholders
of the S corporation are taxed on their proportionate share of the Company's
taxable income. Therefore, pro forma income taxes shown for periods ending in
1995 and 1996 represent the estimated amount of income taxes the Company would
have reported had the Company been a C corporation for those periods taxable at
an assumed effective tax rate of 40%.

    Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying 

                                    Page 31

<PAGE>

amounts of existing assets and liabilities and their respective tax bases 
and, if applicable, operating loss and tax credit carryforwards. Deferred tax 
assets and liabilities are measured using enacted tax rates expected to apply 
to taxable income in the years in which those temporary differences are 
expected to be recovered or settled. The effect on deferred tax assets and 
liabilities of a change in tax rates is recognized in income in the period 
that includes the enactment date.
 
    UNAUDITED PRO FORMA NET INCOME AND PRO FORMA NET INCOME PER SHARE
 
    The pro forma net income presented in the statements of income reflects the
pro forma effects for income taxes at an effective rate of 40%, as if the
Company had been a taxable entity for all periods presented.
 
    The pro forma net income per common share is computed based on the weighted
average number of common shares and common equivalent shares (using the treasury
stock method) outstanding after giving effect to the stock split discussed in
Note 12. In accordance with Securities and Exchange Commission Staff Accounting
Bulletin No. 83, all common and common equivalent shares issued during the
12-month period before filing the initial public offering, even if
anti-dilutive, have been included in the calculation as if they were outstanding
for all periods, at the initial public offering price of $16.00 per share. In
addition, weighted average shares for each period are increased in accordance
with Securities and Exchange Commission Staff Accounting Bulletin Topic 1B3 to
reflect certain distributions in excess of earnings.
 
    IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
 
    The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF, on January 1, 1996. This Statement
requires that the Company review long-lived assets and certain identifiable
intangibles for impairment whenever events or changes in circumstance indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to future net cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the lower of
the carrying amount and fair value less costs to sell. Adoption of this
Statement did not have a material impact on the Company's financial position,
results of operations or liquidity.
 
    USE OF ESTIMATES
 
    Management of the Company has made a number of estimates and assumptions
relating to the reporting of revenue and expense, assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
 
    RECLASSIFICATIONS
 
    Certain prior year amounts have been reclassified to conform to current year
presentation.

(2) ACQUISITIONS
 
    On July 1, 1997, the Company completed the acquisition of two IT services
companies using a portion of the proceeds from the Company's initial public
offering completed in January 1997. The Company acquired the business operations
of Data Systems Technology, Inc., which had offices in Columbia and Greenville,
South Carolina, for $133,930 with up to an additional $366,070 contingency
payment due in the third quarter of 1998, assuming certain operating income
targets are attained by the acquired business. The Company also acquired the
business operations of Kansas City-based J2, Inc., d.b.a. DP Career Associates,
for $5.2 million, $3.9 million of which was paid on July 1, 1997 and $1.3
million of which is payable in the first quarter of 1998, as a result of the
acquired business attaining certain gross profit targets. Each acquisition is
accounted for as a purchase. In connection with these acquisitions, the Company

                                    Page 32

<PAGE>

has recorded approximately $5,396,000 of goodwill which is being amortized on 
a straight-line basis over 30 years. Amortization expense for 1997 and 
accumulated amortization as of December 31, 1997 was $68,265.
 
(3) RELATED PARTY TRANSACTIONS
 
    During 1996 there were several related party notes receivable 
outstanding. As of January 1, 1996, these related party notes receivable 
consisted of $800,000 due on a $1,000,000 line of credit note from the 
majority shareholder requiring annual interest payments at 8%, which was 
secured by Deed of Trust on real property (the "Line of Credit Note"); 
$168,322 due on an unsecured note from a partnership in which the majority 
shareholder and two other shareholders were general partners, requiring 
monthly payments of principal and interest at 8%; and $13,360 of other notes 
receivable from employees. As of December 31, 1996, all of the notes 
receivable, except for the Line of Credit Note, had been repaid in full and 
the notes canceled. Shortly before the Company's January 29, 1997 initial 
public offering, the majority shareholder repaid his outstanding Line of 
Credit Note in full. The Company then canceled the Line of Credit Note and 
released the Deed of Trust on real property securing the note. The highest 
balance outstanding on the Line of Credit Note during 1997 was $550,000.
 
    Until December 31, 1996, the Company leased its corporate headquarters 
from a partnership in which the majority shareholder of the Company and his 
spouse were the general partners. The lease agreement provided for an annual 
rental of $144,000 payable in monthly installments of $12,000. The Company 
leased a new corporate headquarters facility from an unrelated third party 
beginning December 15, 1996. The lease for the old facility was terminated on 
December 31, 1996.
 
    In September 1996, the Company purchased two condominiums from 
partnerships in which the majority shareholder and certain other shareholders 
of the Company are general partners. The total purchase price of $380,000 was 
determined by independent appraisals. Before the purchase, these condominiums 
were leased by the Company from the partnerships for annual rentals of 
$69,000 and were generally made available to the Company's employees as a 
benefit.

(4) PROPERTY AND EQUIPMENT
 
    Property and equipment consist of the following:
 
<TABLE>
<CAPTION>
                                                                                              DECEMBER 31,
                                                                            USEFUL     --------------------------
                                                                             LIFE          1996          1997
                                                                          -----------  ------------  ------------
<S>                                                                       <C>          <C>           <C>
Land....................................................................        n.a.   $     94,376  $     94,376
Buildings...............................................................  31.5 years        607,297       607,297
Computer equipment and software.........................................   3-7 years      4,166,220     6,056,484
Furniture and equipment.................................................   5-7 years      1,370,312     2,011,907
Leasehold improvements..................................................     Various        203,953       291,602
                                                                                       ------------  ------------
                                                                                          6,442,158     9,061,666
    Less accumulated depreciation and amortization......................                  2,372,342     3,389,118
                                                                                       ------------  ------------
                                                                                       $  4,069,816  $  5,672,548
                                                                                       ------------  ------------
                                                                                       ------------  ------------
</TABLE>
 
(5) LINE OF CREDIT FACILITIES
 
    The Company maintains credit facilities of $39,900,000. The facilities are
provided in equal amounts by three banks and have a five-year maturity which may
be extended each year for an additional year. If the facilities are not
extended, principal on one of the facilities must be repaid in four equal annual
installments while the other two facilities require principal repayment at the
end of four years. Until that time, interest only is payable monthly. Two of the
facilities allow the Company to select among prime rate and London Interbank
Offered Rate (LIBOR) based interest rates while the third has only LIBOR based
interest rates. All of the facilities have interest rates that increase as the
balance outstanding under the facilities increases. At December 31, 1997, no
amounts were outstanding under the facilities. As of December 31, 1996,
borrowings outstanding under these facilities totaled $2,547,388. The 

                                    Page 33
<PAGE>

Company has selected a 30-day LIBOR based rate and, if any borrowings were 
outstanding under the facilities at December 31, 1997, the rate on such 
borrowings would have ranged from 6.1% to 6.6%. The facilities also contain 
fees, ranging from 0.125% to 0.3125% annually, which are charged on the 
unused portion of the facilities. The facilities are collateralized by 
accounts receivable of the Company.
 
    The credit facilities contain several covenants, including one requiring 
the maintenance of a certain tangible net worth ratio, which limits the 
amount of dividends that can be paid. The covenants also impose limits on 
incurring additional debt and require a certain debt service coverage ratio 
to be maintained. Amounts advanced under the facilities can be used for 
acquisitions and general working capital purposes.
 
(6) INCOME TAXES
 
    The unaudited pro forma provision for income taxes presented on the 
statements of income for 1995 and 1996 represents the estimated taxes that 
would have been recorded had the Company been a C
corporation for income tax purposes for those periods. The pro forma provision
for income taxes is as follows:
 
<TABLE>
<CAPTION>
                                                                                         YEAR ENDED DECEMBER 31,
                                                                                        --------------------------
<S>                                                                                     <C>           <C>
Pro Forma (unaudited):                                                                      1995          1996
                                                                                        ------------  ------------
  Federal.............................................................................  $  1,700,094  $  3,006,002
  State...............................................................................       300,017       530,471
                                                                                        ------------  ------------
     Total pro forma..................................................................  $  2,000,111  $  3,536,473
                                                                                        ------------  ------------
                                                                                        ------------  ------------
</TABLE>
 
    During 1997, the Company was a C corporation for income tax purposes. The 
provision for income taxes for 1997 includes federal and state income taxes 
currently payable and those deferred because of temporary differences between 
the financial statement and tax bases of assets and liabilities. The 
provision for income taxes consists of the following:
 
<TABLE>
<CAPTION>
                                                                                      YEAR ENDED DECEMBER 31, 1997
                                                                                      ----------------------------
<S>                                                                                   <C>
Current:
  Federal...........................................................................          $  5,047,918
  State.............................................................................             1,056,695
Deferred:
  Federal...........................................................................                60,586
  State.............................................................................                12,359
                                                                                               -----------
     Total income tax expense.......................................................          $  6,177,558
                                                                                               -----------
                                                                                               -----------
</TABLE>
 
    The 1995 and 1996 pro forma tax expense and 1997 actual tax expense 
differ from the amount which would be provided by applying the statutory 
federal rate to income before income taxes primarily as a result of state 
income taxes. A reconciliation of the statutory federal income tax rate and 
the effective rate is as follows:
 
<TABLE>
<CAPTION>
                                                                                                      YEAR ENDED DECEMBER 31,
                                                                                               -------------------------------------
<S>                                                                                            <C>          <C>          <C>
                                                                                                  1995         1996         1997
                                                                                                  -----        -----        -----
Statutory tax rate...........................................................................       34%          34%          34%
Effect of:
  State and local income taxes, net of
    Federal tax benefit......................................................................        5            5            5
  Other......................................................................................        1            1            1
  Termination of S election..................................................................        0            0           (1)
                                                                                                    --           --           --
  Effective tax rate.........................................................................       40%          40%          39%
                                                                                                    --           --           --
                                                                                                    --           --           --
</TABLE>

                                    Page 34
<PAGE>

    The components of the deferred tax asset and liability at December 31, 
1997 are as follows:
 
<TABLE>
<S>                                                                                <C>
Current deferred tax asset:
  Self-insurance reserves........................................................  $ 309,265
  Accrued expenses...............................................................    294,620
  Allowance for doubtful accounts................................................     58,802
                                                                                   ---------
                                                                                   $ 662,687
                                                                                   ---------
                                                                                   ---------
Long-term deferred tax liability:
  Depreciation and amortization..................................................  $(426,515)
  Accrued expenses for financial reporting purposes..............................   (309,117)
                                                                                   ---------
                                                                                   $(735,632)
                                                                                   ---------
                                                                                   ---------
</TABLE>
 
    In assessing whether deferred tax assets may be realized, management 
considers whether it is more likely than not that some or all of the deferred 
taxes will not be realized. Based on the availability of carrybacks of future 
deductible amounts to 1995, 1996 and 1997 taxable income and management's 
projections for future taxable income over the periods in which the deferred 
tax assets are deductible, management believes the existing net deductible 
temporary differences will reverse during periods in which carrybacks are 
available and/or in which the Company generates net taxable income. There can 
be no assurance, however, that the Company will generate any income or any 
specific level of continuing income in future years.
 
(7) EARNINGS PER SHARE
 
    The Company adopted SFAS No. 128, EARNINGS PER SHARE, which revised the 
calculation of earnings per share and requires disclosure of basic and 
diluted earnings per share in the income statement, as well as footnote 
disclosure for the reconciliation of the numerators and denominators of the 
basic and diluted earnings per share computations for net income. During 1995 
and 1996, there were no dilutive securities outstanding. Therefore, the 
calculation of basic and diluted earnings per share was identical in these 
two years. The reconciliation for 1997 is shown below:
 
<TABLE>
<CAPTION>

                                                                FOR THE YEAR ENDED DECEMBER 31, 1997
                                                                --------------------------------------
                                                                                SHARES        EARNINGS
                                                                NET INCOME    OUTSTANDING       PER
                                                                (NUMERATOR)  (DENOMINATOR)     SHARE
                                                                ----------   ------------    ---------
<S>                                                             <C>           <C>            <C>      
Basic Earnings Per Share......................................  $9,627,247   14,610,888      $    0.66
                                                                                             ---------
                                                                                             ---------
Effect of Dilutive Securities -- Incentive Stock Options                                              
  deemed outstanding..........................................     --            51,369               
                                                                ----------   ----------     
Diluted Earnings Per Share....................................  $9,627,247   14,662,257      $    0.66
                                                                ----------   ----------      ---------
                                                                ----------   ----------      ---------
</TABLE>
 
    See Note 8 of Notes to Financial Statements for a description of the 
Incentive Stock Option Plan.
 
(8) STOCK OPTION PLANS
 
    SFAS NO. 123 DISCLOSURE


    As permitted by SFAS No. 123, ACCOUNTING FOR STOCK BASED COMPENSATION, the
Company applies APB Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, to
account for its three stock-based compensation plans. In accordance with APB
Opinion No. 25, the Company recorded no compensation expense related to these
plans in 1997. There is no compensation expense related to the Metro Information
Services, Inc. Employee Stock Purchase Plan (the "ESPP") because it qualifies as
a non-compensatory plan under APB Opinion No. 25. There was no compensation
expense recorded for either of the stock option plans discussed below because
the exercise price of each option equaled the fair value of the underlying


                                    Page 35
<PAGE>

common stock as of the grant date. If compensation expense for the Company's 
three stock-based compensation plans had been determined based on the fair 
value of the underlying common stock at the grant dates as calculated in 
accordance with SFAS No. 123, the Company's net income and net income per 
share for the year ended December 31, 1997 would have been reduced to the pro 
forma amounts indicated below. No options or shares were issued under the 
plans before 1997.
 
<TABLE>
<CAPTION>
                                                                                             DECEMBER 31, 1997
                                                                                       -----------------------------
<S>                                                                                    <C>           <C>
                                                                                            AS        SFAS NO. 123
                                                                                         REPORTED       PRO FORMA
                                                                                       ------------  ---------------
Net 
income...........................................................................     $  9,627,247     $  9,233,358
                                                                                       ------------    ------------
                                                                                       ------------    ------------
Net income per share--
  Basic and diluted..............................................................     $       0.66     $       0.63
                                                                                       ------------    ------------
                                                                                       ------------    ------------
                                                                                       
</TABLE>
 
    The full impact of calculating compensation cost for stock options under 
SFAS No. 123 is not reflected in the pro forma net income and net income per 
share amounts presented above because compensation cost is recognized over 
the options' vesting periods.
 
OUTSIDE DIRECTORS STOCK PLAN
 
    On December 24, 1996, the Company adopted a non-qualified stock option 
plan (the "Outside Directors Stock Plan") for the outside directors of the 
Company. Each outside director is granted an option for 3,000 shares of 
Common Stock on such director's initial election. At each Annual Meeting 
thereafter, such director is granted an additional option for 1,000 shares of 
Common Stock. The options granted to outside directors are immediately 
exercisable in full at a price equal to the fair market value of Common Stock 
on the date of grant. The options expire 10 years after the date of grant or 
one year after the outside director is no longer a director of the Company, 
whichever is earlier. The Company has reserved 50,000 shares for issuance 
under this plan. During 1997, the Outside Directors Stock Plan issued 8,000 
options to the outside directors and no options were exercised.
 
INCENTIVE STOCK OPTION PLAN
 
    On December 24, 1996, the Company adopted the 1997 Employee Incentive 
Stock Option Plan which provides for the grant of incentive stock options to 
purchase up to an aggregate of 770,000 shares of Common Stock. In connection 
with the initial public offering, certain employees of the Company were 
granted options to purchase 374,300 shares of Common Stock at the initial 
public offering price of $16.00 per share. The options issued in 1997 vest 
ratably over five years and expire not later than nine years and 11 months 
after the date of grant.
 
    The fair value of options at the date of grant was estimated using the 
Black-Scholes option pricing model with the following weighted average 
assumptions:
 
<TABLE>
<S>                                                                                  <C>
Expected life......................................................................  5 years
Risk free interest rate............................................................  6.3%
Expected volatility................................................................  51%
Annual dividend yield..............................................................  0%
</TABLE>

                                    Page 36
 
<PAGE>

    A summary of the status of the Company's 1997 Employee Incentive Stock 
Option Plan and Outside Directors Stock Plan as of December 31, 1997, and 
changes during the year then ended, is presented below:
 
<TABLE>
<CAPTION>
                                                                                              WEIGHTED 
                                                                     NUMBER OF                 AVERAGE
                                                                       SHARES              EXERCISE PRICE
                                                                  -----------------  -----------------------------
<S>                                                               <C>                <C>
Options at beginning of year....................................              --                      --
Granted.........................................................         382,300               $   15.98
Exercised.......................................................              --                      --
Forfeited.......................................................          68,100               $   16.00
                                                                         ------- 
Options at end of year..........................................         314,200               $   15.97
                                                                         ------- 
                                                                         ------- 
Options exercisable at year-end.................................          69,320               $   15.88
                                                                         ------- 
                                                                         ------- 
Weighted average estimated fair value of options granted during
  the year......................................................     $      8.30
                                                                         ------- 
                                                                         ------- 
</TABLE>
 
    Following is a summary of the range of exercise prices and the weighted
average contractual life of outstanding stock options at December 31, 1997:
 
<TABLE>
<CAPTION>
                                        OPTIONS OUTSTANDING                OPTIONS EXERCISABLE
                          --------------------------------------------  --------------------------
                                     WEIGHTED AVERAGE     WEIGHTED                
                                         REMAINING         AVERAGE                WEIGHTED AVERAGE
RANGE OF EXERCISE PRICES   SHARES    CONTRACTUAL LIFE   EXERCISE PRICE   SHARES    EXERCISE PRICE
------------------------  ---------  -----------------  --------------  -------    --------------
<C>                       <C>        <S>                <C>             <C>        <C>
$13.50...............       6,000      9.3 years        $   13.50        6,000      $   13.50
$16.00...............     306,200      9.0 years        $   16.00       61,320      $   16.00
$19.25...............       2,000      9.4 years        $   19.25        2,000      $   19.25
                          -------                                       ------
$13.50 TO $19.25.....     314,200      9.0 years        $   15.97       69,320      $   15.88
                          -------                                       ------
                          -------                                       ------
</TABLE>
 
    EMPLOYEE STOCK PURCHASE PLAN
 
    The Company adopted the ESPP on December 24, 1996. Under the ESPP, an 
aggregate of 250,000 shares of Common Stock may be purchased from the Company 
by the employees through payroll withholding pursuant to a series of 
offerings. All full-time employees who have met certain service requirements 
(as defined in the ESPP), except for employees who own Common Stock of the 
Company or options on such stock which represent more than 5% of Common Stock 
of the Company, are eligible to participate. The purchase price of Common 
Stock is 85% of the lesser of the fair market value of Common Stock on the 
first trading day of the calendar quarter and the last trading day of the 
quarter. During 1997, the Company sold 19,984 shares of Common Stock to the 
ESPP for a total of $351,937.
 
    The fair value of the employees' purchase rights of ESPP shares was
estimated using the Black-Scholes option pricing model with the following
weighted-average assumptions:
 
<TABLE>
<S>                                                                                <C>
Expected life....................................................................  3 months
Risk free interest rate..........................................................  5.1%
Expected volatility..............................................................  27%
Annual dividend yield............................................................  0%
</TABLE>
 
    The weighted average fair value of those purchase rights granted in 1997 was
$4.15.
 
                                    Page 37
<PAGE>

(9) PROFIT SHARING PLAN
 
    The Company sponsors a 401(k) employee benefit plan covering all eligible
employees with a minimum of three months of service. Eligible employees are
permitted to make voluntary deductible contributions to the plan and the Company
makes matching contributions of one-half of the eligible employee's
contribution, up to a maximum of 6% of the employee's compensation.
 
    The Company made matching contributions of $939,223, $1,181,665 and
$1,342,860 to the plan for the years ended December 31, 1995, 1996 and 1997,
respectively. 

(10) COMMITMENTS AND CONTINGENCIES
 
    The Company is obligated under various non-cancelable operating leases for
office space. Rent expense for the years ended December 31, 1995, 1996 and 1997
was $854,539, $1,094,436 and $1,424,822, respectively, and is included in
selling, general and administrative expenses in the accompanying statements of
income. Renewal options are available at most locations. Future minimum lease
payments, including contingent rentals, as of December 31, 1997 are as follows:
 
<TABLE>

<S>                     <C>
1998..................  $ 1,481,139
1999..................    1,311,830
2000..................    1,052,944
2001..................      769,213
2002..................       82,115
Thereafter............       67,800
                         ------------
                         $4,765,041
                         ------------
                         ------------

</TABLE>

    The Company self-insures against employees' health insurance claims up to 
a stop loss limit of $125,000 per employee per year and a variable, aggregate 
stop loss limit. Amounts charged to income related to insurance claims were 
$2,206,861, $3,143,431 and $3,965,692 for the years ended December 31, 1995, 
1996 and 1997, respectively. Included in accrued compensation and benefits on 
the accompanying balance sheet is a reserve for claims incurred but not yet 
reported of $485,434 and $800,494 at December 31, 1996 and 1997, 
respectively.

(11) SHAREHOLDERS' EQUITY
 
    On October 22, 1996, the Company's shareholders amended and restated the 
articles of incorporation. Under the amended and restated articles of 
incorporation, the Company authorized 1,000,000 shares of Preferred Stock, 
par value $0.01 and 50,000,000 shares of Common with a par value of $0.01 per 
share, of which 49,000,000 shares are designated as Common Stock and 
1,000,000 shares are designated as Nonvoting Common Stock. The 
recapitalization and the 3,507.2952 for one stock split described in Note 12, 
are reflected in these financial statements and the accompanying notes.
 
    PREFERRED STOCK
 
    The Company's Board of Directors has the authority to issue shares of 
Preferred Stock and determine the stock terms without obtaining shareholders 
approval. There are currently no issued or outstanding shares of Preferred 
Stock and the Company has no present plans to issue any shares of Preferred 
Stock.
 
    COMMON STOCK
 
    The Common Stock shareholders have the sole right to vote. Those shares 
of Common Stock that were subject to certain contractual redemption 
obligations in 1996 have been classified as redeemable common stock (the 
"Redeemable Common Stock"). In all other respects, the Common Stock and 
Redeemable Common Stock had identical rights.

                                    Page 38

<PAGE>

    Redeemable Common Stock was offered to key members of management under 
individual stock purchase agreements annually on April 1 and the individuals 
had 30 days to purchase the stock. The number of shares offered was 
determined by the Company's president based on the prior fiscal year's 
operating income and each individual's performance in that year. The purchase 
price was determined by a formula based on operating income.
 
    Certain shares of Redeemable Common Stock were issued within 12 months of 
the Company's initial public offering date. As a result, the Company's 1995 
income statement includes $770,000 of selling, general and administrative 
expenses which represents the excess of the fair value of the stock, as 
determined by an independent appraisal obtained by the Company, over its 
purchase price.

(12) INITIAL PUBLIC OFFERING
 
    On January 29, 1997, the Company consummated an initial public offering 
of 3,100,000 shares of its Common Stock at a price of $16.00 per share, of 
which 2,300,000 shares were issued and sold by the Company and 800,000 shares 
were sold by a shareholder of the Company. Shortly thereafter the 
representatives of the several underwriters exercised their over-allotment 
option resulting in the sale of 465,000 shares by other shareholders of the 
Company. The net proceeds to the Company from the offering were approximately 
$33,144,000. The Company did not receive any proceeds from the sale of shares 
by the selling shareholders.
 
    The following corporate actions were taken in connection with the initial 
public offering:
 
    DISTRIBUTIONS
 
    On January 20, 1997, the Company distributed $9,000,000 to its 
shareholders, approximating the estimated aggregate undistributed amount of 
income on which the Company's shareholders were required to pay income taxes 
for tax years 1987 through 1996.
 
    STOCK SPLIT
 
    On January 24, 1997, the Company effected a 3,507.2952 for one stock 
split by means of a stock dividend. All share and per share data in these 
financial statements reflect this stock split.
 
    CONVERSION OF NONVOTING COMMON STOCK
 
    The nonvoting Redeemable Common Stock was released from any agreement 
requiring its redemption and was converted into voting Common Stock. As a 
result, the 3,731,761 shares of Redeemable Common Stock have been 
reclassified as Common Stock in the December 31, 1997 financial statements.
 
    TERMINATION OF S CORPORATION ELECTION
 
    Effective January 1, 1997, the Company terminated its S corporation 
election resulting in the Company becoming a C corporation for all income tax 
purposes.
 
    CANCELATION OF RELATED PARTY NOTE
 
    Shortly before the initial public offering, the Company's majority 
shareholder repaid his outstanding line of credit note in full. The Company 
then canceled the line of credit note and released the Deed of Trust on real 
property securing the note.
 
    EMPLOYMENT AGREEMENTS
 
    In connection with the Company's January 29, 1997 initial public 
offering, the Company entered into employment agreements with six executive 
officers. The agreements became effective in January 1997, and provide for an 
initial term of one year with total annual base salaries of $1,200,000 for 
1997 and automatically renew for successive one-year terms unless terminated 
by either party. The six executive officers are also entitled to a 
performance bonus. The agreements contain a two-year non-competition 
provision following termination of employment.

                                       Page 39

<PAGE>

(13) QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

    The following table sets forth certain quarterly operating information for
each of the 12 quarters ending with the quarter ended December 31, 1997. This
information was derived from the unaudited financial statements of the Company
which, in the opinion of management, were prepared on the same basis as the
financial statements contained elsewhere in this report and include all
adjustments, consisting of normal recurring adjustments, which management
considers necessary for the fair presentation of the information for the periods
presented. The financial data shown below should be read in conjunction with the
financial statements and notes thereto included in this report. Results for any
fiscal quarter are not necessarily indicative of results for the full year or
for any future quarter.
 
<TABLE>

<CAPTION>
                                                                        FIRST     SECOND      THIRD     FOURTH
STATEMENTS OF INCOME DATA                                              QUARTER    QUARTER    QUARTER    QUARTER
--------------------------------------------------------------------  ---------  ---------  ---------  ---------
<S>                                                                   <C>        <C>        <C>        <C>        <C>
                                                                       (Dollars in thousands except per share data)

1995:
 Revenue.............................................................  $  19,760  $  20,695  $  21,881  $  23,568
 Gross profit........................................................      5,732      6,195      6,117      6,786
 Operating income....................................................      1,422      1,683      1,428        790 (1)
 Net income..........................................................      1,361      1,596      1,342        700 (1)
 Pro forma net income................................................        817        958        805        420 (1)
 Pro forma net income per share -- basic and diluted.................  $    0.06  $    0.08  $    0.06  $    0.03 (1)
 Gross profit percentage.............................................       29.0%      29.9%      28.0%      28.8%
 Operating income percentage.........................................        7.2%       8.1%       6.5%       3.4%(1)

1996:
 Revenue.............................................................  $  26,328  $  27,812  $  29,142  $  30,681
 Gross profit........................................................      7,726      8,452      8,817      9,216
 Operating income....................................................      2,107      2,248      2,431      2,314
 Net income..........................................................      2,021      2,184      2,371      2,265
 Pro forma net income................................................      1,213      1,310      1,423      1,359
 Pro forma net income per share -- basic and diluted.................  $    0.09  $    0.10  $    0.11  $    0.11
 Gross profit percentage.............................................       29.3%      30.4%      30.3%      30.0%
 Operating income percentage.........................................        8.0%       8.1%       8.3%       7.5%

1997:
 Revenue.............................................................  $  33,045  $  35,883  $  40,569  $  43,080
 Gross profit........................................................      9,727     10,841     12,580     13,351
 Operating income....................................................      2,741      3,409      4,314      4,612
 Net income..........................................................      1,832      2,180      2,703      2,912
 Net income per share -- basic and diluted...........................  $  0.13(2) $    0.15  $    0.18  $    0.20
 Gross profit percentage.............................................       29.4%      30.2%      31.0%      31.0%
 Operating income percentage.........................................        8.3%       9.5%      10.6%      10.7%

</TABLE>
 
------------------------
 
(1) Includes the $770,000 of non-recurring, non-cash compensation expense
    charged to selling, general and administrative expenses accrued in the
    fourth quarter of 1995 for stock issued for services performed by employees
    in 1995. Excluding the effect of such expense, for the fourth quarter of
    1995, operating income would have been $1.6 million, net income would have
    been $1.5 million, pro forma net income would have been $882,000, pro forma
    net income per share would have been $0.07 and, as a percentage of revenue,
    operating income would have been 6.6%.
 
(2) Net income per share for the three months ended March 31, 1997 includes a
    one-time reduction in income tax expense of $125,000 which represents the
    cumulative effect of the Company converting from a S corporation to a C
    corporation effective January 1, 1997. Excluding the $125,000 one-time
    reduction in income taxes, earnings per share for the three months ended
    March 31, 1997 would have been $0.12.

                                    Page 40

<PAGE>
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE
 
None.
 
PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT; SECTION 16(A)
         BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
    The Company is required to identify any director or officer who failed to 
timely file with the Securities and Exchange Commission a required report 
relating to ownership and change in ownership of the Company's equity 
securities. One officer, Steven A. Lurus, inadvertently did not report shares 
owned by his spouse at the time they were married on a Form 4 for February 
1997. These shares were reported on a subsequently filed Form 4.
 
    Another officer, Andrew J. Downing, inadvertently did not report a gift 
of shares to charity from his Form 4 for December 1997. This gift was 
reported on a subsequently filed Form 5.
 
    The other information required by this Item is included in Part I as 
permitted by Rule 401 of Regulation S-K and the General Instructions.
 
ITEM 11. EXECUTIVE COMPENSATION
 
SUMMARY COMPENSATION TABLE
 
    The following table sets forth certain information concerning 
compensation paid to or earned by the Company's President and Chief Executive 
Officer and each of the Company's four other most highly compensated 
executive officers who earned more than $100,000 (the "Named Executive 
Officers") for services rendered during the years ended December 31, 1997, 
1996 and 1995.

<TABLE>
<CAPTION>
                                                                                                    LONG-TERM
                                                                                                     COMPEN-
                                                              ANNUAL COMPENSATION                    SATION
                                                 ---------------------------------------------   ---------------
                                                                                     OTHER       
                                                                                     ANNUAL         SHARES OF
                                                                                    COMPEN-        COMMON STOCK
                                                             SALARY      BONUS      SATION         UNDERLYING        ALL OTHER
          NAME AND PRINCIPAL POSITION              YEAR        ($)        ($)       ($)(1)          OPTIONS(#)     COMPENSATION ($)
-----------------------------------------------  ---------  ---------  ---------  ------------   ---------------  ----------------
<S>                                              <C>        <C>        <C>        <C>            <C>              <C>
John H. Fain,                                         1997    300,000    195,000           --             --              16,339(2)
  Chairman of the Board, President                    1996    600,000         --           --             --               7,889(3)
  and Chief Executive Officer                         1995    600,000         --      216,292             --              14,489(3)
 
Andrew J. Downing,                                    1997    240,000    159,914           --          5,000               5,300(2)
  Executive Vice President and                        1996    210,000    180,810           --          5,000                 749(3)
  Chief Operating Officer                             1995    144,000    166,930       43,258             --               7,591(3)
 
Frank B. Bracken, Jr.,                                1997    180,000    145,729           --          5,000               7,206(2)
  Vice President of Operations                        1996    170,000    143,891           --          5,000                    --
                                                      1995    127,083     68,675       43,258             --                 761(3)
 
Richard C. Jaeckle,                                   1997    180,000    138,750           --          5,000               6,086(2)
  Vice President of Operations                        1996    180,000     99,787           --          5,000                    --
                                                      1995    144,000     88,618       43,258             --                 949(3)

Kathleen A. Neff,                                     1997    180,000    128,567           --          5,000              10,673(2)
  Vice President of Operations                        1996    165,000    100,203           --          5,000                 475(3)
                                                      1995    127,083     68,675       43,258             --               7,494(3)
</TABLE>
 
------------------------
 
                                       Page 41

<PAGE>

(1) Includes non-recurring, non-cash compensation accrued in the fourth quarter
    of 1995 for Redeemable Common Stock issued for services performed in 1995 in
    an amount equal to the excess of the fair market value of such stock over
    the amount paid. The stock was issued pursuant to 30-day options and was
    fully vested with the same rights to dividends as other issued and
    outstanding Common Stock of the Company. Other compensation representing
    less than $50,000 or 10% of the officer's salary and bonus has been omitted.
    Does not include distributions to shareholders.
 
(2) Retirement Savings Plan and Trust contributions were $4,750 for each of the
    Named Executive Officers. Amounts paid for excess accrued vacation and sick
    leave amounted to $8,939 for Mr. Fain, $0 for Mr. Downing, $2,106 for Mr.
    Bracken, $0 for Mr. Jaeckle and $5,413 for Ms. Neff. The remaining amounts
    represent non-cash compensation for use of Company condominiums and other
    miscellaneous amounts.
 
(3) Includes certain health insurance premiums paid by the Company for 1995 and
    1996, amounts the Company contributed to the Metro Information Services,
    Inc. Retirement Savings Plan and Trust, amounts paid for excess accrued
    vacation and sick leave, non-cash compensation for use of Company
    condominiums and other miscellaneous amounts.
 
1997 OPTION GRANTS TABLE
 
    The following table sets forth the number of options to purchase shares of
Common Stock granted to the Named Executive Officers during 1997.
 
<TABLE>

<CAPTION>
                                                 NUMBER OF         PERCENT OF TOTAL                                     PRESENT
                                                  SHARES            OPTIONS GRANTED       EXERCISE OR                  VALUE ON
                                                UNDERLYING           TO EMPLOYEES         BASE PRICE    EXPIRATION      DATE OF
                   NAME                       OPTIONS GRANTED           IN 1997          ($/SHARE) (1)     DATE      GRANT ($) (2)
-------------------------------------------  -----------------  -----------------------  -------------  -----------  -------------
<S>                                          <C>                <C>                      <C>            <C>          <C>
John H. Fain...............................             --                    --                  --            --            --
Andrew J. Downing..........................          5,000                   1.3               16.00      12/29/06        41,550
Frank B. Bracken, Jr.......................          5,000                   1.3               16.00      12/29/06        41,550
Richard C. Jaeckle.........................          5,000                   1.3               16.00      12/29/06        41,550
Kathleen A. Neff...........................          5,000                   1.3               16.00      12/29/06        41,550

</TABLE>
 
------------------------
(1) All options were granted on January 29, 1997 at an exercise price equal to
    the fair market value of the underlying securities on that date. The options
    vest ratably over five years and will expire, at the latest, nine years and
    11 months after the date of grant.
 
(2) This value is based on the Black-Scholes option pricing model which includes
    assumptions for variables such as interest rates, stock price volatility and
    future dividend yield. The Company's use of this model is not an endorsement
    of its accuracy. Whether the model assumptions used will prove to be
    accurate cannot be known at the date of grant or as of the date of this
    Report. The Black-Scholes model produces a value based on freely tradable
    securities. Because the stock options awarded in 1997 are non-transferable,
    the "present value" shown cannot be realized by the holder. Recognizing
    these limitations of the model, the following assumptions were used to
    estimate the present value on the date of grant: dividend yield of 0%,
    risk-free rate of return of 6.3%, estimated volatility of 51% and estimated
    average expected option term of 5 years. These options vest ratably over
    five years beginning December 31, 1997.

1997 YEAR-END OPTION VALUE TABLE
 
    During 1997, no stock options were exercised by any of the Named Executive
Officers. The following table sets forth the number and value of all unexercised
options at year end for these individuals:
 
<TABLE>
<CAPTION>
                                                    NUMBER OF
                                                    SECURITIES
                                                    UNDERLYING
                                                    UNEXERCISED               VALUE OF UNEXERCISED
                                                  OPTIONS AT YEAR           IN-THE-MONEY OPTIONS AT
                                                       END (#)                      YEAR END ($)
NAME                                         EXERCISABLE/UNEXERCISABLE      EXERCISABLE/UNEXERCISABLE
-------------------------------------------  -------------------------      -------------------------
<S>                                          <C>                            <C>

JOHN H. FAIN...............................                0/0                             0/0
ANDREW J. DOWNING..........................        1,000/4,000                    8,310/33,240
FRANK B. BRACKEN, JR.......................        1,000/4,000                    8,310/33,240
RICHARD C. JAECKLE.........................        1,000/4,000                    8,310/33,240
KATHLEEN A. NEFF...........................        1,000/4,000                    8,310/33,240

</TABLE>

                                    Page 42
<PAGE>

DIRECTOR COMPENSATION
 
    Directors who are executive officers of the Company receive no 
compensation for their service as members of either the Board of Directors or 
committees thereof. During 1997, the Outside Directors, Mr. Becker and Mr. 
Loving, each received an annual fee of $3,000, plus $500 for each Board of 
Directors and committee meeting attended and reimbursement for their 
expenses. In addition, under the Company's non-qualified stock option plan 
for Outside Directors (the "Outside Directors Stock Plan"), each Outside 
Director received an option for 3,000 shares of the Common Stock on such 
director's initial election as a director in April 1997 and an additional 
option for 1,000 shares of the Common Stock for their participation in 
Metro's 1997 Annual Meeting, held June 10, 1997. At each Annual Meeting of 
shareholders thereafter, such director shall be granted an additional option 
for 1,000 shares of the Common Stock. The options granted to Outside 
Directors may be exercised immediately at a price equal to the fair market 
value of the Common Stock on the date of grant. The options expire 10 years 
after the date of grant or one year after the Outside Director is no longer a 
director of the Company, whichever is earlier. Options for an aggregate of 
50,000 shares of the Common Stock may be granted under the Outside Directors 
Stock Plan. The Company granted options for 8,000 shares under this plan 
during 1997.
 
EMPLOYMENT AGREEMENTS
 
    In connection with the Company's January 29, 1997 initial public offering,
the Company entered into employment agreements with each of its Named Executive
Officers effective January 1, 1997. The employment agreements provide for an
initial term of one year. Thereafter, each agreement will automatically renew
for successive one-year terms unless terminated by either party. Each employment
agreement provides that an officer's compensation will include a base salary, a
performance bonus and other bonus programs and benefit plans. The performance
bonus is based on the Company's achievement of specified levels of revenue and
operating income as determined by the Compensation Committee. The agreements
contain provisions protecting against use of the Company's confidential
information and protecting the Company against competition from each officer for
a two-year period after termination of employment in any market in which the
Company operates. For 1998, the base salaries of the Named Executive Officers
are as follows: Mr. Fain, $330,000; Mr. Downing, $264,000; Mr. Bracken,
$200,000; Mr. Jaeckle, $200,000; and Ms. Neff, $200,000.
 
    Each employment agreement also includes a salary continuation arrangement in
the event of a serious illness or accident that leads to long-term disability or
in the event of termination of the agreement by the Company without cause. The
amount payable under these arrangements from Metro's funds and group disability
policy could exceed $100,000 under each employment agreement.
 
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
 
    The Compensation Committee of the Board of Directors has responsibility for
establishing and monitoring compensation programs of the Company's executive
officers, which include the Company's President and Chief Executive Officer,
Executive Vice President and Chief Operating Officer, Vice President and Chief
Financial Officer and each Vice President of Operations. The Compensation
Committee is composed of John H. Fain, the Company's Chairman of the Board,
President and Chief Executive Officer, and two outside Directors. Mr. Fain does
not participate in the Compensation Committee's consideration of his
compensation.
 
    The Compensation Committee was formed on April 18, 1997 after the Company's
January 1997 initial public offering. The 1997 Compensation Plans ("1997
Compensation Plans") for the Company's executive officers were established
before the initial public offering. Accordingly, the Compensation Committee was
not involved in the determination of the 1997 Compensation Plans. Mr. Fain, who
was then the Company's sole Director, made those compensation decisions. The
Compensation Committee met once in 1997 to consider the 1998 compensation plans
for the Company's executive officers.
 
    The Company's 1997 Compensation Plans were designed and administered so 
that a significant portion of each executive officer's compensation was 
linked to the Company's financial performance and so that the interests of 
the Company's executive officers were aligned with the interests of its 
shareholders. The Company's compensation plans include base salary, incentive 
awards based on financial performance of the Company for each quarter and the 
year and 


                                    Page 43
<PAGE>

incentive stock option awards. The base salary of the executive officers is 
based on a number of factors, including base salary for executives in similar 
companies, the experience and training of the executive officer and the 
length of service of the executive officer with the Company. A significant 
percentage of the executive officers' compensation for 1997 was based on the 
Company achieving certain revenue, operating income and other performance 
goals, including consultant growth, productivity and consultant retention. 
These goals were met or exceeded by the Company.
 
    Before the Company's initial public offering, the Company established the
Metro Information Services, Inc. 1997 Employee Incentive Stock Option Plan (the
"Incentive Stock Plan") to provide incentive to the Company's key employees,
including the executive officers of the Company, to increase the value of the
Company's stock. In 1997, each of the executive officers (other than Mr. Fain,
who is ineligible to participate in the Incentive Stock Plan) received grants of
options under the Incentive Stock Plan. The options granted executive officers
under the Incentive Stock Plan vest over a five-year period.
 
    This report is submitted by the members of the Compensation Committee:
 
         Ray E. Becker 
         John H. Fain 
         A. Eugene Loving, Jr.


PERFORMANCE GRAPH
 
    The following graph provides a comparison of the cumulative total 
stockholder return on the Common Stock with the cumulative total return on 
The Nasdaq Stock Market and a group of 10 peer companies during the period 
from the Company's initial public offering on January 29, 1997 through 
December 31, 1997. The comparison assumes that $100 was invested at the 
beginning of the period in the stock or index and assumes the reinvestment of 
any dividends. The Company selected a peer group of other IT services 
companies with similar service offerings. The peer companies are: Analysts 
International Corp., Ciber, Inc., Computer Horizons Corp., Computer 
Management Sciences, Inc., Computer Task Group, Inc., Cotelligent Group, 
Inc., Data Processing Resources Corp., Keane, Inc., Renaissance Worldwide, 
Inc. and SCB Computer Technology, Inc. The peer group index reflects the 
weighted average market capitalization of the group.
 
[PERFORMANCE GRAPH]
 
    This graph depicts the performance of $100 invested on January 29, 1997, in
the Company's Common Stock, Nasdaq Stock Market (U.S.) and peer group IT
services companies, including reinvestment of any dividends for the fiscal year
ended December 31, 1997.
 
    Corresponding index value and Common Stock price values are given below:
 
<TABLE>
<CAPTION>
                                             
                                           JANUARY 29, 1997   DECEMBER 31, 1997
                                           ----------------   -----------------
<S>                                        <C>                <C>
Metro Information Services, Inc..........      $100.00             $173.44
The Nasdaq Stock Market (U.S.)...........      $100.00             $116.86
Peer Group...............................      $100.00             $183.33
</TABLE>


                                    Page 44
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    The following table sets forth, as of January 30, 1998, certain 
information regarding the beneficial ownership of Metro Common Stock, by (i) 
each of the Company's directors, (ii) each of the executive officers named in 
the Summary Compensation Table, (iii) all directors and officers of the 
Company as a group and (iv) each person known by the Company to own 
beneficially more than 5% of Common Stock. Unless otherwise indicated in the 
footnotes to the table below, each person or entity named below has an 
address in care of the Company's principal office. All share amounts have 
been rounded to the nearest whole share.

<TABLE>
<CAPTION>
DIRECTORS, OFFICERS                                                         TOTAL
AND 5% SHAREHOLDERS                                                     OWNERSHIP (1)    PERCENTAGE
-------------------                                                     -------------   -----------
<S>                                                                     <C>              <C>
John H. Fain(2)......................................................     8,377,665         56.5%
Andrew J. Downing(3).................................................       563,363          3.8
Robert J. Eveleigh(4)................................................         1,609           *
Ray E. Becker(5).....................................................         4,000           *
Frank B. Bracken, Jr.(6).............................................       236,148          1.6
Richard C. Jaeckle(7)................................................        82,032           *
A. Eugene Loving, Jr.(8).............................................         4,100           *
Kathleen A. Neff(9)..................................................       232,102          1.6
The Fain Family Irrevocable Trust 1993(10)...........................     1,206,510          8.1
All directors and executive officers as a group (8 persons)(2).......     9,501,019         64.1
</TABLE>

------------------------
* Indicates less than 1%.

(1)  Beneficial ownership is determined in accordance with rules of the 
     Securities and Exchange Commission (the "Commission") and includes 
     general voting power or investment power with respect to securities. 
     Shares of the Common Stock subject to options and warrants currently 
     exercisable or exercisable within 60 days of the date of this Report are 
     deemed outstanding for computing the percentage of the person holding 
     such options, but are not deemed outstanding for computing the percentage 
     of any other person. Except as otherwise specified below, the persons 
     named in the table above have sole voting and investment power with 
     respect to all shares of the Common Stock shown as beneficially owned by 
     them. 

(2)  Includes 1,206,510 shares of the Common Stock owned by a trust 
     established by Mr. Fain of which his wife, Joyce L. Fain, and his sister, 
     Cynthia L. Akins, are the co-trustees and of which Mr. Fain disclaims 
     beneficial ownership, 227,974 shares of the Common Stock held by a trust 
     of which Mr. Fain's son is the beneficiary and Mr. Fain is the trustee 
     and of which Mr. Fain disclaims beneficial ownership and 206,930 shares 
     of the Common Stock held by Ms. Akins as custodian for the benefit of Mr. 
     Fain's daughter under the Virginia Uniform Transfers to Minors Act of 
     which Mr. Fain disclaims beneficial ownership. 

(3)  Includes 60,759 shares of the Common Stock owned by a trust established 
     by Mr. Downing and his wife, Cheryl O. Downing, of which his wife is the 
     sole trustee. Also includes 1,000 option shares awarded in 1997 and 
     currently exercisable under the Incentive Stock Option Plan. The business 
     address of The Downing Irrevocable Trust 1997 is 2401 Haversham Close, 
     Virginia Beach, VA 23454. 

(4)  Includes 1,500 option shares awarded in 1997 and currently exercisable 
     under the Incentive Stock Option Plan. 

(5)  Includes 4,000 option shares awarded in 1997 and currently exercisable 
     under the Outside Directors Stock Plan. Mr. Becker's business address is 
     P.O. Box 1448, Ellsworth, ME 04605. 

(6)  Includes 1,000 option shares awarded in 1997 and currently exercisable 
     under the Incentive Stock Option Plan. 

(7)  Includes 1,000 option shares awarded in 1997 and currently exercisable 
     under the Incentive Stock Option Plan. 

(8)  Includes 4,000 option shares awarded in 1997 and currently exercisable 
     under the Outside Directors Stock Plan. Mr. Loving's business address is 
     900 Laskin Road, Virginia Beach, Virginia 23451. 

(9)  Includes 1,000 option shares awarded in 1997 and currently exercisable 
     under the Incentive Stock Option Plan. 

(10) The business address of The Fain Family Irrevocable Trust 1993 is P.O. 
     Box 8888, Virginia Beach, Virginia 23450.


                                   Page 45 
<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    As of January 1, 1997, Mr. Fain did not owe anything under a March 1, 
1995, $1.0 million credit line deed of trust note to the Company. The highest 
amount outstanding under this note during 1997 was $550,000 in principal. 
This note was secured by real property owned by Mr. Fain. This loan was 
repaid in full and the note was canceled in January 1997 before the Company's 
initial public offering on January 29, 1997.
 
    In 1987, the Company became an S corporation for federal and certain state
income tax purposes. As such, the Company's income was allocated and taxable to
the Company's individual shareholders, rather than to the Company. Between 1987
and December 31, 1996, the Company declared and made quarterly distributions to
its shareholders aggregating $25.7 million. These distributions were generally
in amounts in excess of amounts needed by the shareholders to pay the taxes on
the income allocated to them. In addition, on January 20, 1997, the Company
distributed $9.0 million to its shareholders, approximating the estimated
aggregate undistributed amount of income on which the Company's shareholders
were required to pay income taxes for tax years 1987 through 1996. In connection
with the January 29, 1997 initial public offering, the Company terminated its S
corporation election effective January 1, 1997.
 
    The Company entered into an agreement with its existing shareholders before
the initial public offering providing for, among other things, the
indemnification of the Company by them for any federal, state and other income
taxes (including interest) incurred by the Company for any period for which it
reported its taxable income as an S corporation, but only to a maximum amount
equal to the aggregate distributions received by each existing shareholder from
the Company with respect to periods during which the Company was an S
corporation.
 
    Before joining the Company on January 29, 1997 as Vice President of Finance,
Treasurer and Chief Financial Officer, Robert J. Eveleigh was an attorney with
Clark & Stant, P.C., the Company's general counsel. Mr. Eveleigh spent the
majority of his time during his last few months of employment with Clark &
Stant, P.C. working on Metro's initial public offering. During 1997, Clark &
Stant, P.C. served as general counsel to the Company.
 
    The Audit Committee of the Board of Directors is responsible for reviewing
all transactions between the Company and any officer or director of the Company
or any entity in which an officer or director has a material interest. Any such
transactions must be on terms no less favorable than those that could be
obtained on an arms-length basis from independent third parties. The Audit
Committee was formed in April 1997 and met once during the year.


                                   Page 46 

<PAGE>

PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 
    (a) (1) Financial Statements:

    The following financial statements are included in Part II, Item 8 of 
this report:

         Independent Auditors' Report 
         Statements of Income for the Years Ended December 31, 1995, 
            1996 and 1997 
         Balance Sheets as of December 31, 1996 and 1997
         Statements of Changes in Redeemable Common Stock and  Shareholders' 
            Equity for the Years Ended December 31, 1995, 1996 and 1997
         Statements of Cash Flows for the Years Ended December 31, 1995, 
            1996 and 1997
 
    (2) Financial Statement Schedules:

        Financial statement schedules required to be included in this report 
        are shown in Schedule II attached or in the financial statements and 
        notes thereto included in Item 8 of this report or have been omitted 
        because they are not applicable.
 
    (3) Exhibits: 

        1.1  Form of Underwriting Agreement by and among Registrant and 
             Selling Shareholders and the Underwriters, incorporated by 
             reference to Exhibit 1.1 to the Registration Statement on Form 
             S-1 as previously filed with the Commission on January 6, 1997. 

        3.1  Amended and Restated Articles of Incorporation of Registrant, as 
             filed in Virginia on November 20, 1996, incorporated by reference 
             to Exhibit 3.1 to the Registration Statement on Form S-1 as 
             previously filed with the Commission on December 12, 1996. 

        3.2  Amended and Restated Bylaws of Registrant, incorporated by 
             reference to Exhibit 3.2 to the Registration Statement on Form 
             S-1 as previously filed with the Commission on December 12, 1996. 

        4.1  See Amended and Restated Articles of Incorporation of Registrant, 
             incorporated by reference to Exhibit 4.1 to the Registration 
             Statement on Form S-1 as previously filed with the Commission on 
             December 12, 1996 (included as Exhibit 3.1). 

        4.2  Specimen Stock Certificate, incorporated by reference to Exhibit 
             4.2 to the Registration Statement on Form S-1 as previously filed 
             with the Commission on January 22, 1997. 

        5.1  Opinion of Clark & Stant, P.C., a Virginia professional 
             corporation, as to the legality of the shares being registered, 
             incorporated by reference to Exhibit 5.1 to the Registration 
             Statement on Form S-1 as previously filed with the Commission on 
             January 6, 1997. 

       10.1  Registrant's 1997 Stock Incentive Plan and related form of stock 
             option agreement, incorporated by reference to Exhibit 10.1 to 
             the Registration Statement on Form S-1 as previously filed with 
             the Commission on January 6, 1997. 

       10.2  Registrant's 1997 Employee Stock Purchase Plan as amended through 
             June 10, 1997. 

       10.3  Registrant's Outside Directors Stock Plan, incorporated by 
             reference to Exhibit 10.3 to the Registration Statement on Form 
             S-1 as previously filed with the Commission on January 6, 1997. 

       10.4  Employment Agreement dated as of December 10, 1996 between 
             Registrant and John H. Fain, incorporated by reference to Exhibit 
             10.11 to the Registration Statement on Form S-1 as previously 
             filed with the Commission on January 6, 1997. 

       10.5  Employment Agreement dated as of December 10, 1996 between 
             Registrant and Andrew J. Downing, incorporated by reference to 
             Exhibit 10.12 to the Registration Statement on Form S-1 as 
             previously filed with the Commission on January 6, 1997. 

                                   Page 47
<PAGE>

       10.6  Employment Agreement dated as of December 10, 1996 between 
             Registrant and Frank B. Bracken, Jr., incorporated by reference 
             to Exhibit 10.13 to the Registration Statement on Form S-1 as 
             previously filed with the Commission on January 6, 1997. 

       10.7  Employment Agreement dated as of December 10, 1996 between 
             Registrant and Richard C. Jaeckle, incorporated by reference to 
             Exhibit 10.14 to the Registration Statement on Form S-1 as 
             previously filed with the Commission on January 6, 1997. 

       10.8  Employment Agreement dated as of December 10, 1996 between 
             Registrant and Kathleen A. Neff, incorporated by reference to 
             Exhibit 10.15 to the Registration Statement on Form S-1 as 
             previously filed with the Commission on January 6, 1997. 

       10.9  Lease dated September 19, 1996 between Tidewater Partners Limited 
             Partnership and Registrant for premises located at Reflections II 
             Office Building, Suite 300, 200 Golden Oak Court, Virginia Beach, 
             VA 23452, incorporated by reference to Exhibit 10.16 to the 
             Registration Statement on Form S-1 as previously filed with the 
             Commission on January 6, 1997. 

       10.10 Tax Indemnification Agreement dated as of December 24, 1996 
             between Shareholders of Registrant and Registrant, incorporated 
             by reference to Exhibit 10.18 to the Registration Statement on 
             Form S-1 as previously filed with the Commission on January 6, 
             1997. 

       10.11 Employment Agreement dated as of January 29, 1997 between 
             Registrant and Robert J. Eveleigh, incorporated by reference to 
             Exhibit 10.20 to the Registration Statement on Form S-1 as 
             previously filed with the Commission on January 22, 1997. 

       11    Computation of earnings per share and pro forma earnings per 
             share. 

       23.1  Consent of KPMG Peat Marwick LLP. 

       23.2  Consent of Andrew J. Downing to serve as director, incorporated 
             by reference to Exhibit 23.3 to the Registration Statement on 
             Form S-1 as previously filed with the Commission on January 22, 
             1997. 

       23.3  Consent of Robert J. Eveleigh to serve as director, incorporated 
             by reference to Exhibit 23.4 to the Registration Statement on 
             Form S-1 as previously filed with the Commission on January 22, 
             1997. 

       27    Financial Data Schedule. 

       99    Credit Agreement with NationsBank, N.A., Signet Bank and Crestar 
             Bank dated June 20, 1997, incorporated herein by reference to 
             Exhibit 99 to the Quarterly Report on Form 10-Q for the quarter 
             ended June 30, 1997.
 
    (b) Reports on Form 8-K during last quarter of 1997:

        None
 
                                       Page 48
<PAGE>
                                                                     SCHEDULE II
 
                        METRO INFORMATION SERVICES, INC.
                       VALUATION AND QUALIFYING ACCOUNTS

 
<TABLE>
<CAPTION>

                                                     BALANCE                 WRITE-OFF    BALANCE
                                                       AT                       OF          AT
                                                    BEGINNING  CHARGES TO   UNCOLLECTIBLE  END OF
                                                    OF PERIOD    REVENUE     ACCOUNTS     PERIOD
                                                    ---------  -----------  -----------  ---------
<S>                                                 <C>        <C>          <C>          <C>
Allowance for Doubtful Accounts:

  Year ended December 31, 1995....................  $  68,641   $  42,346    $  24,980   $  86,007
  Year ended December 31, 1996....................     86,007     110,010       82,131     113,886
  Year ended December 31, 1997....................    113,886     100,908       62,593     152,201

</TABLE>

                                     Page 49
<PAGE>
 
                          INDEPENDENT AUDITORS' REPORT
                        ON FINANCIAL STATEMENT SCHEDULE
 
The Board of Directors and Shareholders
Metro Information Services, Inc.:
 
Under date of February 2, 1998, we reported on the balance sheets of Metro
Information Services, Inc. as of December 31, 1996 and 1997, and the related
statements of income, changes in redeemable common stock and shareholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1997, which are included herein. In connection with our audits of
the aforementioned financial statements, we also audited the related financial
statement schedule. This financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits.
 
In our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.
 
                                          /s/ KPMG PEAT MARWICK LLP
 
Norfolk, Virginia
February 2, 1998

                                     Page 50
<PAGE>
 
                                   SIGNATURES
 
    Pursuant to the requirements of Section 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
 
                                METRO INFORMATION SERVICES, INC.
 

Date: February 27, 1998        By    /s/ JOHN H. FAIN
                                     ------------------------------------------
                                     John H. Fain
                                     President and Principal Executive Officer
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as 
amended, this report has been signed below by the following persons on behalf 
of the registrant and in the capacities and on the dates indicated.
 
          Signature                        Title                     Date
------------------------------  ---------------------------  -------------------


       /s/ JOHN H. FAIN         President and Director       February 27 , 1998
------------------------------  (Principal Executive       
         John H. Fain            Officer)


    /s/ ANDREW J. DOWNING       Director and Executive       February 27, 1998
------------------------------  Vice President           
      Andrew J. Downing         
                                


    /s/ ROBERT J. EVELEIGH      Treasurer, Chief Financial   February 27, 1998
------------------------------  Officer and Director (Principal                 
      Robert J. Eveleigh        Financial Officer)


     /s/ STEVEN A. LURUS        Director of Finance          February 27, 1998
------------------------------  (Principal Accounting      
       Steven A. Lurus          Officer)
 
                                      Page 51